Swedish startups are not growing as they should, hold too few patents, and too many successful startups leave the country, writes Peter Jörgenssen, former Swedish technical attaché in California. No wonder, replies two professors, Alexandra Waluszewski and Håkan Håkansson, who argue that the concept of innovation is poorly understood and that politicians spend to much tax money on research and education and too little on stimulating the business climate for startups.
So what’s the problem? Sweden usually ends up as number one, two or three in international rankings of innovation climate and Swedish companies earn big incomes from licensing their patents internationally. Also, government spending to promote innovation increased by more than a third during the last decade, while other OECD countries lowered their spendings. At first it seems that the future looks bright for Swedish innovation and competitiveness.
However, there are dark clouds on the horizon. First, young startups grow slower and hold a lower share of the patents compared to many other countries. Second, and troublesome from a Swedish perspective is that many successful startups move abroad. And third, the metrics used by the EU to measure innovativeness may be flawed, failing to account for market and business perspective.
The Swedish market is small, with a shortage of investors, and taxes may be unfavorable for growing high tech companies. Most disturbing though, according to Jörgensen, is that the debate regarding these issues is more or less nonexistent and that there are no recent studies on why startups move abroad to such a great extent.
Waluszewski and Håkansson think that Swedish innovation policies overlook the difficulties of industrializing and putting potential innovations on the market. Even worse, they argue, is that the very concept of innovation has been skewed to only focus on developing products and services and disregard that the very definition of innovation require that the product or service also must reach widespread use on the market.
And the skewed definition of innovation may even have gained hold in the EU. The two professors point out that the EU-comission’s way to measure innovativeness focus too much on government and corporate spendings on education, research and development activities, and very little if at all on how well these activities are converted to commercial use.
And when growing startups move abroad in order to find the right financing and industrial partners, they take the potential new jobs that are created with them.
The conclusion is that if Sweden, or any other nation want to remain competitive it is necessary to pay more attention to how to create markets, financial incentives and industrial structures that stimulate growing startups to stay.