Smart Story: Selecting and Developing Smart Specialisation Projects in the Warmia and Masuria Region
The challenge of enhancing innovation activities in the Warmia and Masuria Region
Located in the north-eastern part of Poland, the Warmia and Masuria Region (Warminsko-Mazurskie Voivodeship) is characterised by scarce innovation resource. This is why supporting entrepreneurs in this direction is one of the biggest challenges. The region has a long tradition related to the production of food and furniture, as well as in economic areas related to water, including tourism.
The Smart specialisation priorities were defined for the first time by the regional board on the 25th of June 2013, as part of the regional strategy for the socio-economic development for the 2013-2025 period. They are the result of wide public consultations, in cooperation with the Regional Steering Committee for the Regional Innovation Strategy, and are based on analytical documents. The following functional areas were specified: water economics, high-quality food, as well as wood and furniture.
Water economy - this specialisation draws on the largest water resource surface in Poland, around which tourism has developed, as well as a number of activities that also have great innovation potential. The Warmia and Masuria Region is renowned for the production of yachts and boats, as well as services related to this industry. The development of this specialisation area meets the needs of environmental protection, in which the region wants to gain international recognition.
High quality food - With one of the highest productivity indicators in Poland, the region boasts of a strong agriculture sector. On the one hand, it has developed a solid scientific and research base to support the food production together with the University of Warmia and Masuria and the Institute of Animal Reproduction and Food Research of the Polish Science Academy. On the other hand, it is currently achieving significant successful international collaborations with the involvement of companies and R&D institutions in Horizon 2020 and EIT Food international projects. This specialisation relies on the agri-food industry and the dynamic development of local agriculture and traditional food processing, based on regional raw materials and short sales chains, as well as food production with designed functions. It responds to consumer needs and the quest to develop a healthy lifestyle.
Timber and furniture - this specialisation is also strongly entrenched in the tradition of the region; the furniture sector and the extensive use of wood were developed even before the 1989 transformation. The region has significant competence in the supply of raw materials and semi-products, but above all, in the supply of final products by local factories. An important element for building this specialisation area is related to the consolidation of design services and enhancing the region's brand.
What is extremely important is that the Strategy indicates not only the main areas of smart specialisation, but also the horizontal areas influencing the development of these specialisations, i.e. security, ICT, financing, logistics as well as fairs and promotion:
Developing horizontal policy instruments that foster Smart Specialisation priority areas
The Regional Policy Department of the Marshal's Office of Warmia and Masuria (Warminsko-Masurskie Voivodeship) is responsible for identifying and monitoring the three smart specialisation priority domains. The department is also leading the Entrepreneurial Discovery Process and designs supportive tools for specialisation under the Regional Operational Programme. The tools include among others, infrastructure support for R&D institutions, business environment institutions and companies, support to companies designing and implementing innovation business models as well as measures for international expansion. An additional advisory body is the Regional Steering Committee for Regional Innovation Strategy consisting mainly of business, education, administrative, financial institutions.
The identification of smart specialisations has indicated the priority areas of interest of regional authorities for innovation and entrepreneurship policy, and thus set the directions for investing EU funds in 2014-2020. The identified needs, challenges and opportunities were reflected in the Regional Operational Programme for 2014-2020 - the main instrument for implementing the Strategy of socio-economic development. Thematic Objective 1 (TO1) entirely focuses on the development of smart specialisation areas, while the preference for projects that foster their development are also used for other thematic objectives, in particular Thematic Objective 3 (TO3).
While entrepreneurs from the region actively participate in the announced calls, in particular under TO3, the R&D activities as part of TO1 turned out to be much more difficult for regional companies. Strict limitation of R&D investment support to smart specialisations limits the possibility of other industries, while all R&D investments are significant in a region that has such low innovation rates. Therefore, it is crucial to understand, that the support is aimed to the development of smart specialisation priority areas along all the value chains, irrespective of the branch in which the company is active.
From the beginning of the Regional Operational Programme (ROP), it was assumed that the support would depend on the impact of a project on S3 development and not on the field of activity on which the beneficiary operates outside of the project. The addition of horizontal smart specialisation areas also favours this approach. Impact on the development of at least one smart specialisation is understood as fulfilling at least two of the following conditions:
- impact on eliminating threats and / or impact on using the opportunities identified in the SWOT analysis for a given smart specialisation area
- impact on enhancing strengths and / or eliminating weaknesses identified in the SWOT analysis for a given smart specialisation area
- diffusion of project results to more than one entity operating in the area of a given smart specialisation
- creating export opportunities within a given specialisation and / or generating potential increase in cooperation in European value chains
- impact on creating cooperation between the scientific and business community, business environment, administration within at least one specialisation area, as a result of project implementation
A diagnostic document was developed for each specialisation area to assess their potential in the area of a given S3, including a SWOT analysis. Beneficiaries submitted an application in order to justify the impact of the project in relation with the specialisation area, comparing the scope and objectives of the planned undertaking with the report prepared for a given smart specialisation area. This criterion allows to support not only entrepreneurs’ projects offering their products / services in a given specialisation area, but also products / services that can support the development of these specialisations. For example, in the field of "High Quality Food" not only producers of food or machinery for the food industry can receive funding, but also IT companies developing ICT technologies supporting production processes.
The effect of these actions has been the high activity of entrepreneurs in calls under TO3. In addition, more than 90% of supported projects were developed under the 3 smart specialisation priority areas of the region.
Developing the Incubation of Smart Specialisation projects
It was extremely important to increase interest in R&D projects. Designing of such projects is particularly difficult for SMEs, which is why, in 2019, the regional authority implemented the incubation of smart specialisation projects, that could be co-financed as part of Warmia and Masuria’s Regional Operational Programme for the 2014-2020 period. The incubation was divided into two main stages. In the first stage, workshop meetings with entrepreneurs were organized, during which experts together with participants analysed the possibilities of applying for funds for their project, discussing, among others, content of the ROP and selection criteria as well as initial ideas for the preparation of project fiches. In the second stage, individual consultancy services with expert support were provided to develop the project concepts and discuss the specific needs of the potential beneficiaries, which led to the development of project fiches. Experts offered substantive assistance in the preparation of the application, including the definition of the beneficiary's needs, project goals, main activities, indicators, overall budget, intellectual property issues, and technological aspects of R&D infrastructure in the context of smart specialisation. This stage aimed at consulting and clarifying the possible doubts of potential applicants. The role of the experts was not, therefore, to fill in the application form, but to provide advisory support in the formulation of the project. In total, about 70 SMEs took part in the project incubation process.
The main result of implementing Smart Specialisation policy is the mobilisation of financial capital and stakeholders’ capacities for the chosen smart specialisation areas. This approach has enabled raising awareness of the importance of economic policy at both EU and regional level for companies and institutions. As a result, regional stakeholders are willing to be more active and involved in the process of policy making, notably through the entrepreneurial discovery process. Without their involvement, it would be difficult to shape the support according to their needs.
In February 2020, Warmia and Masuria has updated its development strategy, and decided to continue the economic development policy based on the concept of smart specialisation whilst opening the path to identify further potential areas of regional competitive advantage. The process of seeking new specialisation areas will be based on a bottom-up approach, in which the initiative remains with the stakeholders. Their role in the process will be to prepare a diagnosis and development programme for the selected sectors. Any type of entity can submit a proposal for the new regional smart specialisation of the Warmia and Masuria Region, as long as a sufficiently large group of stakeholders (at least 20, including a minimum of 15 SMEs from the region and at least one R&D institution) is involved in developing the proposal.
Quote: “Innovation is the most important source of providing external development impulses to the region, so the challenge is to participate in global competition in this field”
 According to the report by the Regional Innovation Scoreboard (2019), the Warmia and Masuria Region is one of the "modest innovators" and ranks 228 among 238 EU regions studied. According to data from the Central Statistical Office of Poland at the end of 2017, capital expenditure of enterprises amounted to PLN 2,414 with the national average of PLN 4,141, the region was ranked 14th out of 16 in the country. Expenditures on R&D per capita amounted to PLN 185, which also placed the region on the 14th position in the country (with an average of PLN 536). In 2016, total expenditure on R&D amounted to 0.33% of GDP (13th position in the country). The region took the 9th place in the country in terms of expenditure on innovations related to R&D works as a share of total sales revenues.