Transformative Change of European Union’s Innovation Policy: From Fragmentation to Strategic Alignment

Tina Schivatcheva |

Abstract

This blog post explores the transformative trajectory of European Union’s (EU) innovation policies through the lens of three major pan-European innovation policy milestones since 2010: the Innovation Union (IU), Horizon 2020 (2014-2020) and Horizon Europe (2021-2025). The exposition argues that there has been a transition towards increasingly more comprehensive policy frameworks, which aim to align scientific achievements, technological innovation, business commercialization and sustainable socioeconomic growth. Also, there has been an emerging emphasis on strategic, collaborative and impact-oriented innovation policies that prioritise openness, inclusivity and broad-based participation.

 

Introduction: Theoretical Perspectives

The present discussion conceptualizes EU innovation policies as characterized by complex transformative dynamics, accompanied by shifts in innovation theory and governance.

Questioning long-held notions of innovation policy centered solely on economics, firms and technology, now, as noted by Diercks et. al. (2019) alternative paradigms such as Mission-Oriented Policies (MOPs) have gained traction. In their seminal work, Kattel and Mazzucato (2018) trace the evolution of MOPs through three distinct generations: from economic catch-up missions in the late 19th and early 20th centuries, through mid-to-late 20th century defence and aerospace endeavours, to today’s focus on Global Social Challenges (GSC) like climate change.

In a European context, initially consigned to what Borrás terms “a rather obscure position amid the host of EU policies,” innovation has ascended to what the scholar describes as “an increasingly strategic status,” according to the scholar. This perceptual shift has led Fedirko and Fedirko (2021) to delineate three generations of European innovation policy: from the “period of great science” (1950s-mid-1980s) focused on collective knowledge generation, through the “period of technology policy” (mid-1980s-early 2000s) focused on technological development and competitiveness, to the current “systemic” vision emphasizing intellectual property, knowledge commercialization infrastructure, and social values. Such understanding expands the scope of policy considerations and resonates with Borrás‘ observation that EU innovation policy is progressing towards an umbrella policy framework, seeking to align various functional dimensions and traditional policy areas to enhance innovative processes.

Yet despite these advancements, a recent 2021 report prepared for the European Parliament (EP) by Ramahandry et. al. cautioned that Europe struggles to translate scientific research outputs into commercial products and retain them within the region. The report highlighted that many successful business models and innovative products originate from outside the EU.

Such critical evaluations underscore the need to reassess European innovation policies and reflect on pivotal junctures of transformation over the years. Thus, the subsequent discussion will now focus on three important policy frameworks, highlighting key moments in the evolution of the EU’s innovation policy since 2010: IU, Horizon 2020 (2014-2020) and Horizon Europe (2021-2025). Given the space constraints of this blog post, the exposition will only be able to bring attention to some key aspects of their grand programmatic trajectories.

 

Innovation Union

Launched in 2010, the IU became one of the Europe 2020 strategy’s flagship projects. Innovation was recognized as an essential component in achieving smart, sustainable, and inclusive growth, with “smart growth” anchoring economic development in knowledge and innovation. The goals of the IU have been built on a “strategic approach to innovation,” emphasizing a medium- to longer-term perspective and identified as three-fold.

According to the European Parliament, positioning the EU as a “world-class science performer” was the main overarching objective, which had to do with the EU’s standing abroad. The EP frames the second goal in terms of removing obstacles to innovation, “which currently prevent ideas getting quickly to market.” These were identified as “expensive patenting, market fragmentation, slow standard-setting and skills shortages” (EP, 2024). In the third place, the IU set the goal of “revolutionizing … the way the public and private sectors work together” (EP, 2024). In this regard, the EC pays particular attention was paid to “the implementation of European Innovation Partnerships (EIPs) between the EU institutions, national and regional authorities and business.” Overall, the IU aimed to create a genuine single European market for innovation, which would attract innovative companies and businesses. To achieve this, various measures were proposed in the fields of patenting, standardisation, public procurement and smart regulation. An important IU initiative was the establishment of a European knowledge market for patents and licensing, facilitating the exchange of intellectual property rights and fostering innovation across borders.

Additionally, the IU fostered the development of several performance assessment tools and initiatives. Originally launched in 2008, the European Innovation Scoreboard (EIS), a comprehensive tool capable of evaluating pan-European innovation performance, has become a key IU component. A Regional Innovation Scoreboard, also launched in 2008, categorizes the EU’s regions into four distinct groups based on their innovation performance, aligning with the framework of the EIS. An annual Innobarometer (active from 2005 to 2013) provided valuable insights into innovation activities and trends in Europe. Although subject to some criticism, scholars, such as Schibany and Streicher (2008) points out that tools such as EIS and RIS have become recognised as “probably the most widely watched” benchmarking tools in the discussion of European technology policy and have continued to play an important role in mapping, assessing and studying the EU’s innovation landscape. Subsequently, the IU’s standardized metrics for assessing innovation performance across the EU have provided valuable insights while facilitating comparability and benchmarking, thus supporting continuous improvement efforts.

 

Horizon 2020 (2014-2020)

Horizon 2020 (2014–2020) significantly advanced European innovation policy. According to) The program allocated nearly 80 billion euros for research funding, which, although substantial, amounted to only a third of China’s planned investment in R&D at that time, as per Kalisz and Aluchna’s assessment. This comparison highlights the scale of persistent investment discrepancies between global regions. Nonetheless, Horizon 2020 set itself apart from previous Framework programs by moving beyond simply supporting inventions to funding innovations that deliver tangible social benefits. An emphasis was placed on the societal impact of scientific and technological progress.

The program sought to foster intelligent, environmentally responsible, and socially equitable development, emphasizing the critical importance of scientific inquiry and inventive solutions in propelling societal well-being, economic vitality, and ecological balance. A key objective was to boost funding for research and development activities, with the intent of catalysing private sector investments in these areas. The EU’s largest research and innovation program thus far, Horizon 2020 also aimed to foster industrial leadership and strengthen the EU’s position as a global leader in innovation.

Horizon 2020 was centered on three main priorities. The first priority, Excellent Science, focused on enhancing the Union’s scientific excellence and research capabilities through initiatives such as the European Research Council (ERC), Future and Emerging Technologies (FET), Marie Skłodowska-Curie Actions (MSCA) and Research Infrastructures. The second priority, Industrial Leadership, aimed to accelerate technological advancement and support the growth of innovative Small and Medium Enterprises (SMEs) through Leadership in Enabling and Industrial Technologies (LEIT), Access to Risk Finance, and Innovation in SMEs actions. Veugelers et. al. (2015) acknowledge that the simplification and streamlining of the application and granting procedures has effectively reduced the administrative burden for SMEs.

The third priority, Societal Challenges, sought to align research efforts with key policy objectives, thereby addressing issues such as health, food security, sustainable energy, transportation, climate action, societal inclusivity, and security. Moreover, according to a report by Delaney et. al. (2020) for the Directorate-General for Research and Innovation, since 2011 the EC has been promoting a Responsible Research and Innovation (RRI) approach, which advocates for collaboration among various societal stakeholders throughout the entire research and innovation (R&I) process. RRI has aimed to ensure that R&I activities and their results are more closely aligned with the values, requirements and aspirations of society as a whole (Delaney et. al, 2020). Thus, Horizon 2020 has not only aimed to promote research excellence across Europe, but also to enhance societal engagement with science and technology.

Ultimately, by moving beyond the traditional focus on business, market and science, and recognising the pressing necessity of coordinating innovation with a wider range of social objectives, Horizon 2020 represented a substantial advancement in European innovation policy.

 

Horizon Europe (2021-2025)

Drawing upon the successes and valuable insights gained from Horizon 2020, González et. al. (2019) hail Horizon Europe as “a cornerstone of innovation ecosystems configuration in the EU.” Supported by an increased budget of 95.5 billion euros, the policy pledges to continue supporting European research and innovation activities. Horizon Europe focuses on resolving societal challenges, promoting industrial competitiveness, and strengthening the EU’s position as a global leader in innovation. The program is structured around three main pillars: Excellent Science, Global Challenges and European Industrial Competitiveness, and Innovative Europe.

MOPs play a prominent role in the program. Horizon Europe defines a policy mission as: “a portfolio of actions across disciplines intended to achieve a bold and inspirational and measurable goal within a set timeframe, with impact for society and policy making as well as relevance for a significant part of the European population and wide range of European citizens.” This definition outlines MOPs as targeted, time-bound, cross-disciplinary initiatives designed to unite efforts towards bold goals with concrete societal relevance and impact across the EU, in concord with Mazzucato and Kattel’ (2020) theorisation of policy missions. It marks a departure from narrow, insular research agendas towards open, collaborative programs oriented around pressing challenges faced by European communities. The program’s five policy missions are ambitious and impactful, demonstrating a commitment to address critical issues related to climate change, health and the environment. Their formulation underscores the role of citizen participation and strongly resonates with Kattel and Mazzucato’s (2018) conclusions that MOPs now endeavour to resolve pressing societal challenges in a holistic manner.

Representing a significant institutional advancement, Horizon Europe established a new institution: the European Innovation Council (EIC), funded by 10.1 billion euros and dedicated to fostering innovation within the EU. EIC expresses a particularly firm commitment to supporting SMEs, with 70% of its budget allocated for their support. This institutional awareness reflects a recognition of the important contribution of the SMEs to innovation and economic growth in Europe.

Horizon Europe places a strong emphasis on the importance of open science, acknowledging it as essential for enhancing the widespread accessibility of research, thereby promoting collaboration and knowledge sharing. Furthermore, it proposes a new approach to partnerships, accentuates objective-driven collaborations with the industry to support key EU policy priorities. Such partnerships are designed to be more ambitious, fostering innovation and driving progress towards common goals through strategic cooperation between the public and private sectors.

Importantly, Robinson et. al. (2020) explain that the program embraces the principles of Open Innovation 2.0 (OI2). The concept has been theorised by Curley (2015), since it has already emerged during the Horizon 2020 programming period, as being founded on principles of integrated multidisciplinary collaboration, co-created shared value, nurtured innovation ecosystems, unleashed exponential technologies and a focus on innovation adoption. Simultaneously, Curley (2015) acknowledges the participatory and inclusive nature of OI2. The policy endorses actions aimed to build interconnected and inclusive innovation ecosystems across the EU by drawing on the existing strengths of national, regional and local ecosystems. Moreover, as Robinson et. al. (2020) discuss, Horizon Europe transcends a perception of the public as “only end-users” of innovation. The program elaborates in its 2023-2024 Work Programme for European Innovation Ecosystems that it seeks deeper societal engagement through participatory processes like citizen science and social innovation, envisioning a more interactive relationship between innovation and the public.

 

Conclusions

Since 2010, the European innovation frameworks have undergone significant transformation, transitioning from policies, narrowly focused on segregated objectives, to strategies aiming to create synergies across different sectors and stakeholders. This evolution has seen a shift from a focus on innovation assessment tools to a broader emphasis on addressing social missions and GSCs. This shift has led to notable achievements in integrating research, business and society via pan-European programs, novel institutions and financial instruments. Innovation policies increasingly promote transformative change through inclusive and mission-oriented strategies that engage multiple stakeholders and encourage openness and bottom-up participation. Challenges remain and continued strategic adjustments will be needed in ensuring the EU’s ability to translate scientific research into commercial success and support sustainable growth.