Harvard Business Review Urges Crisis Innovation

An article in the Harvard Business Review maintains that Greece is finally showing signs of recovering, but posits that the future of the Greek economy will be determined by its competitiveness, which concerns costs, but is also measured by innovation.

Although not ditching macroenomic reforms entirely, Alexander S. Kritikos and Klaus F. Zimmermann stress competitiveness and laying infrastructure for higher value-added goods production.

The authors stress the low R&D outlays, a mere 0.67% of current GDP compared to 2-3% in other EU countries, also mirrored in the European Commission's Innovation Performance Index.

In the article the authors stress the negative impact of an “overregulated legal framework,” highlighted by the World Bank's “ease of doing business indicator” and an OECD report that identified 555 regulatory restrictions. Unfortunately, the authors, espouse the OECD's claim that if these 555 restrictions are lifted, it “would create major incentives to re-dynamize the Greek economy.” So far those regulations that have been lifted have not seemed to have affected anything.

The fact that according to the article “technology-oriented firms face further obstacles,” is a perennial affliction is not weighed enough in the article. There has obviously been a dearth of innovation long before the crisis and there have never been the incentives for developing such.

The article sees hidden assets “on which the country may build a modern innovation system” such as research centers of excellence (Demokritos Center in Athens, FORTH in Crete, and CERTH in Thessaloniki), the huge number of top Greek researchers working outside the country, the considerable number of small but innovative companies, and finally the attractive climate and the overall quality of life.

Messrs Kritikos and Zimmerman propose a series of measures that could make the difference. Among them strengthening efforts to cut red tape, investing in applied research centers of excellence, developing networks between research and business, developing politically independent research organizations, and extending that network to the Greek business and research diaspora.

In conclusion, the article makes a salient point, albeit perhaps one-sided, in this approach to the re-invention of the country through the crisis by investing in innovation. However, there is an overabundance of such notions in crisis-ridden Greece. All sorts of “entrepreneurship” fostering seminars, NGOs, partnerings, mentorships, have mushroomed after the crisis hit the country, but true entrepreneurship and innovation has actually come from the field and totally private initiatives, and those that have blossomed have done so in spite of the red tape, or maybe in a Darwinian sense, because of it.