The Entrepreneurial State: The German Entrepreneurial Regions’ Programme as an Attenuator for the Financial Crisis

Abstract

The financial crisis encourages governments to identify innovation programmes that had proven successful in contributing to regional resilience. In this context, the federal programme Innovative, Regional Growth Core (Innovative Regional Growth Core, IRGC) developed under the umbrella of the Entrepreneurial Regions Programme Portfolio (ERP) (Based on a formative evaluation of the BMBF programme “IRGC” in the context of the ERP and 18 clusters in different funding stages (ex post funding stage after 3 years, funded and cluster in the proposal stage) running from 2003 to 2005. See Gebhardt et al. 2005, Endbericht der Evaluation des BMBF—“Innovative Regionale Wachstumskerne” 2003–2005. Report to the BMBF.) of the German Ministry of Education and Research (BMBF) deserves new consideration for its contribution to regional robustness. IRGC was designed as a crisis recovery tool to jump start East German economy after reunification. Since 2001, the programme has continuously generated a moderate number of new firms, spin-offs from universities and enhanced employment as well as private investments in the politically induced clusters, which have also shown a relatively stable development even in the economic downturn of the recent financial crisis. As a new programmatic feature, the BMBF demands a well-grounded market-oriented strategy from the regional consortia aiming at developing innovative and economically successful products from science. The German innovation programme IRGC illustrates the shift in innovation policy from passive funder to active entrepreneur. Through this strategic approach, government plays an important role in inducing, encouraging and organizing knowledge-based economic development. We discuss how these policies can add to the viability and resilience of innovative clusters by encouraging them to build up management competences.