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Government encouraging innovative business growth
Published: 19 May, 2010, 13:41
Edited: 20 May, 2010, 10:18
TAGS: Investment, Regional development, Economy, Finance
The government has raised its financial support of the small and medium size business sector 16 times in the last 5 years and is looking to boost innovative entrepreneurship.
However, the figure still only stands at $800 million annually, which is not particularly impressive given that the sector is intended to account for 40% of GDP by 2020. Also, the government will only open the purse if the business can show it's an innovative enterprise, says Andrey Sharov, Head of Small and Medium Entrepreneurship at the Economic Development Ministry.
“We see a growing number of small businesses. There are new ones launching and the established firms diversifying into new areas. Our goal is to see a six fold growth in innovative small companies in 3 years. An innovative company is one which owns intellectual property or produces goods that are unique in the world.”
That definition of "Innovation" has cut off government assistance from many businesses which although working in hi-tech, are not doing anything particularly unique, says entrepreneur Dmitry Birman
“If it's about stem cells it obvious that it's innovation, but if we have some technical upgrade that allows the doubling of speed of the main processes on a chip board – that is not considered innovation. The definition of what is innovation is still an issue.”
And it's not the only issue – high rent, the difficulty with securing a patent, corruption and a limping system of public purchase is a heavy burden for small business.
So while there is support for some entrepreneurs, the rest are saying if the government can't help, the least it can do is create a level playing field, then get out of the way.
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4 comments
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Absolutely spot on. The current definition of innovation is completely wrong. IP is a business protection and the creation of a possible saleable or litigation asset. Uniqueness CAN be a great opportunity and allow for big market share. Both of these things can be great to have, the first is a big plus the second can be a plus and a minus, depending on the circumstance. Now we need step back here - what we want is lots of competitive businesses on the world stage, this matters not just externally, but internally too. This is because our stage will become part of the world stage in the end. At the moment we have lots of 'copy' businesses, that in honesty, to a large extent could not compete on the world stage, against more efficient business cultures. We therefore must foster an attitude through education and controlled exposure, to allow these to improve and improve to come up to world standards and then hopefully surpass them in some cases. Each step on this path is an innovation for these business, and they will do it faster with the life of business (Cash) So lets change our definition of innovation, to cover any innovative step for a business itself, assessing each investment on a return on investment basis. So if a business tries to do something new, but will not return increased revenew, profitability, market share ... then even if new we don't back it. Each case is on its merit. Yes the old corruption, rears its head again, but there will be corruption, the trick is to put the right people in the right places, business leaders commited to success and the profits from it We need a portfolio here, the 'copy' small businesses are flourishing, they need protection, support and time, open them straight up with shock treatment to the world market, and Russian companies won't exist. Then we need small and media high techs and then large corporates. Don't limit innovation, let it happen. The market and the people need generate it.