Building innovation ecosystems - ideas for non financial support from the state

Continuing on the theme of ideas for stimulating development of innovation ecosystems, here I list a few ideas which require the support of non-financial nature – especially from the government side or from agencies that exist to support economic development in any region. In the interest of keeping it short, I have excluded a lot many important things than the ones included. I have just tried to give space to the ideas which usually don’t get enough focus.

1) Providing market linkage: Large enterprises could be incentivized to source from suppliers which do direct procurement from SMEs and start-ups at fair prices. Large enterprises can introduce new technologies and better and safer production practices through their influence as a large and stable buyer of the products of small enterprises. Incentives to large enterprises for providing such market linkage could be financial ones like investments, or reputational ones like recognition/ reward.

2)  Safety nets for talent: Human capital is one of the biggest issues faced by the small enterprises. With state supporting/promoting initiatives of this nature, getting both professionals and small enterprises on board would be relatively easy. It could include services like credential verification, joint medical insurance for all candidates hired through system, joint and portable pension accounts, skill trainings, etc. Increase in success rate for small enterprises through this would have positive spillovers in the form of creation of role-models for next generation of entrepreneurs and professionals.

3) Policy advocacy coalitions: There are many issues/problems in the social enterprise sector where solutions would require government partnership, support, interventions or new laws to be passed in state or national legislature. Often multilateral agencies or large non-profits are best positioned to build a coalition of various stakeholders which will deliberate on the entrepreneurs’ difficulties and then advocate for or put forth recommendations to the governments.

4)  IP4Dev: Many business families, SMEs (either formal or informal but reasonably big businesses too) show interest in adopting, investing in and building new businesses on new technologies/products imported from the technologically advanced Western countries. But they find it very difficult to find and acquire such intellectual property and the associated know-how. So creating a platform to facilitate the transfer technology rights and know-how could potentially provide a big boost to the SME development objective and increase the number of SMEs. Coupling such know-how with financing could be even more effective. Such an initiative could also have a big component of South-South cooperation, instead of being only a North-South initiative.

5) Small exits: Innovation ecosystems are well-knit communities (or networks) of all stakeholders. Often smart entrepreneurs, who failed to achieve their planned targets but have provided evidence of hard work, grit and quality ideas, get rewarded by becoming acqui-hires for the bigger firms in that market. They in-turn go ahead and become angel-investors in the start-ups of their promising employees, and so on. Similarly a lot of knowledge sharing occurs during the meet-ups and in cafes or co-located offices. A sense of community starts building up and members of the community are always welcoming and supporting of new-comers. This is a hard to measure phenomenon and there are no fixed steps to achieve this. Still governments should strive to help build such autonomous communities in every possible manner.

If you have read this much, then you must also have some ideas or feedback for me. Please do share your thoughts and I would be highly grateful to you for that.