What will it take to make Europe more innovative? As the World Economic Forum’s Global Competitiveness Report has consistently indicated, increasing the quantity, quality and impact of innovation is one of the biggest challenges facing Europe’s economy. And it’s a very interesting challenge indeed – while Europe has six of the top 10 innovative economies in the world, on average the region performs poorly when compared to other key benchmark economies such as the United States, Japan and Korea, while countries such as China are fast catching up to Europe’s innovation levels in terms of capabilities and output of new commercial ideas.

One way of supporting European innovation is to promote entrepreneurs and fast-growing companies, a topic we explored in last year’s report on Fostering Innovation-Driven Entrepreneurship in Europe, which highlighted the challenge of scaling innovative ideas in a fragmented, regulatory complex regional market where access to growth capital is limited. This report showed that Europe does not have a significant shortage of entrepreneurial talent or ambition – but it does have a shortage of dynamic firms that grow rapidly in both value and employment terms, with entrepreneurs and large businesses increasingly concerned about how they can innovate successfully in today’s highly competitive global markets.

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Taking inspiration from its new status as the International Institution for Public-Private Cooperation, the Forum today launched a new report, Collaborative Innovation: Transforming Business, Driving Growth, which highlights the potential for thoughtful and strategic partnerships between young, dynamic firms and established businesses to improve European innovation.

Based on more than 80 interviews and nine workshops over the last year, the report presents ways in which firms and policy-makers can support collaborative approaches to innovation, thereby helping high-potential ventures overcome the market failures and fragmentation that can hold firms back. The work reveals a number of important challenges facing both young and established firms, as well as strategies that can be implemented by business leaders and policy-makers to improve Europe’s innovation ecosystem.

This is not to say that collaboration is a “silver bullet” or a straightforward process. Even the most complementary partnerships are risky and complex, and involve specific skills. However, the benefits to young firms, established companies and their surrounding economies can be huge, as innovation that may not otherwise have occurred is realized and brought to scale across Europe.

The report, Collaborative Innovation: Transforming Business, Driving Growth, is available here.

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Author: Nicholas Davis, Head of Society and Innovation, World Economic Forum

Image: Employees have a discussion at the innovation lab of Swiss bank UBS in Zurich January 16, 2015. REUTERS/Arnd Wiegmann