Innovation Policy and Innovation Patterns of SMEs—Heterogeneity in German Manufacturing SMEs’ Innovation Behaviour and Its Implications on Policymaking

Research indicates that there are many pathways to innovation and knowledge appropriation for SMEs. However, to what extent is this heterogeneity in SME resources and organisational competences reflected by existing SME innovation policies? Within the VIVA-KMU project funded by the German Federal Ministry of Education and Research, 23 national and four European SME innovation policy instruments were analysed. The systematic analysis comprises documents of regulations, evaluation reports, calls and other publications. The findings illustrate that existing SME policy instruments still predominantly focus on the R&D-based mode of innovation. Other important innovation modes of SMEs, such as deep process expertise, customisation, tacit knowledge or non-technological innovation, are not considered. Additionally, most policy instruments do not meet the specific needs of SMEs in terms of agility, feasibility or the possibility of transferring existing technologies into new fields of application. By integrating existing empirical findings on the heterogeneous innovation patterns of SMEs in the German manufacturing industry and the findings on the existing SME policy landscape, the paper suggests several approaches to a targeted, demand-side-oriented SME innovation policy scheme.