The Value of Research in Developing SMEs


When starting a business and looking for government to help, it is best to keep expectations low. For one, gone are the days when government supported small to medium entrepreneurs by giving them hard cash for start-up investment or additional capital infusion. This has been a failed experiment of 80's welfare state model.

Instead, governments are now emphasizing the need importance of research and development and are significantly devoting funds and assistance to SMEs towards these ends. A survey of available government support for SMEs in Israel would show that most assistance to SMEs now come in the form of R&D grant.

And for good reasons. Government grants are taxpayers' money and must be spent in consistent with any country's government targets. They are appropriated through Congress and must be closely tied to specific national development agenda such as development agricultural or technological development. Logically too, the government has set up stringent requirements to make sure SME support is money well spent. Although Israel government still provide financial assistance to small businesses in the form of loans or as disaster recovery assistance, today, Israel government R&D grants are merit-based rather than start-up aid that are available for very specific Israeli industries and targeted sectors with priorities in scientific and medical R&D and conservation efforts.

These grants for research and development are available for various purposes. There are research grants for feasibility studies, operational assessment, prospective growth analysis and market studies that can provide reliable data for an SMEs expansion potential and logical growth direction. This is considered low-risk since the projections are empirically and scientifically sound. There are also product development grants for quality evaluation, standards assessment, material testing and even experiments that aim to determine physical and operational possibilities to further improve product or services. This is a much preferred course of action than traditional experimental market tests or conventional market analysis since it is more efficient.

R&D government support in Israel also shifts away from traditional feasibility studies and instead emphasizes expansion prospects preferably overseas expansion or global market readiness and franchising studies. Other government support grants for SME in Israel also emphasizes national development agenda are available for SMEs that aims to evaluate and improve their power or fuel efficiency, environmental conservation adaptability, gender sensitivity and cultural sensitivity practices. Although these grants do not directly improve product or operational efficiency, it does help make SMEs more attuned to local and national concerns like ecological protection, energy efficiency, employment generation, women empowerment and local community development.

In a nutshell, R&D government funding support for SMEs in Israel cultivate local entrepreneurship and emphasizes the need for empirically grounded business decisions, encourage expansion into highly competitive global markets and assures sustainability and optimum profit margins are along with consistent with national local, regional and international policy priorities. In addition to becoming more specific, eligibility for a SME funding have also become more rigorous. R&D grants in Israel usually prioritize SME's in economically under served areas, or those in communities with high unemployment rates or those with established brands or performance records. SMEs in the high-tech industry are prioritized for R&D due to their capacity to generate patents and intellectual properties while those operating in the agricultural sector may most likely be supported due to their potentials to contribute to in food security concerns.