Comparison between the innovative systems of Germany and France

Term Paper 2005 13 Pages

Business economics - Business Management, Corporate Governance


Table of Content

1 Introduction

2 Features of the innovative system of Germany
2.1 Scientific research
2.2 Basic research funding
2.3 Linkages with foreign research institutions
2.4 Commercial orientation of research institutions
2.5 Labour mobility
2.6 Venture capital system
2.7 National technology policy

3 Features of the innovative system of France
3.1 Scientific research
3.2 Basic research funding
3.3 Linkages with foreign research institutions
3.4 Commercial orientation of research institution
3.5 Labour mobility
3.6 Venture capital system
3.7 National technology policy

4 Comparison between Germany and France

5 Conclusion

6 Literature consulted

1 Introduction

“Research creates knowledge. Knowledge that expands our awareness and changes our perception of ourselves. Knowledge that shapes our thinking and gives us orientation” [BMBF, 2004]. The research of today leads to innovations of tomorrow. Mainly, every item we use in daily life emerged from research which scientists have done once.

This paper gives an overview of the innovative systems of Germany and France. The main features such as scientific research, funding, link to foreign institutes, commercial orientation of research centres, labour mobility as well as the venture capital system and the national technology policy will be described briefly for each of the above mentioned countries. Additionally, there is a comparison between these features in Germany and France.

2 Features of the innovative system of Germany

2.1 Scientific research

Basically, research in Germany is divided into three categories: Trade and industry, universities, and non-university research institutes. Research and development (R&D) expenditure by trade and industry reached around 36.8 billion euros in 2003. At universities R&D expenditure totalled 9.1 billion euros, and at non-university institutes around 7.3 billion euros [BMBF, 2004]. These figures show that trade and industry play the most important part of research. However, research at universities is the backbone of German science. University research rose to a high level by the middle of the nineteenth century. In some fields such as medicine, chemistry and physics research reached world leadership level [Koen, 2005]. Nowadays, research at universities can be divided into three different groups: Basic research, applied research, and experimental development.

The major non-university institutions in Germany are the Max-Planck-Society as well as the Fraunhofer-Society.

The Max-Planck-Society was established in 1948, formerly known as Kaiser-Wilhelm-Society (founded in 1911). The Kaiser-Wilhelm-Society had major activities in applied research whereas the Max-Planck-Society moved back towards basic research, which had brought international recognition in previous decades [Koen, 2005]. It has 77 own institutes, research facilities, laboratories as well as working groups. The Max-Planck-Society is concentrating on basic research outside universities in areas such as biological-medical research, chemical-physical-technical research as well as in humanities research.

In 1949 the Fraunhofer-Society was established which grew to a large organisation carrying out applied research mainly on contract with clients in industry and government [Koen, 2005]. Nowadays, it is the leading research institute for applied research in Germany. The Fraunhofer-Society’s aim is the implementation of research result into new and innovative products, processes and services [BMBF, 2004]. Furthermore, there is a close relation between the society and universities. Due to this linkage it complements the resources in basic research and gains new young scientists. Further institutions are the Helmholtz-Community of German Research Centre, the Leibniz-Community, the Academy of Nature Scientists Leopoldina as well as the Foundation caesar.

2.2 Basic research funding

Mainly, there are several reasons for funding basic research in Germany. Scientific observation shows the world in new and manifold aspects [BMBF, 2004]. Research is focused on the unknown and to get always into new areas the state is providing the financial resources for scientists to do their work without any limitations considering the financial aspect. Furthermore, basic research is giving impulses for the applied science and research. Another aspect is that research is stimulating the economy in a country. Economic growth and new jobs in Germany are mainly based on excellent qualifications, high level research as well as the development of new technologies [BMBF, 2004].

Nevertheless, supporting basic research is a task of the Länder due to German’s federal structure. However, BMBF (2004) states that institutions and projects of basic scientific research which are of national importance are co-financed by the Federal Government and the Länder. Furthermore, the business sector is the largest source of research funding in Germany. It is financing about 63 per cent of the total R&D which is higher than in USA but lower than in Japan [Koen, 2005].

Additionally, there are foundations which are characterised by private financial engagements. Major foundations are for example Volkswagen-Foundation, Thyssen-Foundation, Robert Bosch-Foundation as well as Bertelsmann-Foundation.

The German state uses two main instruments for promotion of research: Project encouragement and institutional encouragement. Project encouragement is mainly directed on a certain research field with the aim to reach a high international proficiency level in research and development [BMBF, 2004]. On the other hand there is institutional encouragement which is not only focused on one research field but rather on one institution as a whole.

2.3 Linkages with foreign research institutions

More than 85 per cent of the latest knowledge is ‘produced’ outside of Germany. Therefore international cooperation is a key factor for the usage of the worldwide existing sources of knowledge and for increasing the own efficiency [BMBF, 2004].

Mainly, one of the Federal Government’s priorities is to strengthen the European and international research connections. Germany has close co-operations within Europe such as bilateral co-operations, on the basis of agreements on scientific-technical co-operation, with a total of over 50 countries and the involvement in multinational organisations [BMBF, 2004]. Furthermore, in Europe Germany takes actively part in research institutions such as the European Space Agency (ESA) as well as European research centres CERN and ESO.

2.4 Commercial orientation of research institutions

Due to the tough international competition and the decreasing personnel resources the R&D processes must become shorter and more efficiently. In the 70s around six per cent of R&D projects within the industry sector were outsourced to research institutions whereas nowadays it is more than 17 per cent. The greatest potential for collaboration between science and economy can be seen at small and medium enterprises. A great amount of financial support is going into the promotion of R&D and innovation collaboration. BMBF (2004) states cooperative innovators will be more successful in the innovation process compared to non-cooperative innovators.



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Comparison Germany France Comparative International Management




Title: Comparison between the innovative systems of Germany and France