One of the main objectives of the new European research and innovation policy agenda is to favor the positive demographics (creation and growth) of European Union (EU) companies operating in new/knowledge-intensive industries. These companies play an important role in shaping the dynamism of the economy’s sectoral composition, favoring the transition towards more knowledge-intensive activities and in contributing to the overall economic growth objectives and more and better jobs. But which kind of companies should be helped by policy? And how? This paper presents a literature review on the economics of research, innovation and competitiveness, focusing on the determinants for company creation and growth, and the role played by Research and Development (R&D) and innovation. It also implements a tentative simulation exercise aimed to figure out what the possible contribution of High-Growth Enterprises (HGEs) to EU job creation could be in the year 2020. Furthermore, it draws a number of policy implications to design future research and innovation support instruments targeting innovative company growth in Europe.

The new European research and innovation policy agenda emphasizes the need to favor a positive dynamism of the demographics of European Union (EU) innovative companies, especially Small and Medium Enterprises (SMEs), in new/knowledge-intensive industries. This is mainly due to their potential to shape the dynamism of the economy’s sectoral composition, improve its whole competitiveness, and create more and better jobs. In fact, the EU is actually falling behind in terms of competitiveness due to insufficient SME innovativeness and strong obstacles in their sustainable growth path. Research and Innovation (R&I) policy plays a key role in this regard.

According to the EU Competitiveness Council (Council of the European Union, 2010), Europe needs ‘an integrated approach of R&I policies by removing barriers to the restructuring of EU industry towards sectors with growth potential and to the growth of young innovative firms into tomorrow’s global players’. The European Commission’s subsequent proposal of using the share of fast-growing innovative companies in the economy as the headline innovation indicator (complementing the already existing 3% R&D intensity target) illustrates well this new policy endeavor.

Entrepreneurship Development Journal, Enterprises’ Growth, Potential, European, Union, Implications, Research, Innovation, Policy.