The government needs to develop interventions adapted to the specific needs of micro, small and medium enterprises (MSMEs) to encourage them to take risks and innovate, according to a study of the Philippine Institute for Development Studies (PIDS).
In a policy note, PIDS senior research fellows Jose Ramon Albert and Ramonette Serafica, research fellow Francis Mark Quimba, and research analysts Jana Flor Vizmanos and Jose Carlos Alexis Bairan said these firms need to gain access especially to finance, knowledge and skills.
They noted that barriers and bottlenecks keeping MSMEs from innovating are not similar to those faced by large firms, thus the need to customize the interventions that they extend.
Citing an earlier study, the authors said MSMEs still do not innovate as much as large firms, while the government has already provided support to them.
The government has already provided various financial incentives, such as income-tax holidays, tax deductions, duty-free importation, or value-added tax exemptions of raw materials, equipment and other capital inputs, to firms for fostering innovation.
The study said large firms also need assistance in making a “paradigm shift toward seeing the value of going beyond their knowledge and cooperation networks for innovation,” even as they have already financial and human resources. It also called for an inventory and evaluation of existing mechanisms to strengthen the free flow of information within the innovation ecosystem; and support on investments in required technology, research infrastructure and researchers.
“It may also help to have a strong institutional champion that advocates promoting and harnessing innovation in the policy environment, especially as the country prepares for opportunities and risks in the use of emerging technologies and innovations across the world,” it added.<
