Cooperation between established companies and digital startups often triggers innovation

One in three companies in the information industry and one in five in the manufacturing sector are currently collaborating with digital startups or have done so in the past. 80% of these companies achieve at least part of the objectives they set out to meet by engaging in this cooperation. This is the finding of a representative survey of companies by ZEW – Leibniz Center for European Economic Research in Mannheim. ZEW surveyed more than 1,200 companies in the information and manufacturing sectors on behalf of the Federal Ministry for Economic Affairs and Climate Action.

Dr Anna Christmann, the ministry’s Commissioner for the Digital Industry and Startups, said: “The Economic Affairs Ministry’s Digital Hub Initiative is an important lever to promote the networking of suitable partners. The twelve digital hubs have a host of specific programmes to improve cooperation between established companies and startups. Through the Federal Government's Startup Strategy we have set out to further expand and deepen the services offered by the hubs, in order to achieve even more successful cooperation. The strategy also aims to strengthen and fund young innovative companies which are aiming to expand. For example, startups are to receive unbureaucratic and quick access to funding and financing.

“The combination of market experience and financial strength of established companies with the agility and technological know-how of digital startups holds a variety of potential, but also poses some challenges,” says ZEW economist Dr Daniel Erdsiek, co-author of the study. Our study examines scale, motives and obstacles of cooperation between established companies and digital start-ups.”

Around 60% of the cooperating companies from the information and manufacturing sectors were able to improve their products or services or create something new through cooperation. More than half of the cooperating companies in the information industry were also able to access technological knowledge from the startups.

However, the study also shows that the cooperation between established companies and startups doesn’t happen automatically. For example, around 60% of the companies say they don’t have suitable projects for cooperation. Also, around half of the companies surveyed cast doubt on the added value of such cooperation, or are unsure about the maturity, reliability or likely survival of the startups. The main difficulty is to identify suitable startups to work together with.

“In order to further encourage the innovation potential that cooperation between established companies and digital startups can offer, policymakers can improve available information on possibilities for cooperation and support companies in their search for a suitable cooperation partner, for example with networking events,” recommends Professor Dr Irene Bertschek, head of the ZEW Research Unit “Digital Economy” and co-author of the study.

The study on cooperation with digital startups can be downloaded (in German) here. It forms part of a comprehensive research mandate entitled “Measuring the degree of digitalisation in the German economy”.”