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Marina Dabić1 UNIVERSITIES AS PARTNERS FOR SMALL AND MEDIUM ENTERPRISES "The small or newly-born firm is a primary source of new products and innovations". Mueller (1988) 1 Introduction Many countries are now coming to realize that their future advantage will depend on academic partnerships and heightened awareness of the business relevance of science and technology. There are lots of examples, where new technologies are having revolutionary impact (e.g.: biotechnology, information technology, advanced materials). Process innovation can dramatically cut costs of production. Some new technologies are opening entirely new areas of activity. The development priorities of developing countries include income growth, raising investment and exports, creating more and better employment opportunities, and benefiting from technological progress. Governments are committed to achieving these in a sustainable manner, ensuring that resources are available to future generations. Privatization, deregulation and liberalization create more space for firms to pursue their corporate objectives. The evolution towards a “knowledge - based economy” (Drucker, 1991) which promotes full deployment of new, exiting and complementary knowledge has posed great challenges to the management of the innovation system within an organization. New forms of organizations are required to manage links that facilitate the transfer and exchange of knowledge between internal and external sources. Strategic alliances appear to be a central factor in the acquisition of external knowledge, especially in the science based sectors. The literature has identified industry motivations for engaging in an industry/university research relationship. Academic research used the capacity of business to solve complex problem. Universities are included or invited by industry in research projects that we have called “new science”. We are not the first to propose that the collaboration is important, but we contribute to this idea by showing a specific context how various types of interact and promote collaborations throughout the society. However, we would suggest that activities in small and medium organizations as well as at universities could set the stage for collaboration and have high impact on its ultimate success or failure. Thus we would suggest that businessmen’s who wish to innovate should search broadly for opportunities and understand the importance of relations with universities. 2 Collaboration between university and SMS Technology has always been important to economic well-being; the current technological context makes it critical to development. Dosi ()was the first to articulate the concept of a technology paradigm (Stoneman, 1983). This context, called a new “technological paradigm”, is rapidly transforming all productive systems and facilitating globalization. In short, a technology paradigm is a device for dealing with tyranny of combinatorial explosion. With policy dichotomy in mind we can now propose a simple classification of technology policy issues. We present this in terms of the general choices which policy makers face: choices to support the development of or the applications of technology (transfer technology), choices between knowledge, skills and artifacts as the primary targets of policy support, choices about supporting institutions which will be the channels to improve technology, choices to formulate policy in isolation or in joint action with other nations. 1 University of Osijek, Slavonski Brod, Croatia 1 How the revolution of Information Society is affecting the innovation process in enterprises, and which direction is needed for industrial R&D, is therefore a topic of great interest for a small country in transition like Croatia. In the theoretical part, we make use of the following definitions (EU guidelines; Stoneman, 1983; Tirole, 1989). The European Union guidelines define small and medium-sized enterprises (SME) in the following manner: micro enterprises: those with between 0 and 9 employees; small enterprises: those with between 10 and 99 employees, and medium enterprises: those with between 100 and 499 employees. Innovation is viewed as a change in the information set of relationship between inputs and outputs. Process innovations are said to take place when a given amount of output can be produced with less input. Product innovations relate to possibilities found to produce new goods. From the definition it is clear that product innovations in machinery in one firm will often constitute process innovations in another firm. Innovation is different from invention, which is an idea or model for a new improved product or process. In the economic sense this basic idea enters the phase of an innovation when the improved product or process is first sold in the market. A distinction is made between radical (or major) and incremental process innovation. If the cost reductions made possible by an innovation are such that the innovating firm can se a monopoly price and nevertheless take hold of the entire market share, then the innovation is called drastic. Remember that monopoly prices are above competitive level. Otherwise innovations are said to be incremental. For a long time, firms seem to have expanded mainly by taking advantage of every opportunity the market offered; some companies are now increasingly concerned with capitalizing on their technological capabilities. After the era of market-led strategies, some experts are announcing the coming of the era of technology based strategies, even predicting that the latter are generally more successful than the former. Networks help link between industry and University and they have become more important in recent years. Table 1. contains a few illustrative examples of technologies and their linkages to problems, science and technique. Problems to be solved To produce energy while reducing the dependence on imported oil To balance the brake system according to the grip of vehicle’s wheels on the road To obtain a photographic print right after taking the photograph, without having the film processed by laboratory Scientific fields Nuclear physics Science of heart Fluid mechanics Strength of materials Existing techniques Transformation of thermal energy into electrical energy Technology Nuclear electricity Conventional brake system technique Microprocessor data analysis Transmission of data through sensors ABS brake system Optics Chemistry Polaroid process Table 1.: Science, technology and industry: a few examples (Dussauge et al., 1992, p. 14) Government’s most important function in fostering a healthy climate for the rapid absorption and diffusion of advanced technology lies in ensuring that “holes” in domestic innovation- network do not threaten the economy’s long run potential for technological advancement (Dabic, 1998). The areas of 2 greatest concern in this regard differ from one economy to the next; however, some areas stand out as particularly sensitive (Ostry and Gestrin, 1993, p. 26). For example, an emphasis in educational system upon basic scientific skills is of fundamental importance. Related to this is need to encourage the development of transfer sciences (include engineering, fields connected with micro-electronics, automation, robotics and computer sciences in general, fields related to chemistry, and the areas of medicine, pharmaceuticals and agronomics) (OECD, 1992, p. 37), especially precision engineering, microtechnology and nanotechnology. 3 Knowledge as a Source of Competitive Advantage Developing the human resource base “is probably the most importance function of the state related to long-run technological capabilities” (Ernst, O’Connor, 1989, p. 111; Harvey et al., 2001). R&D activities lead to exploration and exploitation of knowledge. Knowledge is now recognized as the asset that can determine the success or demise of a firm. The evolution towards a “knowledge – based economy” which promotes full deployment of new, existing and complementary knowledge has posed great challenges to the management of the innovation system within an organization. A firm’s ability to become competitive in the global market is determined by the incremental, continuous and integrated development and diffusion of new and existing knowledge (Mangematin and Nesta, 1999). As more multinational companies (MNC) evolve to a global strategic network orientation, and expand into emerging markets, the integration and sharing of knowledge about unserved emerging markets become essential (Harvey and Buckley, 1997). The success of global network organizations will be predicated on its ability to develop an efficient global leadership capital across the network of effective initiatives for local competitive positioning (e.g.: thinking globally and acting locally) (Keflas, 1998; Woolcock, 1998; Amin and Cohendent, 1999). Exhibit 1. bellow offers a schematic view of knowledge transfer process between MNC and firms in transition Emerging Markets. It concentrates on the flows of knowledge that are potentially taking place. Knowledge source Transferred kinds of knowledge MNC Tacit-codified Fundamental-Applied Knowledge receivers Firms in Transition/Emerging economies Exhibit 1. Knowledge transfer process between MNC and firms in Transition/Emerging economies R&D collaboration (between firms, between firms and universities, domestic and international) is what differentiates the present R&D system from the one that prevailed during the first seventy-five years of this century (Mowery and Rosemberg, 1989). Academic relations with industry became an explicit mission an academic revolution as potentially far-reaching as the one that made research an academic goal during the late nineteenth century (Etzkowitz, 1994, p. 140). The implications for governments seeking to encourage more university - SME R&D networks are the following: Given their overriding importance, addressing chance factors could be a very cost effective way of encouraging R&D. For example, increasing the probability of “chance” encounters, by means of encouraging networking, matchmaking etc., may be the most effective way of initiating SME R&D. 3 Government pull factors tend to be of much more importance to medium-sized and larger firms, but are not particularly important to small investors. Smaller investors are much less likely to be able to use investment incentives and if these are to be effective, they must be designed in such way as to make them accessible to small firms. Governments must adopt a more active stance if they want to take advantage of entrepreneurial engine offered by SME investors. 4 Type of networks The strategic network approach argues that the network is a new form of organizations and strategy. Freeman has demonstrated ”the importance of both formal and informal networks, even if the expression network was less frequently used” (Freeman, 1990, p. 500). Multiple co-operative relationships of a firm can be the source of its competitive strength. The main missions of universities are now becoming deeply embedded in the core of academic activities. Universities are no longer simply the providers of specialized knowledge through research and education. Rather, they are becoming core components in complex knowledge networks. There are five major areas of change that have had a deep influence on the reorganization of academic research. These are: the growth in university system; the decline of the centralized laboratory, the ascendance of small and medium sized enterprises in using advanced technologies, changing patterns of government funding; and new and emerging academic research structures (Turpin, 1999, p. 235). Within the framework of public support for collaborative, per-competitive R&D various types of projects and networks structure can emerge (close collaboration, shared parallel work, loose collaboration, no real collaboration). Personal contact between researchers, both in academia and industry, is crucial in this context. This was the impetus for the Commission’s ”Keep in Touch” initiative set up by Directorate General III of the European Commission, which is responsible for industrial affairs. This initiative, which aims to create a network of researches in the EU and developing countries, focuses on the need to invest in human resources as well as in technology. Launched in February 1994, the basic philosophy of this initiative is to encourage research in developing countries and to maintain relationships between research teams in different parts of the world. This part of joint co-operations can not only produced valuable results, but also discourage highly skilled researches and technicians in developing countries from going overseas, particularly in the United States, or from giving up their research altogether because of the financial constraints they face at home. The high degree of flux means that a manufacturer cannot base a new product design upon an existing one. The requires the manufacturer to experiment with and test new ideas and concepts by experiential learning. The experiential learning philosophy requires an organization to be open to a diversity options. Basic characteristics of R&D management generations are illustrated in Table 2. Generation First Basic Management Character Incremental resource allocation and the management of R&D as an entity Specific Features Science push strategy, mix project portfolio, unlimited time horizons, ease in resource allocation issues, and individual researches. Second Project management and project quality Third Business strategy links and research planning as a corporate function Fourth External and internal knowledge management, making research networks and collaborations, strategic research alliances, and linking research technology and innovation management. Market pull strategy, project focused, better project evaluation methods, project quality and micro-management projects. Strategically balanced project portfolio, links with business strategy, partnerships, business integration process and the strategic management of R&D and business. Strategic management of knowledge, knowledge organizational and external knowledge sources. Linking international and external knowledge, managing information flows, communication strategies and interactions among firms. Integration between 4 research production, innovation systems and universities. Table 2.: Basic characteristics of R&D management generations (Liyanage et al., 1999, p. 378) 5 Importance of small firms In recent years both policy makers and researcher have become interested in the importance of small businesses. It has been widely recognized that start–ups an more established small business play an important role for economic growth and job creation in countries. In the USA, SMEs employ 54% of the private work force, and they account for 52% of all US sales (SBA, 1996). Similarly, a study by Piatier (1984) found that SMEs provide from 40 to 70% of European jobs, depending on country and sector. There has also been an increasing interest of the role and contribution of SMEs for the development and sustainability of the knowledge-based economy. Jewkes (1969) was among the first to produce systematic data on the role of SMEs in creating inventions. The role of SMEs in economic development has been the topic of government committees as well as several research initiatives (Bolton, 1971; Winter, 1984; Pavitt et al., 1987; Pavitt, 1998; Mueller, 1988) The external knowledge sources and linkages were the principal forms for the acquisition of technological know-how and industrial technology development efforts of SMEs. These were achieved through the development of networks and collaborations with a national researches institute, university, public research institute, other research organizational or individual researchers working in those organizations. There are no comprehensive statistics on the trend of growth in the number of R&D collaborations between university and industry. Small and medium-sized enterprises (SMEs) are an integral part of all economies. SMEs are described as critical to the economic development of industrial nations. Similarly, innovation has also been described as a driving force behind economic development. The contribution of SMEs to total innovation output has been highlighted in several studies (Bolton, 1971; Pavitt et al., 1987; Acs and Audretsch, 1991). A recent study by Riemenschneider and Mykytyn (2000) suggests that the problems, solutions and benefits of the use of information technology (IT) for larger firms may not necessarily be applicable to SMEs. Furthermore, it is also evident from the existing research that the understanding to date of technological innovations in products, processes and knowledge of SMEs is limited (Cragg and King, 1993; Levy et al., 1999; Riemenschneider and Mykytyn, 2000). Although SME R&D is not large at present, the potential is there for it to increase quite significantly, in both absolute and relative terms. This could make an important contribution to economic growth, especially an “entrepreneurial engine” of fast growing firms. Some developing economies face a structural imbalance in terms of both the distribution and the economic role of enterprises by size. Their SME sectors are underdeveloped, the impairing the longer- term sustainability of their economic growth and international competitiveness. These economies need to ensure that their SME sector develop apace, and do not get left behind. R&D in SMEs, and by SMEs, and the cross-border production activities associated with it, could offer an attractive means of achieving this. For developing countries to take advantage of potential of SMEs, and of SME R&D to contribute to economic development, it is necessary to understand the relationship between SMEs and development as well as the role of, and factors influencing some R&D in developing countries. Some countries have developed policy initiatives specifically intended to link SMEs to science and technology capabilities. In Sweden, since the erly1990, these public uinitiatives have also been increasingly designed to promote the construction of different kinds of knowledge networks (Belotti and Tunalv, 1999). In Australia there was a dramatic rise through the 1980s in the number of research centers in the university system. In Australia almost half of industrial R&D active enterprises are investing R&D funds with external organizations. In the US the research center has been described recently as the fastest growing academic unit in American universities (Turpin, Garett - Jones, 1997). This has had enormous implications for university research system because in many countries the “outsource” research is now carried out in applied research laboratories. Carrying out applied research activities on a commercial basis for industrial clients have became a key activity of universities around the world (Turpin, 1999, p. 236). 5 Small firms, therefore, may learn more effectively because of the very fact that they consist of small numbers of individuals. As Rothwell and Dodson (1991) state ”the innovatory advantages of small firms are mainly behavioral rather than material as in large firms.” All the evidence suggests that small and medium sized enterprises will not, in aggregate, be the major suppliers and transferees of technology in the world economy, but they can fill crucial niche roles. The success of these niche roles will be partly determined by the key relationship between firm size and industry size and by small and medium sized enterprises being able to ride the dynamic of the industry (Buckley, 1997). SMEs in particular must play a significant role in incremental innovations whereas large corporation must dominate in the development of some critical technologies. It is no longer a question of whether Croatia will join the information network society. The information society is happening all around already. Our goal should be to make sure that its benefits are spread throughout society. The main advantages of establishing links with SME which notes Jones and Tang (1999, p. 823) were: flexible and rapid responses to communications; simple product ranges and focus on a small number of key objectives; good access to decision –maker(s); close personal contacts between University staff and the firm; strong commitment to technology development; close to market and customers; locally-based involvement. The main disadvantages for University attempting to create links with SMEs which notes Jones and Tang (1999, p. 823) were: lack of financial muscle; narrow range of expertise; lack of managerial skills; focus on day to day “fire-fighting” activities; unfamiliarity with academies and higher education institutions; limited technical skills. Networks are recognized as an essential feature of successful economies as demonstrated by the extensive inter-firm linkages in Japan (Keiretsu) Japan has more small business owners per capita than any other big industrial economy (Economist, 1993). More recent statistics obtained by the author from the Ministry of International Trade and Industry indicate that there are over six million small business in Japan, representing 99 percent of all firms in the country and employing 75 percent of the working population. Since the 1980s most Japanese investment small and medium sized firms abroad have undertaken projects (Dana, 1998, p. 73). More recently, the strategic management of technology has been discussed in many books, but is still lacks a framework to link business strategy to technology strategy (good example for this linkage are Austria and USA ). Case of Croatia How the revolution of Information Society and new technologies are affecting the innovation process in enterprises, and which direction is needed for R&D in small and medium enterprises, is topic of great interest for Croatia. We are faced not only with the problem of re-defining the relations between industry and R&D/university sector (who pays for what) but with the problem of preserving existing R&D and educational potentials what could be devastated in the knowledge- based economy. To bridge this gap is the most important job in many firms from Croatia. The problems of Croatian economy in transition are the following: transition to market economy conditions, in general, handling war destruction, liberalization of prices, privatization, dealing with ecological and environmental problems, human capital and managerial skills, restructuring, renewal, capabilities for technological advance, the need for proper institutions and the choice of a development path suited for faster growth. The following can be considered as driving forces for technology transfer: societal conditions strong external agency support from sources such as Government, Universities, and local R&D establishments support of large corporations, suppliers of technology and training institutions, empowered, knowledgeable and conscientious workforce company culture that encourages to develop new products in the technology supply chain learning organization culture to expedite technological learning. Catching-up is not an easy and costless process because new technology is not equally and freely available to all the countries. The key elements in the catching–up process are technologies, innovations and privatization instead of public education and public funding. Unfortunately, Croatia, as well as other economies in transition suffer from the weak technology sector and insufficiently developed industry to understand the significance of R&D and education in global movements. 6 6 Conclusion A nation’s intellect is surely the product of as many internal and outside pressures as we have seen to be the case with the interface between development and technology. Obviously is that is the increasing role that universities play in world in supporting the technological infrastructure. Universities have educational mission of creating and distributing knowledge. Now, universities have historically mission to evaluate the scholarly merits of each faculty member. Not all components of performance evaluation of university R&D involve economic impacts. The characteristics of technological innovation are increasingly forcing to access external sources of knowledge and information, such as “centers of excellence” in knowledge production, key customers, suppliers and competitors. Therefore, firms increasingly become part of networks, in which resources, knowledge and information circulate at low cost, and strongly rely on collaborations and partnership. Knowledge, especially scientific knowledge, can also show to have a relationship with the level of a country’s development. It may even be a causative factor in the survival or extinction of an entire culture. We can be sure, however, that the process of education obtaining in a particular society is indicative of the level of development towards which the society is moving. Networks are essential if the universities are to fully exploit their commitment to research and if SMEs are to use technology as a source of competitive advantage. Process innovation can dramatically cut costs of production. Some new technologies are opening entirely new areas of activity. The development priorities of developing countries include income growth, raising investment and exports, creating more and better employment opportunities, and benefiting from technological progress. Governments are committed to achieving these in a sustainable manner, ensuring that resources are available to future generations. Privatization, deregulation and liberalization create more space for firms to pursue their corporate objectives. Networking can greatly facilitate and leverage information resources. A person’s value in an enterprise is not only in “what they know”, but “whom they know”. The paradigm, then is that R&D with university must “either network or not work.” References 1. Acs, Z. J. and Audretsch, D. B. (1991): 'Innovation and size at the firm level', Southern Economic Journal, 57, 3, pp. 739-744. 2. Amin, A., Cohendet, P. (1999): Learning and adaptation in decentralized business networks, Environment and Planning: Society and Space, 17, 1, pp. 87-104. 3. Belott, C., Tunalv, C: (1999): Acquisition of technological knowledge in samll and medium-sized manufacturing companies in Sweden, Int. J. Technology Management, Vol. 18, No. ¾, pp. 353-371. 4. Bolton, J. E. (1971): Report of the Committee of Inquiry on Small Firms, Cmnd.4811, HMSO, London. 5. Buckley, P. J. (1997): International technology transfer by small and medium-sized enterprises, Small Business Economics 9, 1 pp. 67-78. 6. Cragg, P. and King, M. (1993): Small-firm computing: motivators and inhibitors, MIS Quarterly, 17 (1), pp. 47-60. 7. Drucker, P. (1991): Post- capitalist Society, Butterworth-Heinemann, Oxford 8. Dabic, M. 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Harvey, M., Mayers, M. Novicevic, M. Dabic, M. (2001): Building knowledge in transition/emerging markets: a key factor in the development of an entrepreneurial environment, Conference in Portoroz, GEA College, Portoroz. 16. Jewkes, J., Sawers, D. and Stillerman, R. (1969): The sources of invention (second edition), London: Macmillan. 17. Jones, O., Tang and Nelson (1996): Networks for technology transfer: linking Higher Education Institutes and SMFs, Int. J. Technology Management, Vol. 12. No. 8, pp. 820-829. 18. Keflas, A.G. (1998): Think globally, act locally, Thunderbird International Business Review, Vol. 40, pp. 547-562 19. Levy, M., Powell, P. and Galliers, R. (1999): Assessing information system strategy development frameworks in SMEs, Information and Management, 36, pp. 247-261. 20. Liyanage, S. Greenfield P. F. and Don, R. (1999): Towards a fourth generation R&D management model-research networks, Int. J. Technology Management, Vol. 18, Nos. ¾, pp. 372-393. 21. Mangematin, V. and Nesta, L. (1999): What kind of knowledge can a firm absorb? Int. J. Technology Management, Vol. 18, Nos. ¾, pp. 149-172. 22. Mowery, D. C. and Rosenberg, N. (1989): Technology and the Pursuit of Economic Growth, Cambridge University Press, Chapter, 9. 23. Mueller, D.C. (1988): The corporate life-cycle, In Thompson, S., M. Wright Eds. Internal Organisation, Efficiency and Profit, London: Phillip Allan, pp. 38-64. 24. Oakey, R. (1994): High Technology Small Firms, Frances Pinter, London. 25. OECD (1992): Technology and the Economy: The Key Relationships, Paris. 26. Ostry, S. and Gestrin, M. (1993): Foreign direct investment, technology transfer and the innovation – network model, Transnational Corporations, Vol. 2, No. 3, pp. 7-30. 27. Pavitt, K. (1998): International patterns of technological accumulation, in Hood, N, and Vahlne, J. E. eds. Strategies in Global Competition, London, pp. 126-157. 28. Pavitt, K., Robson, M. and Townsend, J. (1987): 'The size distribution of innovating firms in the UK: 1945-83, The Journal of Industrial Economics, 35, 3, pp. 297-316. 29. Piatier, A. (1984): Barriers to Innovation, Frances Pinter London. 30. Riemenschneider, K. and Mykytyn, P. (2000): What small business executives have learned about managing IT, Information and Management, 37, pp.257-269. 31. Rothwell, R. and Dodgson, M. (1991): External linkages and innovation in small and mediums.sized enterprises, R&D Management, Vol.35, pp.125-137. 32. SBA (1996): The Facts About: Small Business, U.S. Small Business Administration, Washington DC, January. 33. Stoneman, P. (1983): The Economic Analysis of Technological Change, Oxford University Press, Oxford. 34. The Economist (1993): Survey The Japanese Economy, March 3, pp. 1-20. 35. Tirole, J. (1989): The Theory of Industrial Organisation, M.A. The MIT Press, Cambridge. 36. Turpin, T. (1999): Managing the boundaries of collaborative research: a contribution from cultural theory, Int. J. Technology Management, Vol. 18, Nos. ¾, pp. 232-245. 37. Turpin, T. and Garett-Jones S. (1997): Knowledge networks in Australia and China in Leydesdorff, I and Etzkowitz, H (eds.) Universities in a Global Knowledge Economy: A Triple Helix of UniversityIndustry- Government Relations, University of Amsterdam. 38. Winter, S. G. (1984): Schumpeterian competition in alternative technological regimes, Journal of Economic Behaviour and Organisation, September- December, 5, pp. 287-320. 39. Woolcock, M. (1998): Social capital and economic development: Toward a theoretical synthesis and policy framework, Theory and Society, Vol 27, pp.151-208 8 UNIVERZE KOT PARTNERJI ZA MALA IN SREDNJA PODJETJA UNIVERSITIES AS PARTNERS FOR SMALL AND MEDIUM ENTERPRISES Ključne besede: mala in srednja podjetja, tehnologija, sodelovanje, univerze, mreže, znanje, konkurenčna prednost. Povzetek: Prispevek temelji na dveh pomembnih spoznanjih o sodobnem gospodarskem delovanju. Tako lahko ugotovimo, da se povečujeta vloga in pomen univerz pri podpori tehnološki infrstrukturi v svetu. Prav tako pa je mogoče ugotovimo, da proizvodno usmerjena mala in srednja podjetja generirajo ekonomsko rast in to ne samo v razvitih, ampak tudi v tranzijskih državah. Izhodišče za obravnavo izbranih spoznanj predstavlja opredelitev koncepta partnerskega sodelovanja med univerzami in malimi in srednjimi podjetji. Pri opredelitvi se srečamo s številnimi vprašanji, kot so npr.: kaj so mala in srednja podjetja, vloga univerze pri razvoju malih in srednjih podjetij, kakšna je vloga malih in srednjih podjetij pri izgradnji ekonomije na temelju znanja in kakšne modele sodelovanja je mogoče in primerno uporabiti za povezovanje univerz in podjetij v različnih državah. Sodelovanje je postalo ključna beseda in tema različnih političnih, socialnih, okoljskih in ekonomskih trendov, ki poskušajo predstaviti globalne spremembe človeškega delovanja in bivanja. V tem okviru podrobneje predstavljamo pomen znanja in zasnove mrež za njegovo distribucijo. Managerji malih in srednjih podjetjih so namreč pred nalogo, kako zagotoviti potrebno celovito znanje za delovanja podjetij. Managerji za delovanje v sodobnih gospodarskih razmerah potrebujejo nove nove spretnosti in znanja, ki jih pridobijo s sintezo spoznanj akademskega in profesionalnega delovanja in zasnovo učinkovite uporabe njihovih spretnosti. Preskrbo potrebnega znanja predstavljamo z obravnavo R&D v podjetjih malih odprtih ekonomij, kot je Hrvaška. Na osnovi spoznanj o njihovem delovanju nato opredelimo tudi osnovne značilnosti globalnih ekonomskih vplivov na tranzicijske ekonomije. Two important trends motivate this paper. One is the increasing role that universities play in world in supporting the technological infrastructure, and the other is that it’s now possible to think that productive part of SME generating economic growth not only in developed countries but also in countries in transition. Before discussing these trends, basic concept must be defined, so as to determine the scope of this paper: What is SME? What is the role of University? What is the role of SMEs in building knowledge-based economies? What models of collaborations are used by different countries to develop knowledge-based economies? Collaboration has become a catchword for a number of political, social, environmental and economic trends that are supposed to present challenges on a world - wide scale. This renewed recognition of the importance of “ knowledge and network” as we argue in section 2. In the context of the small enterprise, the managers needs to not only learn new skills and knowledge but also to synthesize the academic, professional knowledge and adapt their behavior in order to effectively apply these skills. In next section we turn to some economic facts by analyzing R&D in small open economy such as the Croatia. And we try to answer the questions: What are economic impacts on transitions economies? We end with some concluding remarks. 9 Knowledge source Transferred kinds of knowledge MNC Tacit-codified Fundamental-Applied Knowledge receivers Firms in Transition/Emerging economies Exhibit 1. Knowledge transfer process between MNC and firms in Transition/Emerging economies 10