Knowledge-based economy

Page 41 of 86 important, as fundamental research can open new opportunities and provides inputs for radical

innovations. It could also serve as an attraction for top researchers from around the world. Failure to maintain high level of Excellent Science research in Europe could cause significant damage to Europe’s future potential as a leading R&D destination, as fundamental research is the building block of cutting edge science.

Horizon 2020 must be simplified and the administrative burden significantly lowered in order to attract the very best collaboration participants. Simplification and lower administrative burden for entry to Horizon 2020 could have far reaching consequences in terms of accessibility. This alone could attract more and better quality participants, and make it possible for SME’s to also enter the fray. Without lowering the administrative burden and simplification of the process, having targets of X % SME involvement and attracting the very best, will remain unfulfilled as the cost of the process will be too expensive and cumbersome for many.

The participation of leading firms and top universities in Horizon 2020 is crucial for achieving growth, addressing societal challenges and enhancing Europe’s global position. IPR is an important factor in collaboration, it is therefore critical that rules are clear and simple. There must be confidence in the rules for firms to engage in Horizon 2020 funded collaborations. It's also important that the rules are seen as fair to both the academic and business partners. The open access criteria should therefore be used flexibly and not enforced rigidly.

Page 42 of 86 higher level of commercialization solely based on this might not be accurate. Commercialisation is a

complex process with many factors involved. It cannot be reduced to a linear process where knowledge is transferred from researchers to business and enters the market as a product. Once the initial linkages between universities and firms have been established, these can then develop dynamically as per the requirements of the situation and aims of the actors.

To ensure high level of innovation in the EU, dynamic and cross-sector ties (strong and weak), are important where transfer of both tacit and codified knowledge can take place. Simply transferring codified knowledge from researchers to firms in a manual will not be sufficient. Researchers must have an understanding of the circumstances under which firms are operating and the challenges they are facing regarding the

commercialization of knowledge. While firms need an in-house absorptive capacity to be able to understand and utilize the knowledge produced by the researchers. More importantly, firms and

universities must understand the importance of innovation and also need to show a willingness to engage with each other and share knowledge for mutual and societal benefits. Societal challenges, particularly environmental and climate research, and green technologies are an area where the EU is world leader (Appendix A, figure 1 and 2), and therefore that lead should be maintained by ensuring adequate funding for research and innovation. Similarly other areas where the EU has a competitive advantage should also be focussed on.

The EU can support the process by providing funding within a framework that caters to the needs of both.

One area highlighted by both universities and firms as crucial, and also identified by EU evaluations, is the need for simplification of the framework programmes. Horizon 2020 has to large extent attempted to make the funding process simple. Reducing administrative burdens and handing out funds faster with fixed time frames, making the calls more flexible, will be hugely beneficial for the process. Having an open EU level playing field will enable large participation. This will also enable the EU to fund research projects that are world-class and fit the bill of excellence. By giving funding to excellent proposals, will increase the generation of new knowledge and improve competitiveness.

Fundamental research can have a significant impact on the economy because that is where new discoveries are made that can radically change how we do things. That’s why it is good that the excellence pillar has been given a large amount of funding in Horizon 2020. Reducing funding for fundamental research can cause long term damage to growth and jobs. It is important for universities to keep focussing on fundamental research and not neglect in favour of research areas with shorter time to market.

Firms should involve themselves in fundamental research, as working with universities in collaborations will

Page 43 of 86 give them first-hand knowledge of upcoming technologies. This will give firms the possibility of first-mover advantage, when the technology matures. Horizon 2020 does focus on this by encouraging research in future and emerging technologies and it will be crucial that this focus is also kept in the upcoming calls and not shifted in favour of market logic and research with higher commercial aspects. Fundamental research is also an area where the EU has a competitive advantage over emerging economic powers, and to maintain this advantage fundamental research needs to be given priority.

In a challenging global context, a fact acknowledged in the Horizon 2020 formation process, there is a critical need for prioritising the growth of R&D and to be able to absorb new technologies. International cooperation with non EU members has been made possible in Horizon 2020, but for that to be beneficial, the internal capacity of EU firms and universities has to be at a level where they are able to absorb the new knowledge generated by the collaboration. To be able to absorb new knowledge, the EU has to push universities and firms in prioritizing cutting edge research, something Horizon 2020 does take into account.

Prioritizing cutting edge research also increases the possibility of being first to come up with radical innovations that can create new markets or provide a significant competitive advantage in the current market.

Being the world’s single largest market, with a large pool of leading universities conducting high level of research and producing leading researchers, as well as high number of publications, citations and patents (European Commission, 2012), gives the EU a unique global position in attracting new investment into R&D.

The challenge for the EU is therefore to maintain that position by ensuring EU universities and firms have access to required funding, and directing that funding towards areas which give the EU a competitive advantage and simultaneously solve key societal challenges, under the Societal Challenges pillar, and enhancing the industrial competitiveness of EU firms under the Industrial Leadership pillar.

To attract world class researchers and maintain a top level of research quality, Horizon 2020 will need to ensure integration of the member states research and innovation policy, to promote the creation of world-class research, while universities, firms and governments of member states, will have to come together not just to collaborate on projects, but also on a larger scale to pool together resources and focus on key areas where a country or region has some advantage. By using this approach the different countries could specialize in key areas and utilize their resources in enhancing their capabilities in that area. For example the way Denmark has in wind energy and bio tech sector. This would also reduce duplication of efforts, and not have one area getting overrun with similar research conducted in multiple countries while other areas are neglected. Member countries that have national innovation programmes to supplement EU

programmes will be in a better position to coordinate their efforts than those who do not. At the EU level

Page 44 of 86 there will be a need to ensure some members states do not get left behind. Figure 1 (appendix A) shows the huge difference between EU countries in terms of employment in knowledge-intensive activities.

Industrial leadership pillar is important for providing funding for research into technologies that are closer to market. In the short and mid-term funding for such research can play a valuable part in solving the growth crises facing the EU, and provide support for key industrial technologies, and allow firms to take a leading role. Providing access to risk finance and funding for SME’s are also welcome steps in improving R&D efforts in the union.

For firms like FLSmidth, IPR rules play a critical role when research is in technologies that are close to market. The rules and their administration must be clear and simple, as a lack of confidence in IPR rules could keep some firms from seeking EU funding. In Horizon 2020 the rules present overall a strengthening of the FP7 IPR rules. The participant which generates a result gets ownership of IP, and if there are multiple participants then joint ownership and protection as and when necessary. Results must be disseminated based on open access principle, and there are exploitation obligations in some research areas.