COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (recast) and Proposal for a Decision of the European Parliament and of the Council on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe
Date: 2019-08-01
Institutions: Directorate-General for Education, Youth, Sport and Culture, European Commission
Subjects: European Institute of Innovation and Technology, higher education, innovation, operation of the Institutions, research and development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 1.8.2019  SWD(2019) 330 final/2  CORRIGENDUM  This document corrects SWD(2019) 330  final of 11.7.2019. This version corrects the omission of the annexes to the Impact Assessment. The text shall read as follows: COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (recast)  and Proposal for a Decision of the European Parliament and of the Council  on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe     {COM(2019) 330 final} - {COM(2019) 331 final} - {SEC(2019) 275 final} - {SWD(2019) 331 final}  
 
 
TABLE OF CONTENTS 

1. 

INTRODUCTION: POLICY AND LEGAL CONTEXT ................................................ 5 
Scope of the impact assessment ......................................................................... 5 
Legal and operational context of the EIT and the KICs .................................. 5 
The EIT as part of the Horizon Europe Programme ....................................... 8 

1.1. 
1.2. 
1.3. 
1.4.  What decisions on the future of the EIT have already been taken in the 

1.5. 

Horizon Europe proposal and what are their implications?............................ 9 
The need to act ................................................................................................. 10 
1.5.1.  The need to amend the EIT Regulation ...................................................... 10 
1.5.2.  The need for a new Strategic Innovation Agenda of the EIT .................... 10 
1.5.3.  Lessons learned ........................................................................................... 11 

2. 

3. 

4. 

5. 

PROBLEM DEFINITION ...................................................................................... 13 
Suboptimal funding model .............................................................................. 13 
Limited impact of EIT’s education activities .................................................. 15 
Limited impact of EIT’s regional outreach .................................................... 17 
Technical issues ............................................................................................... 18 
Summary of problems and technical issues to be addressed: ........................ 21 

WHY SHOULD THE EU ACT? .............................................................................. 22 
Legal basis ........................................................................................................ 22 
Subsidiarity and proportionality: need for, and added value of EU action .. 22 

2.1. 
2.2. 
2.3. 
2.4. 
2.5. 

3.1. 
3.2. 

OBJECTIVES: WHAT IS TO BE ACHIEVED? ........................................................ 23 

HOW OPTIONS ADDRESS PROBLEMS AND TECHNICAL ISSUES ......................... 24 
5.1.  Discussion of technical issues ......................................................................... 24 
5.2.  Discussion of priority fields ............................................................................. 26 
5.3.  Discussion of funding model ........................................................................... 28 
5.3.1.  Continuation of current funding model (discarded) .................................. 29 
5.3.2.  Introduction of a 50/50 co-funding rate (discarded) .................................. 29 
5.3.3.  Introduction of a gradually decreasing EIT co-funding rate (retained) ... 30 
5.4.  Description of policy options ........................................................................... 34 
5.4.1.  Option 1: Baseline ....................................................................................... 34 
5.4.2.  Option 2 ........................................................................................................ 35 
5.4.3.  Option 3 ........................................................................................................ 38 
5.4.4.  Inputs of options .......................................................................................... 40 
5.4.5.  Key features of options ................................................................................ 40 

6. 

IMPACT OF POLICY OPTIONS ............................................................................ 41 
6.1.  Option 1: Baseline ........................................................................................... 41 
6.2.  Option 2 ............................................................................................................ 43 
6.3.  Option 3 ............................................................................................................ 46 
6.4.  Outputs of options ............................................................................................ 50 

7. 

HOW DO THE OPTIONS COMPARE? .................................................................. 51 
7.1.  Risks associated with policy options ............................................................... 53 

8. 

9. 

8.1. 

PREFERRED OPTION ......................................................................................... 55 
Implications of the preferred Option for the EIT Regulation and the SIA ... 56 

HOW WILL IMPACT BE MONITORED AND EVALUATED? .................................. 57 

10. 

ANNEXES .......................................................................................................... 61 
10.1.  Annex 1: Procedural information ................................................................... 61 

1 

 
10.2.  Annex 2a: Stakeholder consultation activities ............................................... 67 
10.3.  Annex 2b: Public consultation - Synopsis Report .......................................... 72 
10.4.  Annex 3: Who is affected and how? ............................................................... 99 
10.5.  Annex 4A: Key achievements of the EIT ...................................................... 102 
10.6.  Annex 4B: key achievements and challenges as outlined in the EIT interim 

evaluation: ..................................................................................................... 103 

10.7.  Annex 5: Discarded policy options regarding the EIT under Horizon Europe

 ........................................................................................................................ 107 
10.8.  Annex 6: Selection criteria for establishing KICs ........................................ 108 
10.9.  Annex 7: Social network analysis of KICs’ partnerships ............................ 111 
10.10.  Annex 8:  Impact Indicator Framework ....................................................... 118 
10.11.  Annex 9: Analysis of possible themes for future KICs ................................ 132 
10.12.  Annex 10: Model-based Analysis on co-funding model for KICs ............... 159 
10.13.  Annex 11: Overview of KIC co-funding rates in 2014-2017 ....................... 185 

2 

 
 
 
Glossary 

Term or acronym 

Meaning or definition 

CLC 

DG EAC 

Co-Location  Centre,  a geographical  hub  for 
practical integration of the knowledge triangle 

the 

Directorate-General  Education,  Youth,  Sport  and 
Culture,  a  Directorate  General  of  the  European 
Commission 

DG GROW 

Directorate-General 
Entrepreneurship and SMEs 

Internal  Market, 

Industry, 

DG RTD 

Directorate-General Research and Innovation 

ECA 

EFSI 

EIC 

RIS 

EIT 

ERASMUS+ 

ERDF 

ESIF 

EU 

ExCo 

GB 

European Court of Auditors 

European Fund for Strategic Investments 

European Innovation Council 

EIT Regional Innovation Scheme 

European Institute of Innovation and Technology 

The  EU  programme  supporting  education,  training, 
youth  and  sport  in  Europe  during  the  2014-2020 
period 

European Regional Development Fund 

European Structural and Investment Fund 

European Union 

Executive Committee of the EIT Governing Board 

Governing Board of the EIT 

Horizon 2020 

Horizon  2020  –  the  EU’s  framework  programme  for 
research and innovation 2014-2020 

HEI 

Higher Education Institution 

3 

 
 
 
HEInnovate 

Joint  initiative  of  the  European  Commission  and  the 
OECD  supporting  HEIs  wishing  to  increase  their 
innovative and entrepreneurial potential  

HLG 

JRC 

KAVA 

KCA 

KIC 

KPI 

KTI 

MFF 

OECD 

OPC 

R&I 

R&D 

SIA 

SME 

SPD 

SWD 

TFEU 

TRL 

High Level Group 

Joint  Research  Centre,  a  Directorate  General  of  the 
European Commission 

KIC Added Value Activities 

KIC Complementary Activities 

Knowledge and Innovation Community 

Key Performance Indicator 

Knowledge  Triangle  Integration  -  close,  effective 
links between education, research, and innovation 

Multiannual Financial Framework 

Organisation 
Development 

for  Economic  Co-operation 

and 

Open Public Consultation 

Research and Innovation  

Research and Development 

Strategic Innovation Agenda 

Small and Medium-sized Enterprise 

Single Programming Document 

Staff Working Document 

Treaty on the Functioning of the European Union 

Technology Readiness Level - a method of estimating 
the maturity of technology  

4 

 
 
 
 
 
1.  INTRODUCTION: POLICY AND LEGAL CONTEXT 

1.1. Scope of the impact assessment 

This impact assessment accompanies the Commission proposals for an amendment of the 
European Institute of Innovation and Technology (EIT) Regulation1 through a recast2 and 
for a new Strategic Innovation Agenda (SIA) for the EIT for the period 2021-2027. These 
initiatives  aim  to  align  the  EIT  legislative  framework  with  the  Commission  proposal 
establishing  the  Horizon  Europe  Programme3,  the  next  Union  framework  programme 
supporting research and innovation, to define the new priority fields of the EIT  as well 
as its financial needs, and to improve the functioning of the EIT taking into account the 
lessons learned from the past years.   

The  Impact  Assessment  accompanying  the  proposal  for  Horizon  Europe4  provided  a 
clear, evidence-based blueprint for how the programme will help to consolidate European 
leadership in research and innovation to deliver scientific, economic and societal impact. 
It described the key objectives and rationale of the programme including a stronger focus 
on the added value of its parts.  

The Horizon Europe proposal confirmed the importance and contribution of the EIT and 
its  Knowledge  and  Innovation  Communities  (KICs)  in  delivering  the  EU's  strategic 
priorities in the area of innovation. It proposes the EIT budget for 2021-2027, its scope, 
added-value  and  main  areas  of  activity,  while  pointing  to  a  revised  role  of  the  EIT  in 
order to reinforce its contribution to Horizon Europe’s objectives. However, the Horizon 
Europe  proposal  itself  does  not  provide  the  legal  basis  for  continuing  EIT  operations 
beyond 2020, which would continue to be laid down in the EIT Regulation.     

This impact assessment does not cover the decisions already taken concerning the EIT in 
the Horizon Europe proposal (see section 1.3 and 1.4), since these were assessed as part 
of  the  Horizon  Europe  impact  assessment.  Instead,  this  impact  assessment  focusses  on 
key problems and issues that have been identified as hampering the effectiveness of the 
EIT based on lessons learned from the EIT interim evaluation and other  key sources of 
evidence.  

1.2. Legal and operational context of the EIT and the KICs 

The European Institute of Innovation and Technology  

The  EIT’s  overall  mission  is  to  boost  sustainable  European  economic  growth  and 
competitiveness  by  reinforcing  the  innovation  capacity  of  the  Member  States  and  the 
Union. Set up in 2008, and part of Horizon 2020 since 2014, the EIT seeks to integrate 
the  knowledge  triangle  of  higher  education,  research  and  innovation,  reinforce  the 
Union's  innovation  capacity,  and  address  societal  challenges.  The  EIT  achieves  these 
goals primarily through its Knowledge and Innovation Communities (KICs): large-scale 
European  partnerships  (with  ~50-400  partners)  focussing  on  global  societal  challenges. 

1 Regulation (EC) No 294/2008 of the European Parliament and of the Council of 11 March 2008 establishing the European Institute 
of Innovation and Technology (OJ L 97, 9.4.2008, p. 1). Amended by Regulation (EU) No 1292/2013 of the European Parliament and 
of the Council of 11 December 2013 (OJ L 347, 11.12.2013, p. 174). 
2  Interinstitutional  Agreement  of  28  November  2001  on  a  more  structured  use  of  the  recasting  technique  for  legal  acts.  OJ  C  77, 
28.3.2002, p. 1. 
3 Proposal for a Regulation of the European Parliament and of the Council establishing Horizon Europe – the Framework Programme 
for Research and Innovation, laying down its rules for participation and dissemination. COM(2018) 435 final.  
4 SWD(2018) 307 final. 

5 

 
 
 
 
 
 
 
 
                                                           
The  EIT  provides  grants  to  the  KICs,  monitors  their  activities,  supports  cross-KIC 
collaboration and disseminates results and good practice. The EIT's Governing Board is 
responsible  for  the  strategic  orientation  of  the  EIT  and  of  the  KICs  and  takes  the 
decisions on the designation of the KICs and their funding. 

The  Horizon  Europe  Impact  Assessment  highlighted  the  role  of  the  EIT  in  addressing 
specific structural weaknesses in the EU’s innovation capacity which are common to EU 
Member  States.  They  include:  the  under-utilisation  of  existing  research  strengths  to 
create economic or social value; the lack of research results brought to the market; low 
levels  of  entrepreneurial  activity  and  mind-set;  low  leverage  of  private  investment  in 
research  and  development;  and  an  excessive  number  of  barriers  to  collaboration  within 
the knowledge triangle of higher education, research, business and entrepreneurship on a 
European level. The EIT addresses these challenges through the KICs. 

The  EIT's  objectives,  rationale,  EU  added  value,  budget,  broad  lines  of  activity  and 
performance indicators are currently defined in the Horizon 2020 Regulation5. The EIT 
Regulation  sets  out,  in  parallel,  the  mission  and  tasks  for  the  EIT  along  with  the 
framework for its functioning. The strategic, long-term priority fields and financial needs 
of the EIT for each seven-year period are laid down in the Strategic Innovation Agenda 
(SIA) of the EIT6. The SIA includes the detailed operating modalities of the EIT such as 
the selection and designation of the KICs and their performance monitoring, based on the 
framework set out in the EIT Regulation. The graph below illustrates the key aspects of 
the current regulatory environment. 

•General and specific objectives of the EIT 
•Broad lines of activity 
•Budget 
•Performance indicators 

Horizon 2020 

•Mission and tasks of the EIT 
•Framework for its functioning 

EIT 
Regulation 

•Strategic direction 
•Activities and implementing provisions 
•Priority fields of the EIT 
•Financial needs 

SIA 

Figure 1: Current regulatory context of EIT, own illustration 

5 Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 - 
the Framework Programme for Research and Innovation (2014-2020). OJ L 347, 20.12.2013, p. 104. 
6  Decision  No  1312/2013/EU  of  the  European  Parliament  and  of  the  Council  of  11  December  2013  on  the  Strategic  Innovation 
Agenda of the European Institute of Innovation and Technology (EIT): the contribution of the EIT to a more innovative Europe. OJ L 
347, 20.12.2013, p. 892. 

6 

 
 
 
 
 
 
 
 
 
                                                           
Knowledge and Innovation Communities  

The  KICs  are  autonomous  partnerships  of  businesses,  research  institutes  and  higher 
education  institutions  (HEIs).  The  KICs  are  set  up  as  legal  entities  under  respective 
Member States’ laws, appoint a Chief Executive Officer to run their operations and have 
their own governance systems. The relations between the EIT and KICs are laid down in 
contractual  agreements,  which  set  out  their  respective  rights  and  obligations,  ensure  an 
adequate level of coordination and outline the mechanism for monitoring and evaluating 
KIC activities and outcomes. The KICs report on their activities on a yearly basis to the 
EIT. Specifically, the KICs submit their annual Business Plans to the EIT as the basis for 
the award of the EIT grant. 

Since  2010,  eight  KICs  have  been  set  up  or  designated  to  address  specific  societal 
challenges. According to the EIT Regulation (Article 7b) and the financial sustainability 
principles adopted by the EIT Governing Board7, the duration of EIT grant for each KIC 
is expected to last a maximum of 15 years after which the KIC should be able to pursue 
its  activities  without  EIT  funding.  The  areas  of  intervention  of  the  current  KICs  are 
indicated below, together with their missions.  

Figure 2: Overview of current KICs, their missions and number of partners; own illustration  

7https://eit.europa.eu/sites/default/files/EIT%20GB%20Decision%20on%20principles%20on%20KIC%20Financial%20Substainabili
ty.pdf 

7 

 
 
 
 
 
 
 
 
                                                           
Each  KIC  aims  at  reinforcing  innovation  capacities  by  running  a  balanced  portfolio  of 
activities in three areas:  

1.  Innovation  support  projects:  aimed  at  supporting  and  developing  new 
innovative products, services and solutions that address societal challenges in the 
KICs areas of activity. They may include the support to demonstrators, pilots or 
proofs of concept.   

2.  Education:  these  include  innovative  educational  and  training  programmes 
offered  by  each  KIC  in  the  form  of  post-graduate  (MSc/PhD)  programmes, 
executive/ professional development courses, lifelong learning modules, summer 
schools,  etc.  The  EIT  Label  ensures  quality  of  the  KIC  education  programmes 
and recognition within and beyond the EIT Community.   

3.  Business creation and support activities: these include start-up and accelerator 
schemes  to  help  entrepreneurs  and  potential  entrepreneurs  translate  their  ideas 
into  successful  business.  The  focus  is  primarily  on  access  to  market,  access  to 
finance, and access to networks, mentoring & coaching.   

KICs  also  engage in  a  range of outreach, communication, dissemination and horizontal 
cross-sectoral activities. Since 2014, the EIT has developed the EIT Regional Innovation 
Scheme  (RIS)  as  part  of  its  outreach  strategy  in  regions  in  Europe  that  are  modest  or 
moderate innovators according to the European Innovation Scoreboard8.  

1.3. The EIT as part of the Horizon Europe Programme 

The Horizon Europe impact assessment emphasises that the EIT should be more strongly 
integrated within Horizon Europe than is currently the case in Horizon 2020 and greater 
synergies  with  other  components  of  the  programme  should  be  created.  Within  the 
Commission’s  proposal  for  Horizon  Europe  the  EIT  activities  thus  become  part  of  the 
Pillar  III  “Open  Innovation”,  which  focuses  primarily  on  supporting  breakthrough  and 
market-creating innovation. The EIT and the KICs are also expected to play a key role in 
addressing global challenges and European industrial competitiveness - and achieving the 
objectives  of  future  R&I  missions  -  (Pillar  II  “Global  Challenges  and  Industrial 
Competitiveness”) while also contributing to excellent science  (Pillar I).9  

A  novelty  of  the  Horizon  Europe  proposal  is  the  introduction  of  multiannual  Strategic 
Planning10  for  ensuring  the  implementation  of  the  programme-level  objectives    in  an 
integrated manner based on wide consultations about priorities and the suitable types of 
action  and  forms  of  implementation,  in  particular  European  research  and  innovation 
partnerships. These European Partnerships are initiatives where the Union, together with 
private and/or public partners (such as industry, public bodies or foundations) commit to 
support  jointly  the  development  and  implementation  of  a  programme  of  research  and 
innovation activities. Horizon Europe promotes a more strategic, ambitious and impact-
oriented approach to  these partnerships, ensuring that they can effectively  contribute to 
the Union’s policies and priorities11.  

8 http://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards_en 
9 e.g. it is expected that the EIT  will  contribute to the climate-related expenditure target  which should exceed 35 % of the overall 
Horizon 2020 budget 
10 Annex I, COM(2018) 436 final, pp. 1-2. 
11  European  Partnerships  will  be  designed  on  the  basis  of  key  principles  of  Union  added  value,  transparency,  openness,  impact, 
leverage  effect,  long-term  commitment  of  involved  parties,  flexibility,  coherence  and  complementarity  with  Union,  national  and 
international initiatives. The criteria for the selection, implementation, monitoring, evaluation and phasing out of Union  funding for 
European partnerships are set out in Annex III of the proposed Regulation for Horizon Europe. 

8 

 
 
 
 
 
                                                           
Under  the  Horizon  Europe  proposal,  the  EIT  KICs  are  considered  as  institutionalised 
European  Partnerships.  The  alignment  with  the  Horizon  Europe  framework  will  be 
supported    through  the  multiannual  Strategic  Planning,  which  will  in  particular 
incorporate inter-disciplinary and cross-sectoral perspectives and ensure that all activities 
under Horizon Europe are coordinated in an effective manner. In particular, the Horizon 
Europe proposal emphasises that “proposals for future EIT KICs in compliance with the 
EIT Regulation will be indicated in the EIT Strategic Innovation Agenda (SIA) and will 
take into account the outcome of the Strategic Planning process and the priorities of the 
Global Challenges and Industrial Competitiveness pillar”12. 

To  deliver  on  Horizon  Europe  objectives  close  cooperation  with,  in  particular  the 
European  Innovation  Council  (EIC),  will  also  be  important  to  ensure  synergies  and 
impact.  The  EIT  and  the  EIC  are  complementary.  The  EIC  will  identify,  develop  and 
deploy  breakthrough  innovations,  and  support  the  rapid  scale-up  of  innovative  firms 
carrying out market-creating innovations at the European and international levels. On the 
other  hand,  the  EIT  will  develop  innovation  capacity  through  knowledge  triangle 
integration  and  support  to  innovation  ecosystems.  It  will  contribute  to  Horizon  Europe 
with  its  distinctive  focus  on  human  capital,  entrepreneurial  education  and  support  to 
business creation and development in specific thematic areas. 

1.4. What  decisions  on  the  future  of  the  EIT  have  already  been  taken  in  the 

Horizon Europe proposal and what are their implications? 

A number of policy choices relating to the future of the EIT have already been made by 
the Commission through the adoption of the Horizon Europe proposal. Specifically, the 
Horizon Europe proposal  sets  out  the budget  for the EIT (EUR 3 billion for the period 
2021-202713), its rationale, the areas of intervention which are the basis of EIT’s general 
objectives,  and  its  broad  lines  of  activity14.  In  particular,  the  general  objectives  of  the 
EIT are reflected in its areas of intervention defined by the Horizon Europe proposal:  

(1) Strengthening sustainable innovation ecosystems across Europe;  
(2) Fostering  the  development  of  entrepreneurial  and  innovation  skills  in  a  lifelong 
learning  perspective  and  support  the  entrepreneurial  transformation  of  EU 
universities; 

(3) Bring new solutions to global societal challenges to the market; 

The  Horizon  Europe  proposal  also  defines  the  criteria  for  selection,  implementation, 
monitoring, evaluation and phasing-out of European Partnerships (including EIT KICs). 
It  sets  out  the  programme’s  rules  for  participation  and  dissemination,  as  well  as 
monitoring  and  evaluation  requirements,  which  will  apply  to  the  EIT,  in  addition  to 
relevant provisions of  the EIT Regulation 15. 

The Horizon Europe programme, however, does not specify the concrete actions nor the 
means  and  instruments  to  achieve  the  EIT’s  objectives.  In  addition,  it  does  not  specify 
the expected results and resources that are needed to  implement  the EIT  key  actions to 

12 Explanatory memorandum, COM(2018) 435 final, p. 15. 
13 Article 9, COM(2018) 435 final, p. 32. 
14 Annex I, COM(2018) 435 final, p. 3 and Annex I, COM(2018)436 final, pp. 70-72. 
15 In particular, with regard to entities eligible for participation, entities eligible for funding, award criteria, funding rates,  indirect 
costs, eligible costs. 

9 

 
 
 
 
 
 
 
 
                                                           
deliver  on  Horizon  Europe  objectives  and  expected  scientific,  economic  and  societal 
impacts.  

Indeed, the Horizon Europe proposal and its impact assessment recognise the role of the 
EIT  Regulation  in  setting  out  the  scope  of  the  EIT’s  functioning  and  in  governing  the 
selection and priority-setting process of the KICs taking into account the outcome of the 
Strategic  Planning  process  and  Horizon  Europe  criteria  for  partnerships.  They  also 
recognise the role of the Strategic Innovation Agenda in setting the priority fields of the 
EIT and KICs for the 7-year programming period.  

1.5. The need to act  

1.5.1.  The need to amend the EIT Regulation  

The  EIT  Regulation,  adopted  in  2008,  establishes  the  EIT.  It  sets  out  the  mission  and 
tasks of the EIT and the framework for its functioning. The Regulation was amended in 
2013 in order, inter alia, to align it with Horizon 2020.16  

The EIT Regulation is not in principle time bound, contrary to the SIA. However, given 
that a number of provisions in the EIT Regulation make a direct reference to the current 
Horizon 2020 programme established for the period 2014-2020, these provisions need to 
be  amended,  to  make  them  compatible  with  the  next  Union  framework  programmes 
supporting research and innovation.   

1.5.2.  The need for a new Strategic Innovation Agenda of the EIT 

In line with Article 17 of the EIT Regulation a new Strategic Innovation Agenda (SIA) 
is to be adopted for each 7-year programming period (MFF). 

The SIA lays down the strategic, long-term priority fields and financial needs for the EIT 
for  the  period  covered  by  the  MFF.  It  also  includes  an  overview  of  the  planned  higher 
education, research and innovation activities and the respective budget breakdown. The 
current SIA is limited in time and covers only the period 2014-2020.  

The new SIA will put forward the  strategic orientations, financial needs and sources of 
funding of the EIT for the next MFF. Furthermore, the SIA will define the priority fields 
and  time  schedule  for  the  selection  and  designation  of  KICs  for  the  next  programming 
period.  It  will  include  an  overview  of  the  planned  higher  education,  research  and 
innovation  activities  and  the  budget  breakdown  over  the  period.  The  SIA  is  also  a 
legislative tool to align the priority setting of the EIT with the Horizon Europe strategic 
programming. 

16 Regulation (EC) No 294/2008 of the European Parliament and of the Council of 11 March 2008 establishing the European Institute 
of Innovation and Technology (OJ L 97, 9.4.2008, p. 1). Amended by Regulation (EU) No 1292/2013 of the European Parliament and 
of the Council of 11 December 2013 (OJ L 347, 11.12.2013, p. 174). 
10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Timing  and  coherence  of  the  Strategic  Innovation  Agenda  and  Strategic  Planning 
Process 

The new Strategic Innovation Agenda of the EIT for the period 2021-2027 needs to be in 
place before 1 January 202117. The SIA will be adopted by the European Parliament and 
the Council, in accordance with the ordinary legislative procedure. 18 

in  order 

to  ensure 

While the scope of the Strategic Planning process under Horizon Europe, its legal form 
and  overall  timing  are  to  be  decided  by  the  co-legislators,  the  preparatory  process 
supporting  the  strategic  planning  has  already  started.  The  Commission  is  discussing 
currently  possible  partnerships 
the  highest  coherence  and 
complementarity  at  service,  cabinet  and  political  level  in  the  form  of  the  Project  Team 
Meeting on Competitiveness and Innovation.  In this context, it clearly emerged that the 
best  option  would  be  to  include  initially  one  priority  area/KIC  theme  in  the  new  SIA 
proposal for the programming period 2021-2027. Other priority areas/theme(s) for future 
KIC(s) within the said period would be proposed subsequently by the Commission taking 
into  account  the  outcome  of  the  multiannual  Strategic  Planning  process,  new  emerging 
priorities, and any other relevant developments. The SIA will outline the selection of the 
KICs taking into account the Strategic Planning process and the criteria for partnerships 
in  line  with  Horizon  Europe.  The  total  number  of  future  KICs  for  the  programming 
period will depend on the adopted EIT budget. 

This approach would be in line with the EIT Regulation and would avoid any delay in the 
preparation and launching the call of the  first new KIC in 2021. This would enable the 
EIT to  continue developing innovative solutions  addressing societal  challenges through 
new KICs and contributing to the attainment of the objectives of Horizon Europe through 
a new KIC starting from 2021.  

The  proposed  approach  for  the  adoption  of  the  SIA  would  therefore  ensure  (i)  the 
continued functioning of the EIT as from 1st January 2021, (ii) avoidance of unnecessary 
delay of the launch of any new KIC and (iii) addressing the need for the planning of new 
KICs to take account of the strategic planning process under Horizon Europe. 

1.5.3.  Lessons learned 

Given that the EIT Regulation needs to be revised to align it with the applicable  Union 
framework programme supporting research and innovation and that a new SIA needs to 
be proposed, it is appropriate to consider what other changes would be needed in order to 
improve  the  functioning  of  the  EIT  and  enable  it  to  fulfil  its  mission  and  objectives. 
These considerations should take account of a number of evaluations, audits reviews and 
reports on the EIT that have been carried out over the past few years.  

The  following  sections  describe  the  key  issues  and  technical  problems  that  have  been 
identified in these reports and assess the options for addressing these issues through the 
amendment of the EIT Regulation and the proposal for a new SIA. 

17 According to Art. 1 of the current SIA, it will expire at the end of 2020.  
18  Based  on  Art.  17(4)  of  the  EIT  Regulation,  which  provides  that  acting  on  a  proposal  from  the  Commission,  the  European 
Parliament and the Council shall adopt the SIA in accordance with Art. 173(3) of the TFEU.  

11 

 
 
 
 
 
 
 
 
 
 
 
 
                                                           
The  table  below  indicates  the  most  important  sources  of  evidence  for  this  impact 
assessment.    

Lessons learned  

 The Court of Auditors report of 201619 acknowledged the raison-d'être of the EIT 
but recommended a number of changes to the implementation model such as a revision 
of its funding model and changes to the EIT staff provisions in order to increase the 
overall effectiveness and achieve the expected impact of the EIT. 

 The EIT interim evaluation of 2017 and the related Commission Staff Working 
Document20 concluded that the EIT model remains valid. They highlighted the need for 
the EIT to improve in a number of operational areas and develop further synergies with 
other EU initiatives.   

 The High Level Group on the EIT of 201721 identified a clear need to strengthen 

the role of the EIT as a provider of shared services and expertise to the KICs. It 
recognised the distinctive role education plays in knowledge triangle integration and 
called for the EIT to strengthen it.  

Table 1: Key sources of evidence on EIT; own illustration 

19 European Court of Auditors (2016), Special Report on performance of the EIT (subsequently mentioned as ECA (2016), Special 
Report) 
20  C.  Wilkinson  and  al./ICF  (2017),  Evaluation  of  the  European  Institute  of  Innovation  and  Technology  (EIT)  (subsequently 
mentioned as ICF (2017), Evaluation), and  European Commission, Staff Working Document on the Interim Evaluation of the EIT, 
SWD (2017) 351 final (subsequently mentioned as SWD (2017) 351 final).  
21  The  High  Level  Group  was  established  by  Commissioner  Tibor  Navracsics  in  2016  to  review  the  EIT’s  workings  and  make 
recommendations that can help guide the European Commission and the EIT Governing Board.  High Level Group on the EIT (2016), 
The Future of the European Institute of Innovation and Technology (EIT). Strategic Issues and Perspectives (subsequently mentioned 
as High Level Group (2016), Future of the EIT).  

12 

 
 
 
 
                                                           
2.  PROBLEM DEFINITION 

This  chapter  presents  the  main  problems  and  further  technical  issues  driving  EIT 
intervention within the Horizon Europe framework. It presents only those problems and 
technical  issues  that need to  be addressed in  the next  programming period (2021-2027) 
through  legislative  changes  and  decisions.  These  adjustments  will  increase  the  EIT’s 
efficiency, effectiveness and overall internal and external coherence, in combination with 
operational  and  managerial  measures.  The  problems  and  issues  identified  below  stem 
primarily  from  the  EIT  evaluation,  the  Court  of  Auditors  report,  and  the  High-Level 
Group report, and include references to the findings of those documents.  

2.1. Suboptimal funding model  

The  EIT  provides  annual  grants  to  KICs  for  a  maximum  of  15  years.  The  KICs 
implement their knowledge triangle integration activities based on annual Business Plans 
which  are  implemented  by  the  KIC  partners.  The  KIC  activities  are  divided  into  two 
categories: 

a) activities funded up to 100 % by the EIT; and 
b) complementary activities which are not funded by the EIT. 

The distinction between these two types of activities determines the ceiling of the EIT’s 
contribution. According to the EIT Regulation, EIT funding may only cover a maximum 
of 25 % of a KIC’s overall costs (i.e. the sum of the costs of EIT-funded activities and 
non-EIT-funded activities - this complex model is set out in the Figure 3 below). 

Figure 3: EIT funding model, European Court of Auditors illustration  

13 

 
 
 
 
 
 
 
 
According  to  the  Court  of  Auditors  2016  report,  the  inclusion  of  “complementary 
activities”  in  the  funding  model  is  suboptimal  given  that  both  their  definition  and  their 
interpretation  are  rather  general  and  vague.22  This  creates  problems  in  applying  the 
eligibility  rules  among  partners  and  KICs.  The  criteria  for  the  designation  of 
complementary  activities,  i.e.  their  links  to  key  activities  and  their  proportionality,  are 
unclear, and thus, of little added value.23  

As the Court of Auditors observed, “the measuring and reporting of KIC complementary 
activities  are  not  essential  to  the  achievements  of  the  EIT’s  objectives”  as  many 
complementary activities are not additional in practical terms,24 i.e. they are not directly 
triggered by the EIT intervention, already exist or will happen anyway.   Therefore, the 
intended EIT financial leverage effect, i.e. ensuring that a substantial part of the overall 
KIC budget comes from non-EIT funding (such as membership fees, national or regional 
funding), is not applied in practice.25 In addition, the current funding modalities create a 
disproportionate administrative burden in terms of financial reporting for the KICs. The 
Court of Auditors implied in its report clearly the need to focus on EIT-funded activities 
and concluded that the EIT funding model was not effective and requested its change in 
order to improve it.26  

An  additional  important  aspect  of  the  EIT  funding  model  is  the  financial  sustainability 
objective:  KICs  should  gradually  reduce  their  dependency  from  EIT  funding  for  their 
further consolidation  and further expansion.  In accordance with  the EIT  Regulation  the 
EIT  grants  provided  to  KICs  should  normally  cease  after  a  maximum  of  15  years.  In 
order  to  support  this  objective,  the  EIT  has  adopted  principles27  obliging  each  KIC  to 
develop and implement a financial sustainability strategy and submit an annual progress 
report. However, the current  funding model does not  provide any specific incentives to 
KICs to gradually increase their levels of private funding. As a result, progress towards 
financial sustainability remains uneven amongst KICs (see Figure 4). 

22 ECA (2016), Special Report, pp. 15-20.  
23 An example used also by the European Court of Auditors is that KIC partners have reported as a KIC complementary activity the 
cost  of  non-EIT  students  attending  courses  in  which  EIT  students  also  participate.  However,  these  costs  are  not  additional  as  the 
courses were part of the standard educational programme of the university.  
24 Ibid., p. 24 
25 The overall level of co-funding of KAVA activities by KICs was 23% in 2016 and 20% in 2017.   
26 Ibid., pp. 15-20.  
27 Decision 4/2015 of the Governing Board on Principles of KICs financial sustainability.  

14 

 
 
 
 
 
                                                           
Development of co-funding rate   
(% of KICs contribution)  

40,0

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0,0

2014

2015

2016

2017

Climate KIC

Innoenergy

Digital

Health

Raw Materials

Food

AVERAGE

Figure 4: Co-funding attracted by KICs, 2017; own chart based on EIT data 

An additional challenge of the current funding model is the annual nature of the planning 
and preparation  cycle of the KIC  Business  Plans.28 As the Court of Auditors observed, 
the  current  annual  grant  process  is  at  odds  with  the  need  to  reflect  the  longer-term 
perspective of innovation activities.29 The annual grant process is also a major obstacle to 
planning  and  coordinating  multiannual  innovation  projects.  This  limits  the  potential  of 
the KICs and leads to a suboptimal selection of innovation activities, low engagement of 
some KIC partners and limited networking and interaction.30   

Questions  related  to  the  EIT  funding  were  also  part  of  an  Open  Public  Consultation 
(OPC)  which  was  launched  in  the  context  of  the  impact  assessment.  The  majority  of 
respondents31  supported  the  notion  that  KICs  need  a  robust  financial  sustainability 
strategy from the outset (64% of respondents) and that securing other public funding for 
the operations of KICs is necessary (60% of respondents). Furthermore, securing funding 
from  other  sources,  including  those  from  private  actors  was  the  most  popular  solution 
cited by respondents in an open-ended question regarding financial sustainability. 

2.2. Limited impact of EIT’s education activities  

Since its set-up, the EIT has supported innovative education and training programmes by 
linking  education,  research  and  business;  learning-by-doing  curricula;  entrepreneurship 
education;  and  international  and  cross-sectorial  mobility.  EIT  students  have  strong 
entrepreneurial competences and high employability rates, suggesting that their skills and 
education are both recognised and useful.32 In the last four years, 43 ventures and persons 

28 The KICs’ Business Plan contains the detailed description of the activities that the KIC and its partners will run in the course of the 
year and forms the basis on which the grant allocations are decided by the EIT Governing Board; (see details in Annex 5). 
29 ECA (2016), Special Report, pp. 26-30.  
30 Based on the network analysis of partnering within KICs in the Study to support the Impact Assessment (SQW, November 2018), 
Annex 7. 
31 See Annex 2B 
32  There  were  close  to  entrepreneurial  1200  EIT  Label  graduates  as  of  2017,  in  addition  to  EIT  students  engaged  in  other 
programmes. See EIT (2017), Our Impact, from 2010 to 2016, pp. 33-34 (eit.europa.eu/interact/bookshelf/eit-our-impact-2010-2016), 
and SWD (2017) 351 final, p.28.   

15 

 
 
 
 
 
 
 
 
                                                           
from  the  EIT  Community  have  been  featured  in  Forbes  Europe  30  under  30  lists.33  As 
highlighted  by  the  EIT  evaluation34,  there  are  benefits  to  EIT-supported  education 
activities  resulting  from:  knowledge  triangle  integration  and  the  integration  of  research 
results and innovative practices into the education offer; involvement of industry in the 
design and delivery of the programmes; and access to accelerator programmes.  

However, the EIT evaluation and the High Level Group report to the Commissioner also 
highlighted  that  the  impact  of  the  education  activities  of  the  EIT  remains  limited.  The 
evaluation referred to the low awareness of the EIT education brand35. The EIT labelled 
programmes  do  not  appear  to  have  sufficient  traction  to  create  market  demand. 
Moreover,  the  evaluation  found  that  links  “between  education  and  innovation-support 
activities  [are  underexploited],  and  will  require  further  efforts  in  the  coming  future.”36  
More  generally,  in  terms  of  overall  impact,  the  Commission  concluded  in  its  Staff 
Working Document on the EIT evaluation that “stronger impact is expected from [EIT] 
education activities”.37 

A recent report38 of the Joint Research Centre argues that "together with research centres, 
HEIs  are  co-innovators  of  70%  of  the  innovations  derived  from  H2020  projects. 
However, further changes in strategic orientation and university governance are required 
for  universities  to  realise  their  potential  contribution  as  enablers  of  innovation. 
Excellence  in  research,  high-quality  education,  entrepreneurship  and  contributions  to 
innovation  all  need  to  be  strengthened,  while  at  the  same  time  ensuring  synergies 
between them.”39  

The Horizon Europe proposal has outlined a stronger role for the EIT in education. This 
relates  to  the  need  for  stronger  entrepreneurial  and  innovation  capabilities  and  skills  in 
HEIs.40  Against  this  backdrop,  the  Horizon  Europe  impact  assessment  called  for  “an 
enhanced  role  for  the  EIT  in  embedding  innovation  and  entrepreneurial  capabilities, 
prospective skills identification and talent development in HEIs”.41  

The challenge to increase the innovation capacity of HEIs is set to grow as they become 
more  integrated  in  local,  national  and  global  innovation  chains.42  In  this  context,  the 
proposal  for the Specific Programme under Horizon Europe  identifies “entrepreneurial 
and  innovation  skills  in  a  lifelong  learning  perspective  and  the  entrepreneurial 
transformation of EU universities”43 as one of the intervention areas for the EIT. 

The stakeholders responding to the Open Public Consultation called for a stronger role of 
the  EIT  in  education.  A  total  of  65%  of  all  OPC  respondents44  agree  or  strongly  agree 
that  training  opportunities  to  become  more  entrepreneurial  and  innovation  minded  are 
insufficient in Europe. The most popular suggestions from the respondents for achieving 

33  See  EIT  (2017),  Our  Impact,  p.  37  and  EIT  Press  release:  EIT  entrepreneurs  in  the  spotlight  in  Forbes  30  under  30 
(eit.europa.eu/newsroom/eit-community-entrepreneurs-spotlight-forbes-30-under-30).  
34 SWD (2017) 351 final, , pp. 40-44.  
35 SWD (2017) 351 final, p.31.   
36 Ibid., p.28.   
37 Ibid., p.44.   
38 C. Benedetti Fasil et al. (2017), Current challenges in fostering the European innovation ecosystem, EUR 28796 EN, Publications 
Office of the European Union, Luxembourg, 2017, ISBN 978-92-79-73862-3, doi:10.2760/768124, JRC108368. 
39 Ibid., p. 10. 
40  See  OECD 
(http://www.oecd.org/cfe/leed/43201452.pdf) as well as OECD country reviews on https://heinnovate.eu   
41 SWD (2018) 307 final,  p. 256 
42 See Renewed EU Agenda for Higher Education (COM(2017) 247) and the ones set in the Renewed EU Agenda for Research and 
Innovation  (COM(2018) 306)  as  well  as  High  Level  Group  on  maximizing  the  impact  of  EU  Research  &  Innovation  Programmes 
(2017) LAB – FAB – APP. Investing the European future we want, p.13. 
43 COM(2018) 436 final, p. 71 
44 Cf. Annex 2B 

innovation  and  entrepreneurship:  criteria  and  examples  of  good  practices. 

(2009),  Universities, 

16 

 
 
 
 
 
 
                                                           
the  educational  policy  objective  are  for  the  EIT  to  provide  funding  for  innovation 
capacity  development  and  rewarding/recognising  HEIs  to  become  more  innovative  and 
entrepreneurial (71% of respondents) and to launch new actions supporting education and 
human  capital  development  through  the  identification  of  future  skills  needs  (69%  of 
respondents).  In  the  same  consultation  however,  only  23%  of  respondents  support  the 
strengthening of the EIT label. Furthermore, the representatives of business and regional 
associations interviewed by the Commission45 expressed the view that HEIs should play 
a key role for a more entrepreneurial environment in Europe. 

2.3. Limited impact of EIT’s regional outreach  

The KICs consist of geographical hubs or co-location centres (CLCs) that bring together, 
at a local or regional level, education, research and industry partners of the KIC. As the 
EIT  evaluation  confirmed,  CLCs  broaden  the  EIT  innovation  support  to  some  of  EU's 
moderate  innovation  performers;  nevertheless,  the  CLCs'  support  to  the  group  of 
“moderate  and  modest  innovator”  countries46  remains  limited  to  a  small  number  of 
Member States (Portugal, Poland, Estonia, Greece, Slovenia)47. 

Both the evaluation of the EIT and the High-Level Group report highlighted that efforts 
are still needed for the KICs to be fully integrated into the local innovation ecosystems. 
60% of respondents  to  the consultation  on the mid-term  evaluation  of the EIT reported 
that  “the  KIC  had  had  little  or  no  systemic  impact  on  local,  regional  or  national 
innovation ecosystems”.48  

The majority (77%) of all respondents to the OPC agree or strongly agree that the joint 
activities  between  HEIs,  businesses  and  research  organisations  are  not  sufficiently 
integrated  within  their  regional  and  local  ecosystems.  This  perception  is  even  stronger 
(89% of respondents) in “moderate and modest innovators” countries. Similarly, the main 
issue  raised  by  the  representatives  of  the  business  and  regional  associations  during  the 
consultation organised by the Commission in November 2018 related to the necessity of 
linking  the  EIT  and  KIC  activities  to  the  regional  and  local  Smart  Specialisation 
Strategies.  

The problems of insufficient engagement of KICs in developing strong local innovation 
communities are further amplified by the fact that 73% of the EIT financial contribution 
is concentrated in five countries.49 This results in a lack of integration and promotion of 
KIC  activities  within  the  regions  and  local  innovation  ecosystems  across  Europe  and 
limits their overall impact on regional innovation ecosystems.  

Through  its  Regional  Innovation  Scheme  (EIT  RIS)  which  was  launched  in  2014,  the 
EIT  developed  an  outreach  strategy,  which  is  carried  out  through  the  activities  of  the 
KICs. Its main objective is to support countries and regions that lag behind in innovation 

45 Views expressed in the stakeholder workshops organised by the Commission in November and December 2018. 
46 This report adopts the categorisation of the European Innovation Scoreboard. The Scoreboard identifies countries as: Innovation 
Leaders;  Strong  Innovators;  Moderate  Innovators;  and  Modest  Innovators.  ec.europa.eu/growth/industry/innovation/facts-
figures/scoreboards_en 
47 ICF (2017), Evaluation, p. 36, i.e. Portugal, Poland, Estonia, Greece, Slovenia 
48 Ibid., p. 84. and High Level Group (2016), Future of the EIT, p. 13.  
49  ECA  (2016),  Special  Report,  pp.  42-43.  Funds  are  concentrated  in  partners  from:  Netherlands  (24%),  Germany  (15%),  France 
(13%), Sweden (12%) and United Kingdom (9%) 

17 

 
 
 
 
 
 
 
 
                                                           
performance50  by  strengthening  their  capacity  for  innovation  and  by  bringing  the  EIT 
model  to  these  regions.  EIT  RIS  is  a  voluntary  scheme  and  KIC  do  not  have  an 
obligation to implement it unless they decide to include it their Business Plans.  

Incentives for KICs to operate in EIT RIS territories are still limited, in comparison to the 
total budget available. The EIT RIS guidelines foresee that each KIC can apply for EUR 
1.5 to EUR 4 million annually. This is between 1.7% to 5% of the total annual grant for a 
first  generation  KIC  in  2018.  Such  incentives  appear  insufficient  to  fully  exploit  the 
potential of the regional outreach of the  KICs  activities and do not  adequately mitigate 
existing regional disparities.  

Given the novelty of the RIS any conclusions regarding its impact would be premature at 
this stage. However, there are indications that its effect is likely to be limited, partly due 
to    low  budgets  as  well  as  differing  strategies  between  the  horizontal  EIT  RIS  strategy 
and  the  individual  strategies  of  the  KICs  that  ultimately  implement  it  on  a  voluntary 
basis.  

2.4. Technical issues  

In  addition  to  the  three  key  problem  areas  described  above,  the  interim  evaluation,  the 
Court of Auditors Report, the High-Level Group Report, the Commission’s observations 
on the EIT functioning also point to a number of technical issues that the EIT needs to 
address in order to increase the effectiveness, efficiency and coherence of its operations, 
in line with its objectives and mission.  

KICs: openness, transparency and collaboration  

Limited transparency and openness of the KICs affect their partners and stakeholders. As 
the  Court  of  Auditors  observed  in  relation  to  KIC  internal  processes,  the  major 
challenges  relate  to  the  limited  number  of  partners  involved  in  the  strategic  and 
operational  decision-making  of  the  KIC51;  the  selection  of  activities  financed  by  the 
EIT52;  and  the lack of transparency  and communication53, hindering wide participation, 
roll-out  and  replication.54  The  high  concentration  of  EIT  financial  support  in  a small 
number  of  partners  negatively  impacts  the  attractiveness  of  the  KICs  for  potential  new 
partners.  

The  High-Level  Group  report  found  that  the  limited  openness  of  KICs,  and  their 
innovation ecosystems as a whole, to new partners, as well as the lack of clear guidelines 
associated with becoming a partner can reduce the effectiveness of the EIT model. The 
Group  report  referred  to  the  perception  of  the  KIC  as  “closed  clubs”  and  called  for 
principles that can better engage external partners including SMEs.55 A similar view was 

50  Modest  and  moderate  innovators  in  2018,  based  on  the  European  Innovation  Scoreboard:  Bulgaria,  Croatia,  Cyprus,  Czech 
Republic, Estonia, Greece, Hungary,  Latvia,  Lithuania, Malta, Poland, Portugal, Romania, (South) Italy, Slovakia, Slovenia, Serbia 
and Turkey. 
51 ECA (2016), Special Report, p. 42. 
52 Ibid. p. 44; 50% of the respondents to the survey do not believe that the selection of the activities within the KIC is fair and 
transparent.  
53  Ibid. p. 44; some KIC partners have expressed their concerns by stating that “there are a couple of influential partners and they 
distribute the funds among themselves”. 
54  E.g.  the  websites  of  some  KICs  still  lack  basic  information  on  the  supported  projects  such  as  contact  details  of  project 
coordinators,  project  duration,  amount  of  EU-funding,  and  key  deliverables.  The  EU  as  funding  source  is  not  properly  indicated 
throughout the co-funded projects. 
55 High Level Group (2016), Future of the EIT, pp. 17-18. 

18 

 
 
 
 
 
 
 
 
 
                                                           
reiterated  by  some  participants  in  the  consultations  on  Horizon  Europe.56  Some 
stakeholders  highlighted  that  “it  is  essential  that  the  EIT  and  the  KICs  improve  their 
openness  and  responsiveness  to  include  new  relevant  actors  and  keeping  a  continuous 
outreach effort to renew and reinforce the member base”.57 Stakeholders also highlighted 
the potential synergies from more active collaboration between and across the KICs.58 

More  than  50%  of  OPC  respondents  indicated  that  the  EIT  brand  is  not  well 
recognised.59 The current EIT mechanisms to ensure systematic and wide dissemination 
of  results  to  better  inform  European,  national  and  regional  policy  makers  of  the 
achievements of KICs/EIT are not effective.60  

The  integration  of  the  activities  of  HEIs,  research  organisations,  and  businesses  is  a 
cornerstone of the EIT innovation model and requires efficient collaboration among these 
actors. As confirmed by participants in the consultation activities run by the Commission, 
the  level  of  cooperation  between  education  and  training  institutions  and  businesses  is 
insufficient.  Business  actors  were  not  always  willing  to  partner  with  academia  thus 
confirming a broader problem in university-business collaboration.61  

Furthermore, the social network analysis in Annex 7 suggests that in selected KICs up to 
83%  of  KIC  beneficiaries  participated  in  only  one  or  two  projects  meaning  that  some 
organisations have weak ties with the system and that activities are concentrated around a 
small number of organisations. 

EIT Governance  

Good governance of the EIT is essential for achieving its objectives and ensuring long-
term  success.  Structures,  processes,  roles  and  responsibilities  as  established  in  the  EIT 
Regulation  are  interrelated.  Several  bodies  play  an  important  role  and  these  are  (1)  a 
Governing  Board62  (high-level  members  experienced  in  higher  education,  research, 
innovation and business) assisted by an  Executive Committee, (2) a Director, appointed 
by the Governing Board and (3) an  Internal Auditing  Function  advising the  Governing 
Board and the Director. The Commission has an observer role in the Governing Board. It 
also  appoints  the  members  of  the  Board  but  the  latter  is  not  obliged  to  report  to  the 
Commission.  Therefore,  the  Commission’s  contribution  to  the  effective  and  efficient 
functioning of the EIT and KICs is limited.  

56 E. Griniece and M. Muizarajs (2018), Synthesis of stakeholders input for Horizon Europe, p. 64. 
57 Ibid.  
58 See Annex 2A 
59 ICF (2017), Evaluation, pp. 51-52 
60 Ibid. 
61  European  Commission 
at.europa.eu/en/publication-detail/-/publication/1b03ee59-67a4-11e8-ab9c-01aa75ed71a1/language-en 
62  It  adopts,  for  example,  the draft  EIT’s  SIA,  the  SPD, the  EIT’s  budget,  appropriate  measures  if the  evaluation  of  a  KIC  shows 
inadequate results, appoints and dismisses the Director and exercises disciplinary authority over him/her, promotes the EIT globally, 
etc.  

(2018),  The  state  of  university-business  cooperation 

in  Europe.  Publication  available 

19 

 
 
 
 
 
 
 
 
 
 
                                                           
The external  evidence on governance is  not  as  extensive as in  other  areas;  however, in 
the  Commission’s  experience  it  is  clear  that  the  current  form  of  governance  has  an 
impact  on  the  efficiency  of  the  EIT’s  functioning.    As  an  example,  the  current  EIT 
Regulation  does  not  rigorously  distinguish  between  the  supervisory  powers  of  the 
Governing  Board  and  the  executive  powers  of  the  Director,  e.g.  with  regard  to  the 
continued  monitoring  and  evaluation  of  the  activities  of  the  KICs.  The  governance 
structures  should  also  better  ensure  that  KICs  operate  in  synergy  with  each  other  and 
with relevant EU policy objectives 

According  to  the  EIT  Regulation,  the  Stakeholder  Forum  is  intended  to  be  a  platform 
open to national, regional and local authorities, organised interests and individual entities 
from  business,  higher  education,  research,  associations,  civil  society  and  cluster 
organisations,  as  well  as  other  interested  parties  from  across  the  knowledge  triangle. 
However, its implementation is through one annual event63, which suggests that it is not 
effectively fulfilling its function due to its limited scope.  

The governance of the EIT has also been the subject of recommendations from the High 
Level  Group  on  the  EIT  (HLG)64.  Consequently,  there  is  a  need  to  clarify  and  adjust 
roles,  responsibilities  and  the  division  of  tasks  between  the  Governing  Board,  the 
Executive Committee and the Director with a view to  increase clarity, avoid duplication 
and the need to simplify the EIT’s decision-making process65. In addition, a clarification 
of the role of the Stakeholder Forum is necessary in order to maximise its impact.  

Other issues 

As highlighted by the Court of Auditors’ 2016 report, there is a high staff turnover at the 
EIT  linked  to  the  fact  that  EIT  staff  contracts  have  limited  duration  compared  to  other 
similar  EU  bodies.  This  is  an  issue  that  needs  to  be  addressed  as  it  has  impact  on  the 
continuity of EIT's operations and its functioning. 

63 The EIT is organising every year an event gathering EIT stakeholders. See for more information https://eit.europa.eu/innoveit 
64 High Level Group (2016), Future of the EIT, pp. 22-24. 
65  Supported  by  evidence  from  decentralised  EU  agencies  concluding  that  a  clear  separation  of  roles  and  functions  between  the 
Management Board and the Director, as foreseen in the founding regulations, is meant to avoid overlap between the two, and allow 
the Management Board to focus on strategic priorities and key management decisions. 

20 

 
 
 
 
 
 
 
 
 
 
                                                           
2.5. Summary of problems and technical issues to be addressed: 

The following problem tree exemplifies the drivers of the problems and technical issues:  

Figure 5: Problem tree; own illustration 

The following table shows the sources of problems and technical issues:  

Operational/managerial 
measures 

X 

X 

X 

Problem/technical  
issue 

Regulation 

X 

X 

X 

X 

X 

Suboptimal funding 
model  

EIT governance 

Future themes for  
new KICs 

Limited impact of 
education activities 

Limited impact of 
regional outreach 

Openness, transparency 
and collaboration of 
KICs 

Horizontal: ensuring  
alignment within 
Horizon Europe and 
synergies  

SIA 

X 

X 

X 

X 

X 

X 

Table 2: Sources of problems and technical issues; own illustration 

21 

Suboptimal KIC funding modelLimited impact of EIT s regional outreach Limited impact of EIT education activities Limited inclusion of education in innovation ecosystemsLow integration and promotion of KIC activities within local environmentsLimited openness and transparency of KICsConcentration of EIT funding in few countriesLow integration and promotion of KIC activities within local environmentsNon coherence between KIC strategies/ business plans and EIT activities (RIS scheme) vis-à-vis regions  Limited entrepreneurial competencesLow co-funding attracted and limited progress in achieving financial sustainabilityLow effectiveness of annual activity planning and budgeting Disproportionate admin burden on financial reportingLack of specific skills in key fields (individual level)Lack of entrepreneurial capabilities of HEIs(institutional level)ProblemsEffects ConsequencesTechnical issuesCollaboration and unexploited linkages between KTI activitiesEIT Governance – responsibilities and tasks Complicated concept of KAVA vs. KCA activities and related unclarity on eligibility among KIC partnersLow awareness of the EIT education activities, the concept of entrepreneurship education and linking the education, research and business  Untapped potential to better link innovation players across EuropeDrivers 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.  WHY SHOULD THE EU ACT? 

3.1. Legal basis 

The  EU  has  a  shared  competence  in  industry  policy  based  on  Article  173  TFEU  (Title 
XVII). According to Article 173(1), the Union and the Member States shall ensure that 
conditions  necessary  for  the  competitiveness  of  the  Union's  industry  exist.  For  that 
purpose, in accordance with a system of open and competitive markets, their action shall 
be  aimed  also  at  fostering  better  exploitation  of  the  industrial  potential  of  policies  of 
innovation,  research  and  technological  development.  Article  173(3)  foresees  that  the 
European Parliament and the Council, acting in accordance with the ordinary legislative 
procedure  referred  to  in  Article  294,  may  decide  on  specific  measures  in  support  of 
action  taken  in  the  Member  States  to  achieve  the  mentioned  objective,  excluding  any 
harmonisation  of  the  laws  and  regulations  of  the  Member  States.  This  provision  is  the 
legal  basis  of  the  EIT  Regulation  and  of  the  EIT’s  Strategic  Innovation  Agenda  2014-
2020.   

The  proposed  reinforcement  of  the  activities  of  the  EIT,  including  in  the  area  of 
education and the regional dimension, are innovation-driven and aim at the fulfilment of 
the objective set out in Article 173 TFEU. Therefore, the industry legal base provided in 
Article  173  TFEU  constitutes  the  legal  base  of  both  proposals  assessed  in  this  impact 
assessment. 

3.2. Subsidiarity and proportionality: need for, and added value of EU action 

The Commission proposals for amending the EIT Regulation through a recast and for a 
new  SIA  respect  the  principles  of  subsidiarity  and  proportionality.  They  do  not  go 
beyond  what  is  required  for  achieving  the  Union's  objectives  and  provide  a  clear  EU 
added-value in terms of economies of scale, scope and speed of investments in research 
and  innovation  areas,  compared  to  national  and  regional  initiatives  and  solutions. 
Moreover,  EU  action  would  not  interfere  with  purely  domestic  scenarios  or  require 
harmonisation of the laws and regulations of the Member States. 

The  EIT  has  a  unique  way  of  building  EU-wide  innovation  ecosystems  of  education, 
research, business and other stakeholders.66 Its activities have a cumulative effect, which 
support and stimulate Europe's expertise, notably, in key strategic fields. This strengthens 
the  Union's  competitiveness  and  innovation  capacity  for  the  benefits  of  society  as  a 
whole.  Furthermore,  cooperation  activities  supported  by  the  EIT  lead  to  an  increased 
quality of action, innovation and internationalisation of KIC partners and organisations, 
the creation of cross-border, multidisciplinary networks, more cross-sectoral cooperation 
and geographical outreach. 

The EIT is also the sole instrument within Horizon 2020 and the future Horizon Europe 
with  a  distinct  focus  on  education  as  a  key  driver  of  innovation,  growth  and 
competitiveness.  The  EIT  and  the  KICs  develop  innovative  education  and  training 
programmes by linking education, research and business; learning-by-doing curricula and 
robust  entrepreneurship  education.  The  EIT  contributes  to  increasing  the  number  of 
entrepreneurs  and  skilled  professionals  thus  contributing  to  the  overall  development  of 
human capital in Europe. 

66 ICF (2017), Evaluation, p. 36.  

22 

 
 
 
 
 
 
 
 
                                                           
4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

The  general  objectives  are  reflected  in  the  Horizon  Europe  programme  proposal  and 
presented  below,  along  with  the  specific  objectives  that  address  the  problems  and 
technical issues facing the EIT. 

Figure 6: General and specific problems and objectives of the EIT; own illustration 

In line with the identified problems, the specific objectives, to be defined in the SIA are:  

a.  To  increase  the  impact  of  KICs  and  knowledge  triangle  integration  through  an 

effective and efficient EIT funding model;  

b.  To  increase  the  innovation  and  entrepreneurial  capacity  of  the  higher  education 

sector by promoting institutional change in HEIs in Europe;  

c.  To  increase  the  regional  outreach  of  the  EIT  in  order  to  address  regional 

disparities in innovation capacity across the EU; 

23 

I. Barriers to collaboration between higher education, research and businessII. Low levels of entrepreneurial activity  and lack of entrepreneurial mindsetIII. Underutilisation of existing research strengths to create economic or social valueSuboptimal KIC funding modelLimited impact of EITs regional outreach Limited impact of EIT education activities Technical issuesI. Strengthen sustainable innovation ecosystems   across EuropeII. Foster innovation and entrepreneurship through better education III.  Bring new solutions to global challenges to market Increase the impact of KICs and knowledge triangle integrationIncrease regional outreach of EIT by addressing regional disparities in innovation capacity across the EUIncrease innovation capacity of higher education by promoting entrepreneurial transformation of HEIsIndividual operational objectivesOBJECTIVESPROBLEMSGeneralSpecificEIT Regulation, SIAHorizon Europe 
 
 
 
 
 
 
5.  HOW OPTIONS ADDRESS PROBLEMS AND TECHNICAL ISSUES 

A number of options regarding the EIT’s future direction were considered and discarded 
in  the  Horizon  Europe  impact  assessment67:  namely,  the  Reduction/Discontinuation  of 
EIT KICs  interventions; the Continuation of the approach to  EIT/KICs as implemented 
under  Horizon  202068;  the  Direct  integration  of  KICs  into  the  Framework  Programme 
(without the EIT). Annex 5 provides details on policy options which were not considered 
viable and the reasons for this. 

Before proceeding to the discussion of the three policy options, sections 5.1.-5.3. discuss 
measures to be taken in response to problems and technical issues described in section 2 
for which only one alternative is viable. The policy options are presented in the backdrop 
of a targeted EU level  intervention on the basis  of the Horizon Europe proposal  for an 
EIT budget of EUR 3 billion (allowing the launch of one or two new KICs during 2021-
2027  according  to  the  option  chosen).  The  options  offer  different  strategic  choices  and 
are not cumulative even though a wide range of similarities exists across all of them.  

5.1. Discussion of technical issues  

Openness, transparency and collaboration  

Limited  transparency  and  openness  affect  negatively  the  collaboration  of  EIT 
stakeholders.  Technical  amendments  in  the  EIT  Regulation  would  be  necessary  to 
reinforce  the  principles  of  openness  and  transparency,  particularly:  the  provision  on 
transparency  of  both  the  EIT  and  KIC  and  access  to  documents  and  extending  the 
selection  criteria  for  KICs  to  incentivise  the  addition  of  new  members  and  including 
references  to  Horizon  Europe  principles  of  transparency  and  openness  for  European 
Partnerships.  

A  number  of  technical  measures  can  be  introduced  by  the  EIT  which  do  not  require 
additional  amendments  to  the  EIT  Regulation.  Such  measures  include  the  creation  of 
guidelines  by  the  EIT  to  be  followed  by  KICs  as  regards  transparency  and  openness 
aspects, in particular the selection of new partners, the preparation of the Business Plan69 
and the openness of activities to third parties. The Governing Board (GB) would monitor 
how  KICs  apply  the  guidelines  and  take  them  into  account  in  the  assessment  of  KICs’ 
performance  for  the  funding  allocation.  This  includes  the  possibility  to  explore  how 
strategic priorities that are not foreseen to be addressed by new KICs can eventually be 
efficiently  supported  through  collaborative  action  among  several  KICs  (cross-KIC 
actions).  This  applies  even  more  so  if  more  than  one  KIC  already  foresee  activities 
common for a policy objective.   

In addition, the KICs’ multi-annual strategies need to describe how the KICs will ensure 
openness to relevant partners and stakeholders and how it intends to reach new potential 
partners  across  Europe.  Other  measures  include  ensuring  that  KICs  transparently  share 
the conditions and the criteria to become partners as well as improving the procedure for 
the  preparation  of  a  KIC  multi-annual  strategy  and  Business  Plan  (including  the 
identification  of  priorities,  synergies  with  other  KICs  and  other  EU-activities,  the 
selection  of  activities  and  the  allocation  of  funds).  Finally,  the  Governing  Board  could 

67 SWD(2018) 307 final, p. 129  
68 This approach was discarded due to its perceived lack of integration of EIT in the overall R&I framework  
69 Including guidance on streamlining the policy goals/targets and its monitoring.  

24 

 
 
 
 
 
 
 
                                                           
incentivise  KICs  that  demonstrably  increase  the  share  of  calls,  in  particular  for 
innovation projects that are open to third parties.  

In  its  monitoring,  the  EIT  should  signal  over-concentration  of  EIT  financial  support  to 
the Governing Board which should be able to request operational measures from the KIC 
that  mitigate  such  over-concentration.  More  generally,  transparency  guidelines  should 
ensure  that  KIC  Business  Plans  contain  the  information  on  the  level  and  intensity  of 
cooperation  between  KIC  partners  (i.e.  overview/ratio  of  KIC  partners/beneficiaries 
within  individual  KIC  activities,  innovation  projects  or  education  programmes;  and 
breakdown of funding distribution among individual partners). Such measures should be 
monitored  by  the  EIT  via  relevant  indicators  and  trigger  action  at  the  level  of  the 
Governing Board if related objectives are not met.  

Governance  

There  is  a  need  for  clarification  of  the  roles  for  the  EIT  Governing  Board,  Executive 
Committee and Director. The Governing Board needs to strike the right balance between 
strategic leadership of the EIT and KICs and responsibility for operational aspects of the 
EIT and KICs.70 In addition, the Governing Board has to give overall guidance to the EIT 
while  respecting  the  autonomy  of  the  KICs.71  While  the  EIT  Regulation  qualifies  all 
decisions  of  the  Governing  Board  as  ‘strategic’,  it  is  clear  that  some  decisions  are 
operational in nature such as the establishment of advisory groups or the implementation 
arrangements for the operation of an Internal Auditing Function.  

The EIT would benefit from a more guidance from the Governing Board on key strategic 
issues.    The  Governing  Board  currently  does  not  play  a  sufficiently  strong  role  in  the 
monitoring,  supervision  and  steering  of  KICs,  which  could  be  strengthened  by 
supervising  more  closely  the  ongoing  evaluation  and  monitoring  of  KICs.  A  clearer 
division  of  tasks  could  help  the  Governing  Board  to  achieve  balance  between  strategic 
leadership and operational aspects.  

The assistance by the Executive Committee to the Governing Board should be clarified in 
order to provide more effective support (eg. preparation by Executive Committee of the 
meeting  of  the  Governing  Board  in  cooperation  with  the  Director;  consultation  of  the 
Exectutive  Committee  by  the  Director  on  key  documents  such  as  the  draft  Single 
Programming  Document  and  draft  consolidated  annual  activity 
report).  The 
Commission’s  role  should  also  be  clarified  to  reflect  its  legal  obligations  in  terms  of 
monitoring  and  sound  financial  management.  A  requirement  for  agreement  by  the 
Commission  on  a  limited  number  of  strategic  issues  (e.g.  monitoring  and  financial 
allocation principles) should be introduced.   

The EIT Stakeholder Forum should take into consideration the activities of the Forum of 
Member States and Associated Countries’ public authorities and bodies to be established 
under  the  Horizon  Europe  programme.  This  forum  will  promote  coordination  and 
dialogue  on  the  development  of  the  EU’s  innovation  ecosystems  and  between  EU  and 
national innovation policies and programmes.  

70 Under the current EIT Regulation, the  GB has to i) take the necessary strategic decisions on the EIT and KICs by, for example, 
adopting the Strategic Programming Document (SPD) and EIT’s budget, the draft SIA, selecting a partnership as a KIC; ii) exercise 
responsibility for  operational aspects of the EIT and KICs, e.g. by adopting procedures for financing, monitoring and evaluating the 
activities  of  the  KICs;  and  iii)  respect  the  substantial  autonomy  of  the  KICs  by  not  influencing  their  internal  organisation  and 
composition , precise agenda or working methods. 
71 As a result of the broad scope of the KICs autonomy in the EIT Regulation, the KICs have tended to grow large, strong and 
independent, while the GB has built up the corresponding capacity to successfully oversee their strategic development and 
performance. The result is a lack of operational transparency of the KICs, a problem identified in ECA (2016), Special Report, and 
High Level Group (2016), Future of the EIT. 

25 

 
 
 
                                                           
Moreover, several amendments to the EIT Statutes annexed to the EIT Regulation would 
be necessary to reinforce the EIT governance provisions. In particular, this would include 
changes  to  clarify  the  role  of  the  Governing  Board,  the  Executive  Committee,  the 
Director  and  the  Commission  in  the  governance  of  the  EIT  with  a  view  to  increase  its 
effectiveness; and to clarify the role of the Stakeholder Forum. In addition, provisions as 
regards staff contracts should be amended to allow for contracts of an indefinite duration 
in line with other comparable bodies, in order to ensure the continuity of EIT operations. 

5.2. Discussion of priority fields  

According to the EIT Regulation, the SIA should define the priority fields for the future 
KICs. The Governing Board of the EIT proposed four possible priority themes for future 
KICs  in  its  Strategic  Outline  on  the  Future  of  the  EIT72    and  the  draft  Strategic 
Innovation  Agenda  of  the  EIT  that  was  submitted  to  the  European  Commission  in 
accordance  with  the  EIT  Regulation.  The  priority  fields  proposed  by  the  Governing 
Board have been subject to a further thorough assessment by the Commission (see Annex 
9  for  more  details).  It  should  be  noted  that  this  assessment  did  not  include  a  detailed 
specific  assessment  of  the  potential  economic,  social  and  environmental  impacts  of 
possible  KICs  launched  under  each  of  the  proposed  priority  fields  since  this  is  not 
explicitly required by the EIT Regulation.73  

The final  Commission  assessment, summarised in  the table below, 1) builds  on several 
reports and assessments conducted by the EIT and the Commission against various sets 
of criteria and 2) is based on the evaluation of 9 key aspects that condition the selection 
of the priority fields. Annex 9 summarizes the assessment process and its different steps 
and outcomes.  Annex 6 outlines the European partnerships criteria that will be reflected 
in the call for selection of future KICs and in their multiannual strategies.  

for 

See 

72 
https://eit.europa.eu/sites/default/files/eit_strategic_outline_0.pdf  
73 The same approach was followed by the Commission and co-legislators for the preparation and adoption of the current Strategic 
Innovation Agenda 2014-2020. 

published 

strategic 

outline 

details 

more 

GB: 

EIT 

the 

the 

by 

26 

 
 
 
 
 
 
 
                                                           
Key aspects 

Cultural and 
Creative 
Industries 

Security and 
Resilience 

Water, Marine 
and Maritime 

Inclusion, 
Integration 
and Migration 

Coherence and synergies with 
EU R&I and Education 
landscape 

Not covered by planned similar 
EU initiatives (i.e. partnerships) 

Fragmentation of the innovation 
value-chain 

Suitability  of  the  EIT  model  to 
address innovation bottlenecks 

Ability to mobilize investment 
and sufficient market for 
innovation 

Modernisation/transformation 
potential  of 
system and skills gap  

the  Education 

Regional dimension 

Citizen-focus approach  

Synergies with and 
complementarity to existing 
KICs 

TOTAL 

++ 

++ 

++ 

++ 

++ 

+ 

++ 

++ 

++ 

++ 

17 

+ 

+ 

++ 

+ 

+ 

+ 

++ 

+ 

12 

++ 

+ 

+ 

++ 

+ 

+ 

++ 

+ 

+ 

12 

+ 

++ 

++ 

0 

0 

++ 

+ 

++ 

0 

10 

Table 3: Selection of future priority fields, Commission assessment 

As a result of this assessment process, the field of Cultural and Creative Industries (CCI) 
has been identified as the most adequate thematic priority for the first KIC to be launched 
under Horizon Europe as it obtained the best results in the overall assessment against the 
proposed  criteria.  CCI   are  a  sector  with  a  high  growth  potential,  many  grass-roots 
initiatives  and  strong  citizen  appeal.  They  are  strongly  embedded  in  their  local  and 
regional  ecosystems.  However,  the  innovators  and  business  creators  in  this  sector  lack 
the needed entrepreneurial and innovation skills. For these reasons, the KIC model seems 
particularly well adapted.  

27 

 
 
 
 
 
Cultural and Creative Industries also complement  very well the themes of the 8 already 
existing  KICs  in  the  EIT  portfolio.  Last  but  not  least,  they  cover  an  area  for  which  no 
other potential partnership is foreseen and where there is a strong political support from 
the European Parliament and from  Member States. Therefore, this theme has proven to 
be the most suitable to the KIC model and complements well the activities of the existing 
ones. These conclusions would be reflected in the SIA, along with an indication for the 
launch  of  such  a  KIC.  A  call  would  be  launched  in  2021  that  would  lead  to  the 
designation of a KIC in the year after, i.e. 2022.   

5.3. Discussion of funding model 

In  line  with  the  EIT  Regulation  provision  that  requires  funding  for  KICs  to  cease 
normally after a maximum of 15 years, the EIT Governing Board adopted principles for 
the financial sustainability of the KICs in 2015, based on its initial experience with the 
first generation KICs launched in 2010. In the principles, the Board outlined that that the 
maximum  EIT  contribution  to  a  KIC  for  eligible  costs  should  start  to  decrease  from 
100% to 80% in year 11 of the EIT grant agreement with the KIC74, implying there is no 
co-funding  obligation  for  the  KIC  in  the  years  one  to  ten.  While  this  decision  was  the 
first  to  explicitly  introduce  co-funding  from  the  KIC  partners,  given  that  no  KIC  has 
entered its eleventh year by 2019, its effectiveness cannot currently be assessed.  

KIC  partners  already  attract  co-funding,  albeit  to  a  very  different  extent.  The  figure 
below provides an overview of the co-funding attracted by KICs so  far  – ranging from 
9.7% in EIT InnoEnergy (launched in 2009) to 27% in EIT Health (launched in 2014). 
The figure shows the average co-funding increasing from 9% to 19% between 2014 and 
2017 (see Annex 11 for more details). However, as shown in the Figure 7, it is evident 
there are significant performance differences between the KICs. In particular, two out of 
three first generation KICs have significant difficulties in attracting co-funding.  

Co-funding rate, 2017 
(% of KICs contribution) 

30,0

25,0

20,0

15,0

10,0

5,0

0,0

Climate KIC

Innoenergy

Digital

Health

Raw
Materials

Food

AVERAGE

Figure 7: Co-funding rate (% of KICs contribution) in different KICs in 2017; EIT data 

74 The decision applies to the so-called KAVA activities (KIC-value added activities), ie. the activities that can be funded with up to 
100% (see chapter 2.1. for an explanation). The Governing Board decided in 2015 that the maximum EIT contribution to a KIC will 
be reduced from up to 100% funding to KAVA after 10 years of a KIC’s designation to 80%, on average, in year 11 and thereafter 
progressive  annual  reductions:  60%  in  year  12,  40%  in  year  13,  20%  in  year  14  and  10%  in  year  15.  This  decision  has  not  been 
revoked  since  then as  it  is  expected that  the  Commission  will  revise  the  funding  model,  in accordance  with  the  Court  of  Auditors 
recommendation.  

28 

 
 
 
 
 
 
 
 
                                                           
In  this  context  and  in  view  of  the  recommendation  of  the  Court  of  Auditors,  different 
solutions  have  been  analysed  in  order  to  address  the  suboptimal  funding  model  of  the 
EIT:  a  continuation  of  the  current  practice;  an  introduction  of  a  co-funding  rate  in  line 
with  the  Horizon  Europe  provisions  for  partnerships;  and  a  decreasing  EIT  co-funding 
rate. Annex 10 provides a financial modelling analysis of the implications of co-funding.  

5.3.1.  Continuation of current funding model (discarded) 

Not changing the current funding model would mean that there would continue to be a 
funding model that does not distinguish clearly between the EIT grant and real external 
investment. The KIC activities not funded by the EIT would continue to be included in 
the calculation basis when determining the EIT’S financial contribution to the KIC. The 
yearly reporting of the KIC complementary activities, both in the Business Plans and in 
the financial reports submitted by the KICs, would continue to add considerable burden 
with limited added value.  

As  a  result,  the  funding  allocation  would  continue  to  be  ineffective  and  disincentivise 
KICs from implementing sound financial sustainability strategies. The expected leverage 
effect will continue to be undemonstrated. Finally, not responding to the recommendation 
of the Court of Auditors75 is not a justified option, so this solution is discarded. 

5.3.2.  Introduction of a 50/50 co-funding rate (discarded) 

In light of the 2015 decision of the Board, the subsequent recommendations of the High 
Level  Group  and  the  Court  of  Auditors,  the  data  available,  and  the  need  to  strengthen 
KIC partners contributions or other revenue sources, an alternative to the continuation of 
the  current  model  is  to  consider  the  introduction  of  an  explicit  co-funding  model  to 
replace current practice.   

One possibility would be to  adopt  the  guidance  provided for institutionalised European 
Partnerships based on Articles 185 and 187 of the TFEU. The provisions in Annex III on 
Partnerships  of  the  Horizon  Europe  proposal  stipulate,  “the  financial  and/or  in-kind, 
contributions  from  partners  other  than  the  Union,  will  at  least  be  equal  to  50%”.76  The 
shift to such a funding model would however raise a number of serious concerns in terms 
of feasibility and the overall impact on the KIC.77   

While  it  can  be  assumed  that  co-funding  of  KICs  would  gradually  increase,  it  seems 
implausible that KICs would be able to adapt to a co-funding rate of 50% in the transition 
to  the  Horizon  Europe  framework  as  of  2021  onwards.  Such  a  change  in  the  funding 
model of all existing KICs would imply a far-reaching revision of all existing financial 
management and planning practices. Such an abrupt change would need to be agreed by 
all  KIC  partners  putting  the  KIC  partnership  at  risk.  It  is  not  excluded  that  it  can 
seriously destabilise the current structure which is based on existing guidance.  

In addition, the application of a harmonised co-funding rate of 50% across all eight KICs 
- that are in very different stages of development - would disrupt all KICs and the entire 

75 ECA (2016), Performance report, p. 51 
76 See COM(2018) 435 final, Annex III, p.7. 
77  It  is  expected  that  the  final  HE  Regulation  will  require  the  limit  of  50%  of  EU  financial  contribution  will  apply  only  to 
institutionalised partnerships under Article 185 and 187 of the TFEU. 
29 

 
 
 
 
 
 
 
 
 
 
 
                                                           
KIC operation model. It would be contradictory to the guidance provided by the EIT GB 
which  aimed  to  allow  for  some  flexibility  in  preparing  KICs  better  for  financially 
sustainability with a decreasing rate of co-funding by the EIT.  

Moreover, such a rate would not provide sufficient incentives to any new KICs to apply 
to  upcoming  calls  or  to  the  achievement  of  the  financial  sustainability  goals  by  the 
current ones. In the case of new KICs, the obligation to co-fund 50% of the budget from 
the very beginning entails a clear risk of non-implementation, as partners would be more 
reluctant  to  engage  in  long-term  partnerships  that  requires  them  to  commit  significant 
resources  over  up  to  15  years.  It  is  very  likely  that  calls  for  proposals  for  future  KICs 
would not attract interest under this co-funding rate.  

Apart from the significant operational implications of a shift to a 50% co-funding model, 
the  financial  modelling  in  Annex  10  shows  that even  though  attractive  in  theory  in  the 
short  term,  a  co-funding  rate  of  50%  would  be  a  suboptimal  solution  in  the  long-term. 
Moreover,  there  are  significant  enforcement  issues  with  such  a  rate  that  may  prevent 
partners from participating in the activities, both for existing and new KICs.  

In addition, a co-funding of 50% appears more suitable for research-industry partnerships 
where industrial partners have a core interest in shaping and controlling the research and 
development  agenda.  It  seems  however  less  suitable  for  a  KIC  that  includes  at  its  core 
also  education  and  entrepreneurship  activities  that  aim  at  developing  skills  and  a  more 
entrepreneurial  culture.  Such  activities  are  traditionally  addressed  by  and  in  close 
collaboration  with  the  education  sector  and  are  more  difficult  to  fund  from  private 
sources.  

In conclusion, there is a considerable risk that a co-funding rate of 50% applied across all 
KICs  may  lead  to  premature  termination  of  the  activities  of  at  least  some  KICs,  while 
causing severe disruption in all of them and preventing new ones from starting. For this 
reason this option is discarded as well.  

5.3.3.  Introduction of a gradually decreasing EIT co-funding rate (retained) 

A  number  of  reasons  suggest  a  gradually  decreasing  EIT  co-funding  rate  would  be  an 
appropriate solution to the problem at hand.   

First,  the establishment  of EIT co-funding rates that would reflect  the decision adopted 
by  the  Governing  Board  in  2015  and  the  needs  of  KICs  across  their  different  phases 
(start-up  phase,  ramp-up  phase,  maturity  phase,  exit  from  the  EIT  grant).  It  would 
support  them  more  effectively  towards  achieving  financial  sustainability  and  result  in 
additional economic benefits due to the significant investment made already.78 It would 
provide  clarity  on  specific  co-funding  conditions  for  the  different  phases.  This  would 
result 
in  KIC-supported 
projects/sectors, enabling KICs to gradually focus more on higher added-value activities 
and services they provide.  

in  higher  planning  security  and  private 

investment 

Secondly,  the  introduction  of  a  gradually  decreasing  rate  of  EIT  co-funding  would 
stimulate  and  reward  performance  and  best  practice.  While  most  of  the  KICs  already 
have adequate non-EIT co-funding rates, some of them do not. This is the case of two out 

78 See Annex 10 for details 

30 

 
 
 
 
 
 
 
 
 
 
                                                           
of  the  three  first  generation  KICs  (EIT  InnoEnergy  at  9.7%  and  EIT  Climate-KIC  at 
12.6% in 2017) despite them being fully mature and receiving a grant of around EUR 85 
million and EUR 80 million, respectively for 2017. However, given the clear guidance of 
the  Governing  Board  from  2015  it  is  expected  that  their  performance  will  improve 
between 2018 and 2020 (latest data available is 2017) as the EIT Governing Board has 
raised this issue with the KICs in its monitoring and supervision.  

A  co-funding  rate  applicable  to  the  KICs  should  reflect  best  performance  and  aim  to 
increase  the  performance  of  KICs  that  under-perform.  Based  on  the  KIC  development 
model, a decreasing funding rate would involve four phases. A start-up phase (years one 
to four) will involve the set-up of the organisational structure of the KIC, establishing its 
management  and  operational  structures  and  defining  the  short-term  business  strategy. 
This  phase  will  be  supported  with  up  to  100%  of  the  eligible  cost  within  the  available 
grant.  This  is  necessary  as the  KICs build up their operations in  the  first  years  and the 
absolute size of the grant is growing only over time (for example, EIT Health, launched 
in  2014, received the  followings  amounts:  EUR  3.2 million   (2015);  EUR 20.7  million 
(2016), EUR 34.2 million (2017) and EUR 57.7 million (2018)).79  

In  the  ramp-up  phase  (years  five  to  seven)  the  KIC  will  consolidate  its  partnership 
structure  and  deliver  on  its  mid-term  business  strategy.  The  EIT  will  support  the  KIC 
with up to 80% of the eligible costs, requiring the KIC to match at least 20% of the cost. 
In the maturity phase (years eight to eleven), the KIC will grow, expand and the EIT will 
support  it  with  up  to  70%  of  the  budget.  Finally,  in  line  with  the  Governing  Board 
principles for financial sustainability, during the exit phase (years twelve to fifteen), the 
EIT will request the KIC to gradually increase its co-funding rate on an annual basis. The 
“exit  from  EIT  grant”  phase  is  in  line  with  the  guidance  of  the  Governing  Board  that 
stipulated  a  decrease  starting  with  80%  in  year  11  and  thereafter  progressive  annual 
reductions: 60% in year 12, 40% in year 13, 20% in year 14 and 10% in year 15”.80 The 
EIT will discontinue its annual grant to the KIC after year fifteen.  

The  table  below  provides  an  overview  of  the  proposed  decreasing  co-funding  rate  that 
adapts and formalizes the decision taken by the Governing Board.  

Start-up 

Ramp-up 

Maturity 

Exit from EIT grant 

Years 

1 – 4 

5 – 7 

8 – 11 

12 – 15 

EIT 
funding rate 

Co-

Up to 
100% 

Up to 80% 

Up to 70% 

50% at year 12, 
decreasing by 10% per 
annum 

Table 4: Overview of the proposed decreasing co-funding rate for the EIT grant; own illustration 

79 Internal data and reporting provided by the EIT to the European Commission.  
80 The same document stipulates “in year 11 and thereafter progressive annual reductions: 60% in year 12, 40% in year 13, 20% in 
year 14 and 10% in year 15”. 

31 

 
 
 
 
 
 
 
 
                                                           
Unlike the Governing Board proposal of 2015, the proposed decreasing co-funding rate 
would ensure that co-funding is applied early on in the KIC operations (starting at year 5 
instead of 11), thereby significantly increasing the commitment of the partners and their 
long-term planning security. The proposed EIT co-funding rate would gradually decrease 
over the years 5 to 15 and facilitate the KICs transition to financial sustainability, rather 
than  start  to  fall  steeply  after  10  years.  All  other  things  being  equal,  the  proposed 
decreasing rate would also trigger higher private investment than the current GB proposal 
(see  also  Annex  10).  Finally,  such  a  co-funding  rate  reflects  well  the  best  performing 
KICs today that should gradually become the benchmark.  

EIT co-funding rate, EIT expected annual grant and KIC 
co-funding in 15 years perspective 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

90

80

70

60

50

40

30

20

10

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

EIT co-funding rate (%)

EIT co-funding (Meuro)

KIC co-funding (Meuro)

Figure 7: EIT co-funding rate, EIT expected grant and KIC co-funding in perspective; own projection  

The adaptation of the funding model would increase the non-EIT co-funding share. As a 
result,  higher  private  investments  from  both  existing  KIC  beneficiaries  as  well  as  new 
partners investing in KIC-supported projects would be likely in the medium to the long 
term  as  the  simulations  in  Annex  10  demonstrate.81  Furthermore,  the  adaptation  of  the 
funding model is in line with the views of the majority of stakeholders expressed in the 
Open Public Consultation. Securing other public or private funding for the operation of 
KICs from the outset was the most popular solution cited and supported by 64% of the 
respondents.   

81 The simulation results in Helsinki-Uusima and Noord-Brabant regions suggest that the accelerating of the private investment in the 
medium-  to  long-run  is  the  most  effective  when  the  increasing  co-funding  rate  over  time  is  applied  (policy  option  2)  attracting 
annually EUR 96.62 million and EUR 324 million respectively in 2035.  

32 

 
 
 
 
 
 
 
                                                           
The implications of changes to the funding model would be different for different waves 
of KICs:  

 First wave (three KICs launched in 2010): somewhat affected as the funding by 
the EIT will be discontinued after 2024 and Governing Board guidance from 2015 is 
broadly in line with current proposal. 

 Second and third wave (three KICs launched in 2014 and 2016): moderately 
affected since the change in the funding model would happen in the middle of their 
programming period. However, the KICs of 2014 and 2016 already now have a non-
EIT co-funding rate of between 20 to 25 % which is in full compliance with the 
proposal.     

 Fourth wave (two KICs launched in 2018): no significant implications as they 

would start up their activities in 2019 and 2020 which would allow for smooth 
integration into any new funding model. 

 For any future KICs: no particular implications as they would be launched in the 

next programming period. 

Table 5: Implications of new co-funding model on KICs; own analysis 

The theoretical and empirical simulation analyses in Annex 10, point to the overall large 
potential  of  the  EIT  investment  support  to  leverage  additional  private  investment  into 
KIC projects through gradually decreasing EIT co-funding rates. However this may also 
have  an  effect  on  the  number  of  KIC  partners  and  the  membership.  Higher  KIC  co-
funding  rates  could  imply  fewer  partners  willing  to  participate  and  contribute  to  the 
operation  of  the  KICs.  Such  a  scenario  could  however  be  counterbalanced  with 
appropriate EIT incentives that reduce the financial, technology or market uptake risks of 
the potential KIC investors.   

A  number  of  additional  measures  aimed  at  improving  the  efficiency  of  the  funding 
allocation will support the application of the new funding model. First, a comprehensive 
and in-depth review after seven years of KIC operations would be the opportunity for the 
EIT Governing Board to decide if a KIC has demonstrated adequate and expected results 
with the option to discontinue funding82. This review would guarantee transparency and 
would  be  in  line  with  the  guiding  principles  and  criteria  for  European  Partnerships  in 
Horizon Europe and best practice in the EU.83 

A possible challenge may  emerge if there is  non-compliance by the KIC with  the non-
EIT co-funding rule. For this there are effective mitigation measures. Firstly, a KIC must 
respect the financial principle of the EIT when preparing their Business Plans (prepared 
and  submitted  in  year  n-1),  necessitating  that  the  KIC  will  have  to  make  the  relevant 
calculations before proposing its Business Plan and requesting a budget to implement it.  
Secondly, should a KIC still have difficulties to match the EIT grant, then the Governing 
Board  could  reduce  the  absolute  EU  contribution  to  a  level  that  the  KIC  can  match, 
according  to  the  rules.  Such  flexibility  is  currently  possible  and  can  be  implemented 
through managerial measures.  

82 The possibility that the EIT Governing Board has of terminating a KIC should its results be inadequate is foreseen in the current 
EIT Regulation. The new EIT Regulation should include a clear reference to the 7-year review and the possible termination or 
suspension of funding.   
83 Cf. the review process of the Exzellenzinitiative in Germany which can extend the status of an “excellent university”.  Deutsche 
Forschungsgemeinschaft, http://www.dfg.de/foerderung/programme/exzellenzinitiative/  

33 

 
 
 
 
 
 
                                                           
5.4. Description of policy options 

Three  policy  options  are  presented  below:  a  baseline  reflecting  the  continuation  of 
business as usual; and two different options addressing the problems and technical issues 
identified in the impact assessment.   

The following graph presents comprehensively the intervention logic of all the Options 1, 
2 and 3. It is to be noted that the options are expected to achieve the outputs, results and 
impacts to a different extent (further developed in section 6). 

Figure 8: Intervention logic; own illustration 

5.4.1.  Option 1: Baseline  

The baseline option represents the continuation of EIT’s activities as they are today with 
essential  adjustments  necessary  to  align  it  with  the  proposal  for  Horizon  Europe.  The 
EIT’s  activities  would  be  planned  and  implemented  to  maximise  synergies  and 
complementarities with the actions (clusters and missions) under the Global Challenges 
and  Industrial  Competitiveness  Pillar.  EIT  would  comply  with  implementation, 
monitoring and evaluation criteria for European Partnerships.   
In  addition,  the  EIT  will  develop  synergies  with  the  European  Innovation  Council  in 
offering  support  to  highly  innovative  ventures  in  both  start-up  and  scale-up  stages,  in 
particular  through  KICs.  In  order  to  ensure  alignment  with  the  overall  Horizon  Europe 
proposal in terms of administrative rules, a simplification of rules would be pursued. 

34 

Direct support actions for entrepreneurial and innovation capacity development of Higher Education Institutions 8 existing KICs2 new KICs8 existing KICs1 new KICCreation of EIT hubs in all MS- Collaborative small scale projects for    knowledge triangle integration- Brokerage between KICs and regions- knowledge triangle integration services (business support, education)Businesses involved in EIT activitiesRegional actors in Europe involved in EIT activitiesHEIs  involved in EIT activitiesStart-ups supported by EITIncreased knowledge sharing and networking in innovation ecosystems involving more actors at regional level Increased quality of entrepreneurial higher educationReduction in skills mismatches in key sectorsEffective and efficient new businesses creationIncreased innovation capacity in EuropeMore entrepreneurial and innovative European higher education; Improved human capital and talent for innovation   Budget85 %15 %Budget70 %30 %KIC activitiesEIT activitiesACTIVITESOUTPUTSRESULTSIMPACTSStudents involved in EIT activitiesDedicated EU financial, human and organisational resources to EIT as part of Horizon Europe; KICs as organisations performing activities and networks of HEIs, businesses, research and civil society; EIT as organisation performing horizontal activities beyond the remit of KICs; INPUTNew products, services or processes on the marketKICs co-fundingSuboptimal KIC funding modelLimited impact of EITs regional outreach Limited impact of EIT education activities Technical issuesIncrease the impact of KICs and knowledge triangle integrationIncrease regional outreach of EIT and address regional disparities in innovation capacity across the EUIncrease innovation and entrepreneurial capacity of higher education institutions in EuropeImprove operational effectiveness and efficiency of EIT ISSUESOBJECTIVESOPTION 2OPTION 38 existing KICs2 new KICsBudget97 %OPTION 1Basic coordination- EIT RIS- EIT Label3 % 
 
 
 
 
 
 
 
 
The EIT and the KICs would keep their current model and continue business as usual. 
The  EIT  would  continue  to  operate  only  through  KICs.  The  role  of  KICs  as  drivers  of 
innovation  ecosystems  in  specific  fields  and  the  EIT  as  primarily  a  grant  management 
agency would not change. The funding model of KICs would stay unchanged. Horizontal 
activities,  such  as  the  EIT  Label  or  the  EIT  Alumni  would  continue  operating  on  their 
current  basis.  The  Regional  Innovation  Scheme  (EIT  RIS),  would  continue  to  be 
performed  on  a  voluntary  basis  and  its  activities  would  not  be  part  of  a  KIC’  overall 
strategy.  

No new actions would be launched by the EIT to further address education and regional 
aspects as part of the baseline.  

In  line  with  the  EIT  Regulation,  the  first  three  KICs84  would  cease  to  receive  EIT 
financial  support  after  2024.  The  five  KICs85  that  started  operations  between  2015  and 
2019 would reach maturity in the new programming period.   

Within  the proposed budget  of EUR 3 billion and based on the  current  funding model, 
two new KICs would be launched within the timeframe of 2021 – 2027, the first in the 
field of Culture and Creative Industries (CCI), the second on a theme to be defined taking 
into account the Horizon Europe Strategic Planning exercise.  

In terms of budget, Option 1 would represent a continuation of the current distribution of 
budget  between  KIC  activities,  the  EIT-driven  activities  and  the  EIT  administrative 
budget,  i.e.  97%  of  the  budget  for  the  grants  to  KICs  and  the  rest  divided  between  the 
EIT-driven  activities  and  its  administrative  budget.  No  changes  would  be  made  to  the 
EIT staff provisions and duration of staff contracts.   

2021 

2022 

2023 

2024 

2025 

2026 

2027 

Total 

Admin budget 

6 

7 

7 

7 

7 

7 

7 

48 

KIC-related expenditure 

401 

388 

424 

427 

424 

435 

431 

2930 

EIT-driven activities 

2 

2 

3 

3 

4 

4 

4 

22 

Total EIT Budget 

409 

399 

437 

441 

439 

446 

444 

3000 

Table 6: Indicative budget under option 1 (MEUR); own illustration 

5.4.2.  Option 2 

Option  2  builds  on  the  baseline.  In  addition  to  the  essential  adjustments  necessary  to 
align with the proposal for Horizon Europe, (=baseline), it adopts a number of technical 
measures to enhance the functioning of the EIT. Synergies with the proposal for Horizon 
Europe will be similar to those under the baseline. 

Option 2 introduces a new EIT action in order to address its specific objectives in the 
fields of education and regional outreach. The main defining feature of this action would 
be the direct support action for entrepreneurial and innovation capacity development of 

84 EIT InnoEnergy, EIT Digital, EIT Climate-KIC 
85 EIT Food, EIT Health, EIT Raw Materials, EIT Manufacturing, EIT Urban Mobility 

35 

 
 
 
 
 
 
 
 
 
 
 
                                                           
Higher Education Institutions (HEIs). In addition, complementarities with other EU level 
programmes  (e.g.  ERDF,  Erasmus+)  or  national  programmes  and  funding  instruments 
would increase.   

The EIT would adapt its funding model and implement a gradually decreasing EIT co-
funding rate, as described in section 5.2. Another important aspect of this Option would 
be  the  introduction  of  a  long-term  planning  perspective  of  innovation  activities 
(multiannuality). In order to address technical issues hampering its functioning, the EIT 
would  also  adapt  its  governance  model  and  improve  openness,  transparency  and 
collaboration.  

The Regional Innovation Scheme will be further strengthened by integrating it fully in 
the  KIC  Business  Plans  and  making  it  a  core  activity  of  the  KIC  with  an  increased 
budget.  

A substantial number of stakeholders in the Horizon Europe consultations referred to the 
role  of  the  EIT  in  Horizon  Europe  in  bridging  R&I  instruments  with  support  to  higher 
education.86  The  EIT  will  simplify  the  EIT  labelling  process,  extending  it  to  a  wider 
lifelong  learning  perspective  and  to  external  quality  assurance.87  In  order  to  address  its 
specific  objectives,  the  EIT  would  launch  a  new  support  and  coordination  action 
aimed  at  supporting  the  development  of  entrepreneurial  and  innovation  capacity  of 
HEIs.  This  action  will  build  on  HEInnovate,  a  proven  concept  developed  by  the 
Commission and OECD. 

HEInnovate is a policy framework of the Commission and the OECD launched in 2013, 
that  offers  (1)  a  methodology  for  HEIs  to  develop  their  innovation  and  entrepreneurial 
capacities    and  (2)  a  methodology  to  Member  States  to  review  their  higher  education 
systems. To date more than 1000 HEIs have used HEInnovate and a number of Member 
States  have  hosted  HEInnovate  policy  reviews  by  OECD.88  This  demand  suggests  that 
there is a strong need in HEIs to develop their innovation and entrepreneurial capacity in 
a  structured  and  systematic  way.  However,  tn  the  current  programming  period  (2014-
2020) the use of HEInnovate is not linked to any funding support.  

Given  its  experience  in  the  knowledge  triangle  integration  that  directly  supports 
innovation capacity development the EIT is uniquely positioned to implement an action 
aimed at supporting the development of entrepreneurial and innovation capacity of HEIs. 
The  action  would  integrate  the  HEInnovate  methodology  of  the  Commission  and  the 
OECD  and  would  fund  entrepreneurial  and  innovation  capacity  development  in  HEIs. 
The new support and coordination action would include the following elements:  

86 E. Griniece and M. Muizarajs (2018), Synthesis of stakeholders input for Horizon Europe, p. 62.  
87 Such an approach could build on e.g. the ‘European Innovation Associate’ pilot (DG GROW)  –a test to establish a SME-driven 
scheme  to  attract  foreign  recent  PhD  graduates  (or  PhD  graduate  returnees  to  their  countries  of  origin)  to  R&I  posts  in  small 
innovative  enterprises,  or  the  toolbox  initially  developed  for  the  EC  and  now  operated  by  the  ‘European  Innovation  Management 
Academy’ in Düsseldorf, Germany (www.improve-innovation.eu )   
88 Five Member States (NL, IE, HU, PL, BG) completed an OECD review and four (IT, AT, CR, RO) are currently undergoing one.  
36 

 
 
 
 
 
 
 
                                                           
 Support the entrepreneurial and innovation capacity development in HEI in the 

following HEInnovate dimensions: Leadership and Governance; Digital 
Transformation; Organisational Capacity; Entrepreneurial Teaching and Learning; 
Preparing and Supporting Entrepreneurs; Knowledge Exchange; Internationalisation; 
and Measuring Impact.   

 Transferring innovation and entrepreneurial know-how between HEIs, by 

networking partners established in one region with HEIs established in other regions;  

 Bringing innovative HEIs from across the EU closer to KICs stakeholders 
communities and the EIT RIS stakeholder communities and connect local HEIs to 
European value chains in which KICs are involved; 

 Entrepreneurial and innovation capacity building services - including business 

support services, entrepreneurial education;  

 Support synergies and alignment between different EU programmes contributing 

to innovation capacity; 

Table 7: Overview of new action supporting the entrepreneurial and innovation capacity of HEIs; own 
illustration 

The  EIT  would  implement  the  aforementioned  action  through  annual  calls  and  a 
dedicated budget. The calls would support collaborative projects comprising consortia of 
a  minimum  of  three  HEIs.89  The  EIT  would  provide  specific  guidance,  expertise  and 
coaching to participating HEIs and develop evidence on best practices and share it with 
the wider innovation community.   

Bridging  regional  disparities  will  be  a  significant  part  of  the  new  action  as  the  EIT 
would  particularly  target  HEIs  from  modest  and  moderate  innovator  countries  to  help 
them  strengthen  the  regional  innovation  footprint  and  smart  specialisation  strategies  of 
their  HEIs.  The  EIT  would  allocate  at  least  25%  of  the  overall  budget  of  the  action 
(around  EUR  420  million)  to  projects  led  by  a  partner  from  a  modest  or  moderate 
innovator  country.    The  open  nature  of  the  calls  (open  to  all  HEIs)  and  the  widening 
dimension  will  reach  out  to  as  many  institutions  from  modest  and  moderate  innovator 
countries as possible.  

Within  the  proposed  budget  of  Euro  3  billion  and  based  on  the  introduction  of  a  co-
funding  model  that  aims  to  increase  private  investment  from  KIC,  Option  2  would  see 
two  new  KICs  launched  within  the  timeframe  of  2021-2027,  the  first  on  Cultural  and 
Creative  Industries  and  a  second  on  a  theme  to  be  decided  by  taking  into  account  the 
future  Strategic  Planning  Process.  In  line  with  the  EIT  Regulation,  the  first  three  KICs 
(launched in 2010) would cease to receive EIT financial support after 2024. 

89 The specific rules for setting up consortia will be in compliance with the relevant rules of Horizon Europe programme.  

37 

 
 
 
 
 
 
 
                                                           
The more efficient funding of KIC through the decrease of EIT co-funding will result in 
the  EIT  being  able  to  launch  EIT-driven  activities  within  its  proposed  budget.  The 
distribution  of  budget  between  KIC  activities,  EIT-driven  activities  and  EIT 
administrative budget would be as follows: 83% of the budget for the grants to KICs and 
the rest split between EIT-driven activities (15%) and administrative budget (1.8%). 

2021 

2022 

2023 

2024 

2025 

2026 

2027  Total 

Admin budget 

10 

10 

10 

10 

10 

10 

10 

70 

KIC-related 
expenditure 

342 

335 

367 

370 

366 

374 

360 

2513 

EIT-driven activities 

19 

36 

56 

66 

79 

76 

85 

417 

Total EIT Budget 

371 

381 

432 

445 

454 

464 

454 

3000 

Table 8: Indicative budget under option 2 (MEUR); own illustration 

5.4.3.  Option 3    

Similar  to  option  2,  option  3  builds  on  the  baseline,  adopts  essential  adjustments 
necessary to align with the Horizon Europe proposal and develop synergies with it, and 
includes the same co-funding model and technical measures to enhance the functioning 
of EIT as option 2.  

Option 3 differs from option 2 in that it would introduce a new activity of setting up a 
EIT  Hub  in  each  Member  States  in  order  to  address  the  limited  impact  of  the  EIT’s 
regional  outreach  activities,  instead  of  the  support  and  coordination  action  aimed  at 
supporting the development of entrepreneurial and innovation capacity of HEIs proposed 
in option 2.  

The  EIT  Hubs  in  the  Member  States  would  build  on  and  gradually  absorb  the  current 
Regional  Innovation  Scheme  of  the  EIT.  The  EIT  would  directly  implement  the  EIT 
Hubs to foster knowledge triangle integration, for example, via support for collaborative 
projects on a smaller scale than KICs. The projects would include partners from higher 
education, research and business. The EIT Hubs would also serve as  a broker between 
the existing KICs and the needs of the local innovation community of the Member States 
and regions.  

The  EIT  Hubs  would  ensure  pro-active  engagement  with  beneficiaries,  development  of 
local  ecosystems  as  well  as  provision  of  services  and  small-scale  grants  to  the 
beneficiaries, based on transparent criteria. They would also facilitate the management of 
knowledge triangle projects targeting regions where they operate. The EIT Hubs would 
serve the following functions: 

38 

 
 
 
 
 
 
 
 
  
 Brokerage between KIC activities and local partners and support cross-KIC 

collaboration in connecting to local partners 

 Bringing the KICs stakeholders communities and the RIS stakeholder 
communities closer together, as well as support collaboration between European 
Structural and Investment Funds (ESIF) managing authorities and KICs and connect 
stakeholders to European value chains in which KICs are involved 

 Managing annual grants in support of knowledge triangle integration for 

collaborative projects, including business support services, entrepreneurial education;  

 Transferring expertise and know-how between KIC and regions, by networking 

partners established in one region with EIT Hubs established in other Member States; 

 Establishing links between local actors including innovation agencies, KICs and 
related R&I Initiatives, notably Strategic Value Chains, European partnerships, other 
EU-funded initiatives like Digital Innovation Hubs;  

Table 9: Overview of EIT Hubs activities; own illustration 

The EIT would manage the Hubs in all Member States90. The Hubs would support small-
scale knowledge triangle integration projects between at least one HEI, one business and 
one  research  organisation  from  at  least  3  countries8989.  A  particular  emphasis  will  be 
put on developing effective collaboration between HEIs and businesses as this is usually 
the  weakest  link  in  innovation  projects.  The  EIT  would  provide  specific  guidance, 
expertise  and  coaching  to  participating  organisations  and  develop  evidence  on  best 
practice  and  share  it  with  the  wider  innovation  community.  The  EIT  would  allocate 
around EUR 800 million of the total budget to this action.  

In terms of budget implications, Option 3 would foresee 70% of the budget for the grants 
to  KICs  and  the  rest  would  be  split  between  EIT-driven  activities  (27%)  and 
administrative  budget  (3%).    Only  one  new  KIC  would  be  launched  during  the  next 
programming period, on the theme of Cultural and Creative  Industries.  In line with  the 
EIT  Regulation,  the  first  three  KICs  launched  in  2010  would  cease  to  receive  EIT 
financial support after 2024. 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

Total 

Admin budget 

8 

12 

12 

13 

14 

15 

16 

90 

KIC-related 
expenditure 

290 

281 

307 

308 

307 

311 

298 

2100 

EIT-driven activities 

37 

76 

111 

129 

139 

158 

160 

810 

Total EIT Budget 

334 

361 

426 

447 

464 

489 

477 

3000 

Table 10: Indicative budget under option 3 (MEUR); own illustration 

90 In Hungary as the EIT wwouldassume this role through its headquarters based in Budapest 

39 

 
 
 
 
 
 
 
 
                                                           
5.4.4.  Inputs of options  

The following table summarises the inputs to the presented options:  

Option 1 
(baseline) 

Option 2 

Option 3 

48 

2930 

10 

22 

0 

60 

90 

2500 

2100 

10 

440 

0 

9 

810 

26 

EIT administrative budget (mio EUR) 

EIT funding to KICs (mio EUR) 

Maximum number of KICs active during SIA 

Budget for EIT-driven activities (mio EUR) 

EIT Hubs in EU Member States91 

Table 11: Inputs of discussed options; own illustration 

5.4.5.  Key features of options  

The following table summarises the key features of the presented options:  

Issue 

Option 1 (baseline) 

Option 2 

Option 3 

Number of KICs 

 8 existing KICs 
 2 new KICs 

 8 existing KICs 
 2 new KICs 

 8 existing KICs 
 1 new KIC 

Alignment with Horizon 
Europe 

 synergies 

with 
partnerships,  missions, 
EIC 

 Same as option 1 

 Same as option 1 

Technical issues 
(openness and 
transparency; 
governance) 

 No changes 

Funding model  

 No changes 

New actions addressing 
problems on limited 
impact of education and 
regional outreach  

 None 

 adaptation 
governance 

to 

 measures 
openness 
transparency 

of 

 Same as option 2 

increase 
and 

 New 
on 
based 
decreasing 
rate  

funding  model 
gradually 
co-funding 

 New  action  to  support 
for 
and 
capacity 

actions 
entrepreneurial 
innovation 
development of HEIs 

 Strengthening 

of 
Innovation 

Regional 
Scheme 

 Same as option 2  

 New  action  to  create 
EIT  Hubs  in  Member 
support 
States 
to 
small 
collaborative 
scale 
for 
triangle 
knowledge 
integration 

projects 

 Strengthening  of  EIT 

Label 

Table 12: Key features of options, own illustration  

 Strengthening  of  EIT 

Label  

91 Hubs would operate in all Member States except Hungary and the United Kingdom following its expected withdrawal in 2019.  

40 

 
 
 
 
 
 
 
 
 
 
                                                           
6.  IMPACT OF POLICY OPTIONS 

The  following  section  contains  a  qualitative  and  quantitative  assessment  of  the  main 
economic, societal and innovation impacts identified in areas where the options are likely 
to have effects. The projections of future performance are based on past data reported by 
the  EIT  using  existing  performance  indicators.  The  accuracy  of  forecasts  based  on 
historical data is limited but considered the best method to assess the results of the KICs. 
While undertaking such an assessment ex-ante, it is important to remember that the EIT 
operates in  the dynamic  and evolving innovation landscape. The novel  character of the 
EIT and the knowledge triangle integration model suggest that its impacts are gradually 
evolving and can only be demonstrated in the long-term.  

6.1. Option 1: Baseline 

The EIT would continue to support KICs and build innovation ecosystems across the 
EU. The first three KICs, launched in 2010, will cease to receive an EIT grant after 2024 
(in line with the maximum duration for support provided by the EIT to KIC) while one 
new KIC would be set up in 2022 and a second in 2025.  

Synergies  and  complementarities  with  other  EU  programmes  and  funding  instruments 
would increase due to the closer alignment with Horizon Europe, and in particular Pillars 
II  and  III.    Consequently,  the  overall  effectiveness  in  spending  public  money  on 
innovation would improve although its quantification is not available.   The presence of 
the  EIT  will  remain  concentrated  in  a  limited  number  of  Member  States  (see  below). 
More than half of the EIT co-location centres (CLC) are placed in 6 countries, while only 
six CLCs out of 51 in total are located in moderate and modest innovator countries.  

EIT Co-location Centres (CLCs) of the EIT, 2018  

8
7
6
5
4
3
2
1
0

Figure 9: Co-location centres of the EIT as of 2018; EIT data 

In the absence of effective transparency, openness and collaboration measures, activities 
of the EIT would remain limited to the KICs' partners. No significant diversification of 
the partnership is expected in the absence of  a change in the approach towards openness 
and transparency.  

No  enhancement  of  SME  participation  is  expected  in  this  option  as  there  would  be  no 
particular incentives for SMEs in place.  

41 

 
 
 
 
 
 
 
 
Concentration of funds would be unlikely to change, in line with the current trends, with 
around 73 % of the total budget concentrated in partners from five countries (see problem 
definition, page 16).  

The establishment of the EIT with  the KICs and  their co-location centres  were directly 
responsible for approximately 430 FTE direct jobs in 2016 (with a portfolio of 5 KICs, 
two  of  which  only  starting)  across  the  EU.92  Based  on  this  data,  and  a  portfolio  of  10 
mostly  mature  KICs  between  2021-2027,  it  is  estimated  that  the  number  of  equivalent 
FTE in the EIT and KICs would reach 1000.  

Data  reported  from  the  three  first-wave  KICs,  suggests  that  they  have  supported  start-
ups,  scale-ups  and  business  ventures  that  have  created  around  6,100  jobs93  by  2016. 
Building on a portfolio of up to 10 KICs between 2021 and 2027, it is assumed that the 
number of indirectly created jobs will more than double, i.e. around 12,000 jobs will be 
indirectly created.  

The  structure  of  the  KIC  with  regard  to  the  type  of  partners  and  their  overall  weight 
would not be expected to change.  

Around 300 HEIs would continue to be part of the EIT Community as KIC partners, with 
some  fluctuations  over  the  years  due  to  the  cessation  of  the  EIT  grant  to  the  first 
generation  of  KICs  after  2024  and  the  set-up  of  two  new  KICs  during  the  Horizon 
Europe programming period.  

With  additional  and  more  mature  KICs,  opportunities  for  knowledge  transfer  would 
increase proportionately. Based on past performance, it is estimated that between 2021-
2027 around 3500 new products, services or processes would reach the market.94   

It  is  estimated  that  over  2021-2027  around  10,000  students  would  participate  in  EIT 
education  activities  through  the  EIT  label  and  adjacent  activities,  which  would  equip 
them  with  solid  entrepreneurial  and  innovation  skills.  It  is  likely  that  a  part  of  them 
would  become  entrepreneurs  and  attract  economic  activity  to  regions  where  they  are 
based, meaning agglomeration effects would continue. Currently, the ratio of student-to-
entrepreneur in the EIT is around 1.8%, meaning some 200 start-ups could be created by 
students (8 start-ups created by EIT students in 2017). Together with the start-ups created 
as  a  result  of  KIC  innovation  projects,  the  number  of  start-ups  supported  by  the  EIT 
would reach almost 400. 

The  impacts  described  above  would  be  visible  across  all  the  sectors  in  which  KICs 
operate,  though  to  different  extents: the  most significant  impacts  would  be  observed  in 
the areas of health, raw materials, food, urban mobility, and added-value manufacturing 
as the KICs addressing these priority fields would all reach maturity during 2021-2027. 
The impacts of the first generation of KICs (EIT Climate-KIC, EIT InnoEnergy and EIT 
Digital) would be expected to remain. The impacts of new KICs would be visible mainly 
in the field of Cultural and Creative Industries – to be launched in 2022.  The impact of 
the  second  KIC,  if  launched  as  expected  around  2025,  would  be  marginal  during  the 
Horizon Europe programming period.  

EIT 

(2017) 

92 
2017_our_impact_from_2010_to_2016.pdf 
93 Ibid. 
94 See output table at the end of this section 

Our 

Impact, 

p. 

4, 

available 

at 

https://eit.europa.eu/sites/default/files/11983-eit-

42 

 
 
 
 
 
 
 
 
 
                                                           
in  EIT  education  activities  would  continue 

to  acquire 
Students  participating 
entrepreneurial  competences,  and  have  high  employability  rates  95.  However,  the 
systemic  impact  of  EIT  educational  activities,  i.e.  beyond  the  direct  KIC  partners  and 
beneficiaries,  would  remain  restricted  due  to  the  lack  of  external  quality  assurance  and 
limited visibility of the EIT Label.  

There  would  be  no  changes  in  the  funding  model.  The  yearly  reporting  of  the  KIC 
complementary  activities,  both  in  the  Business  Plans  and  in  the  financial  reports 
submitted by the KICs would continue to add significant administrative burden with no 
added  value.  The  absence  of  clear  rules  for  external  co-funding  will  result  in  missed 
efficiencies  and  lost  opportunities  to  establish  stronger  incentives  for  financial 
sustainability.  

Option 1 would mean a continuation of EIT administrative expenditure at current levels 
(EUR 48 million over 7 years) in line with the overall budget increase of the EIT over the 
programming  period  of  seven  years  arising  from  staffing.  Within  this  option,  the  staff 
provisions of the EIT and  duration of staff contracts would not be amended.   

6.2. Option 2 

The  EIT  would  continue  to  support  KICs  and  build  innovation  ecosystems  across 
Europe. The key results of KIC activities (EIT Label graduates; start-ups created by EIT; 
new products and services on the market) would be broadly similar to the baseline given 
that  the  number  of  new  KICs  will  be  the  same.  However,  there  would  be  a  number  of 
efficiency gains resulting from the improvements related to the technical issues and the 
introduction of a co-funding model.   

Establishing clearer implementation measures and tools regarding openness, transparency 
and collaboration would facilitate access to KIC and CLCs96 and improve the interaction 
with partners. This would be particularly the case for partners from modest and moderate 
innovator countries or SMEs. This would increase the likelihood of new CLCs in modest 
and  moderate  innovator  countries  for  both  existing  and  new  KICs.  While  difficult  to 
estimate  an  absolute  result,  it  is  likely  that  the  number  of  the  CLC  in  modest  and 
moderate innovator countries will at least double. 

The integration of the Regional  Innovation Scheme in  the KICs multi-annual  strategies 
and  Business  Plans  would  increase  the  effectiveness  of  EIT’s  regional  outreach. 
Assigning  a  higher  budget  to  the  RIS  activities  from  the  current  average  of  4.3%  to  at 
least  10%  will  also  increase  their  impact.  Stronger  impact  would  be  expected  to 
materialise in those countries and regions that are moderate and modest innovators as the 
number  of  organisations  engaged  with  KICs  would  grow  and  their  activities  would 
increase  due  to  increased  knowledge  and  technology  transfers  linked  to  a  stronger  EIT 
regional focus.97   

Improving the functioning of the EIT governance would have a generally positive effect 
for the function of the EIT and the KIC in terms of effectiveness and efficiency.  

95 See Annex 4  
96  EIT  RIS  innovation  hubs  could  be  seen  as  embryonic  CLCs  in  RIS-eligible  countries,  directly  sharing  and  disseminating  KIC 
knowledge and know-how to local knowledge triangle stakeholders. 
97 Liang J. and Goetz, S. (2018), “Technology intensity and agglomeration economies”, Research Policy 47, pp. 1990–1995; see also: 
Apa,  Noni,  Orsi  and  Sedita  (2018),  “Knowledge  space  oddity:  How  to  increase  the  intensity  and  relevance  of  the  technological 
progress of European regions”, in Research Policy 47, pp. 1700–1712  
43 

 
 
 
 
 
 
 
  
 
                                                           
The  change  in  the  funding  model  would  mean  annual  reporting  of  the  KIC 
complementary activities would no longer be necessary, resulting in significant reduction 
of  administrative  burden.  The  information  obligations  arising  from  the  KIC  grant 
agreements (i.e. declaration of costs of associated activities) with its intention to show the 
financial commitment of KIC partners and its leverage effect will become redundant with 
the  introduction  of  the  new  co-funding  model  for  KICs.  The  alleviation  of  such  a 
requirement  on  the  side  of  the  EIT  as  well  as  KICs  and  their  partners  will  ease  their 
resources for other tasks and improve the efficiency of the KICs operations.  

The  introduction  of  explicit  conditions  for  co-funding  will  lead  to  stronger  private 
investment and external involvement. Specifically, between EUR 1500 and 1800 million 
in  co-funding  is  expected  to  be  generated.  This  would  reflect  the  preferences  of  the 
majority  of  stakeholders  in  the  OPC  who  expressed  their  support  to  co-funding. 
Commitment  from  partners  would  further  increase  the  likelihood  of  KICs  to  achieve 
financial  sustainability  in  the  long-run  as  the  number  of  their  stakeholders  will  grow. 
KICs  are  expected  to  adjust  to  the  new  funding  model  as  most  of  them  already  have 
significant  co-funding.  Greater  openness  and  stronger  performance  monitoring  by  the 
governing board would contribute to raising the overall efficiency of the KIC model. In 
the case of difficulties for some KICs (for example the first generation that will stop to 
receive  an  EIT  grant  after  2024),  the  EIT  Governing  Board  could  introduce  transitory 
measures.  

The  introduction  of  a  long-term  planning  perspective  of  innovation  activities  and  the 
move away from the current annual granting scheme (annuality) would imply that KICs 
would  offer  greater  legal  and  financial  security  for  KIC  partners.  It  would  also 
consolidate the innovation activities in line with the multiannual strategies adopted by the 
KIC. It would ease the administrative burden by reducing the annual reporting and would 
facilitate the assessment of the KIC performance over the long term. Generally, it would 
help to ensure business continuity.  

The number of start-ups generated would not necessarily increase in linear terms in 2021-
2027,  compared  to  the  baseline.  However,  the  higher  private  investment  and  external 
participation would improve the general quality of new business creation. While difficult 
to quantify, some efficiency gains are expected in terms of survival rates of start-ups and 
higher commercialisation of ideas and technological maturity (TRL98).   

Compliance and implementation costs arising from the adaptation of the funding model 
would  be  expected  to  be  higher  for  those  KICs  and  their  partners  that  would  have  to 
adjust their established processes and operation systems, and relatively low for those that 
are  at  the  starting  phase  and  establishing  their  operation  modes.  However,  given  that 
most KICs already attract co-funding, the measure would likely increase on average the 
performance across KICs, as those lagging behind would need to accelerate their efforts 
in  attracting  co-funding  and  catch  up  with  best  practice  or  risk  correction  measures 
requested by the EIT Governing Board.  

The  impacts  described  above  will  be  visible  across  all  the  sectors  that  KIC  operate  in 
with  the  most  significant  impacts  in  the  areas  of  health,  raw  materials,  food,  urban 
mobility, and added-value manufacturing as the KICs addressing these priority fields will 
all reach maturity during 2021-2027.  

98 Technology Readiness Level (TRL) – a method of estimating technological maturity and capability. 

44 

 
 
 
 
 
 
 
                                                           
Impact  of  the new Action on supporting  the  entrepreneurial and innovative  capacity of 
HEIs 

On top of the KIC results, the impact of the EIT  would be distinctive as a result of the 
new actions that the EIT would launch to support the innovative capacity of HEIs. The 
new  EIT  actions  would  spread  best  practice  and  help  create  a  community  of 
entrepreneurial  HEIs  across  institutions,  disciplines,  countries  and  regions99.  The  social 
impact  of  the  entrepreneurial  transformation  of  higher  education  through  this  measure 
would  be  reflected  by  the  involvement  of  staff,  students  and  institutions.  Providing 
funding  for  innovation  capacity  development  of  HEIs  is  the  most  popular  suggestion 
among the OPC respondents in order to achieve the educational policy objective for the 
EIT.   

to  participate 

in  HEInnovate-driven 

As  a  result  of  the  action,  around  450  HEIs  and  more  than  20,000  students  would  be 
expected 
in  capacity  development  actions. 
Entrepreneurial  and  intrapreneurial100  activities  in  the  participating  HEIs  would  lead  to 
higher  levels  of  economic  activity,  particularly  in  modest  and  moderate  innovator 
countries,  given the open nature of the annual  calls and the earmarked budget (25% of 
the  action  budget  would  be  allocated  to  projects  led  by  partners  from  modest  and 
moderate  innovator  countries).  The  illustration  below  provides  an  overview  of  the  key 
assumptions behind this actions.  

 Total budget of this action is around 420 Million, or 60 Million per year 

 Annual calls for projects including at least 3 HEIs and an average budget of max 

EUR 3 million per project  

 Each HEI will involve at least 50 students in the capacity building action 

 23 projects per year leading to ~150 projects in total (2021-2027) 

 150 projects with at least HEIs each means 450 HEIs (involving at least 50 

students each) means at least 22500 students (2021-2027) 

 At least 25% of projects would directly involve partners from moderate and 

modest innovator countries, i.e. 25% of 450 HEIs, or ~110 HEIs 

 Overall participants from moderate and modest innovation countries, i.e. 200 

(current RIS) and 200 (future RIS) and at least 110 (HEIs projects) 

Table 13: Assumptions behind new action supporting the innovative capacity of HEI; own illustration 

It is realistic to assume that at least 15% of all EU HEIs would be reached through the 
HEInnovate capacity development  actions  (450 in total  over 7  years from  around 3300 
HEIs in the EU) over the 7 years.  The impacts would be visible in both  economic and 
teaching,  research,  and  entrepreneurial  activities.101  More 
social 

through 

terms 

99 E.g. HEinnovate country reviews which demonstrate the importance and the challenge for HEIs to develop their entrepreneurial 
and  innovation  capacity.  The  reports  show  that  pioneering  initiatives  emerge  in  a  number  of  HEIs,  but  need  to  be  broader,  more 
systematic  and  taken  forward  by  HEI  leaders  in  collaboration  with  key  stakeholders.  The  reviews  are  available  at 
www.HEInnovate.eu.   
100 Intrapreneurship is the act of behaving like an entrepreneur while working within a large organisation. 
101 Jacob, M et al. (2003) : “Entrepreneurial transformations in the Swedish University system: the case of Chalmers University of 
Technology”, in: Research Policy 32, pp.  1555–1568.  Also Guerrero, M., Cunningham, J. and Urbano, D., (2015), “Economic 

45 

 
 
 
 
 
 
 
                                                           
specifically,  there  is  evidence  that  scientific  productivity  is  positively  associated  with 
entrepreneurial  effectiveness  so  participating  HEIs  could  be  expected  to  increase  their 
scientific  production  levels.102    Finally,  raising  awareness  about  the  entrepreneurial 
capacity  of  an  HEI  is  crucial  because  perceiving  an  HEI  as  having  a  low  or  high 
entrepreneurial  capacity  has  an  important  effect  on  whether  an  academic  engages  in 
entrepreneurial  activities,  thus  influencing  the  overall  entrepreneurial  aptitude  of 
academics.103 

Together with the new action, the impact of the existing EIT Label, which is awarded to 
the  KIC  education  programmes,  would  increase  via  stronger  quality  assurance 
mechanisms including external reviews. This would positively influence the recognition 
of the label outside the EIT community.  

Synergies  and  complementarities  with  other  EU  programmes  and  funding  instruments 
would  increase  due  to  closer  alignment  with  the  proposal  for  Horizon  Europe,  and  in 
particular  Pillars  II  and  III104. 
  In  addition,  strong  cross-over  synergies  and 
complementarities  would  be  expected  to  emerge  between  the  Horizon  Europe  and  the 
Erasmus+ programme as a result of the scaling up of the action supporting the innovation 
capacity of HEIs by the EIT. In budgetary terms, Option 2 would mean a re-balancing of 
the  expenditure  of  the  EIT  back  to  around  one-third  of  the  total  budget  allocated  to 
education  (currently,  only  17%  of  the  KIC-related  expenditure  are  spent  on  education, 
this would increase to around 31% with the proposed action under Option 2). 

Compared  to  the  baseline  scenario,  Option  2  would  mean  an  increase  in  EIT 
administrative costs (EUR 70 million compared to the EUR 48 million baseline) in line 
with the overall budget increase of the EIT over the programming period of seven years 
arising  from  staffing  and  setting  up  a  stronger  capacity  and  expertise  in  the  EIT.  This 
increase appears commensurate with the overall growth of activities and responsibilities 
of the EIT. Within this option, the staff provisions and duration of staff contracts of the 
EIT would be aligned with those of other agencies in order to ensure the continuity of the 
EIT operation. 

6.3. Option 3 

The  EIT  would  continue  to  support  KICs  and  build  innovation  ecosystems  across 
Europe.  Within  the  given  budget  distribution  of  this  option  only  one  KIC  could  be 
launched  (in  2022).  The  key  results  of  KIC  activities  (EIT  Label  graduates;  start-ups 
created  by  EIT;  new  products  and  services  on  the  market)  would  be  broadly  similar  to 
Options 1 and 2. 

Impacts  resulting  from  the  introduction  of  clearer  rules  for  transparency,  openness  and 
collaboration would be similar to those under Option 2. The effect from the adjustments 
in the governance of the EIT would be similar to those under Option 2 with the exception 
of introducing relevant governance provisions for the implementation of the new Action 

impact of entrepreneurial universities’ activities: An exploratory study of the United Kingdom”, in Research Policy, Volume 44, Issue 
3, April 2015, pp. 748-764 
102 Van Looy, B., (2011), “Entrepreneurial effectiveness of European universities: An empirical assessment of antecedents and trade-
offs”, in Research Policy 40, pp. 553–564.  
103 Kalar, B. and Antoncic, B., (2015)  “The entrepreneurial university, academic activities and technology and knowledge transfer in 
four European countries”, in Technovation 36-37, pp. 1–11. 
104 E.g. it is expected that EIT actions will better contribute to 35% of the overall financial envelopes to climate objectives within the 
Horizon Europe. 

46 

 
 
 
 
 
 
 
                                                                                                                                                                            
described  below.  Compliance  and  implementation  costs  arising  from  the  adaptation  of 
the funding model would be similar to those under Option 2.   

Impact of new EIT Hubs-related action  

The most significant  differences in  terms  of impact  under Option  3 would be linked to 
the creation of the EIT Hubs.  

This option would have a high impact on the management and governing bodies of the 
EIT.  It would have significant implications in terms of human resources, budget and task 
allocations. High administrative overhead costs for the EIT would arise from setting-up, 
staffing  and  developing  EIT  Hubs,  ensuring  quality  of  services  provided,  allocation  of 
funds to these hubs as well as reporting to the EIT. The establishment of the EIT Hubs 
would  mean  that  staff  would  need  to  be  appointed  on  a  permanent  basis  to  maintain 
them. Assuming that each Hub would be staffed by a minimum of five persons (a head of 
the hub;  three account  managers for education, innovation,  and entrepreneurship; and a 
communication  officer),  around  130  positions  would  have  to  be  managed  by  the  EIT 
structure, in  addition to the resources needed at the EIT itself. This means that the EIT 
staff  needs  over  the  period  of  2021-2027  would  be  expected  to  more  than  double 
compared to Option 2.  

 Total budget of EIT Hubs action over 7 years = around 810 Mio  

  Set  up  and  maintenance  of  26  EIT  Hubs  with  average  administrative  cost  of  

EUR 600 000 per year x 7 years = around EUR 110 million; 

Operational 

budget 

over 

7 

years 

= 

EUR 

700  million  

(annual budget = EUR 100 million);  

  Each  Hub  to  run  annual  projects  promoting  knowledge  triangle  activities  with  
at least 1 HEIs, 1 Research and Technology Organisation and 1 business and an average 
volume of max EUR 3 million per project; at least 20 students to be involved per project;  

 Total number of projects over 7 years: ~ 230;  

 Total number of organisations participating in EIT Hubs activities: ~ 700 

 60% of results should be traced directly to moderate and modest innovator countries 

 700 x 60% = c. 450 institutions involved in moderate and modest innovator countries 

  Overall  participants  from  moderate  and  modest  innovation  countries,  i.e.  200  

(current RIS) + 200 (future RIS) + 450 (HEI projects) 

Table 14: Assumptions behind new action on EIT Hubs; own illustration 

The  implementation  of  the  EIT  Hubs  would  need  to  take  place  gradually  and  would 
require strong efforts at the beginning for their establishment and continuous efforts for 
their  coordination      The  substantial  time  lag  between  putting  operational  structures  in 
place,  implementing  tasks  in  regions  and  seeing  the  overall  effects  would  significantly 
47 

 
 
 
 
 
 
influence  the  perceived  success  of  Option  3,  particularly  concerning  the  timeliness  of 
impact. 

Knowledge triangle integration in regions would increase as a result of operations of the 
EIT  Hubs  though  the  annual  calls.    In  particular,  the  cooperation  with  education  and 
training  in  the  regional  innovation  ecosystems  would  improve,  reflecting  the  positive 
operational  experiences  with  the  KICs.  The  EIT  hubs  would  primarily  serve  as  
technology  transfer  hubs  connecting  businesses  and  knowledge  providers  and  ensuring 
regional  outreach  of  successful  KIC  activities  and  experiences  already  existing  in 
agglomeration economies.  

A  moderate  reduction  in  the  skills  gaps  and  skills  shortages  would  be  expected  in  the 
areas of active operation of EIT Hubs. The relative number of partners from modest and 
moderate  innovator  countries  as  compared  to  leading  innovators  in  the  regional 
ecosystem  would  increase.  Job  creation  and  revenue  growth  in  local  innovation 
ecosystem would increase marginally as a result of the activities of the EIT Hubs.  

Interaction  between  agglomeration  economies  and  the  proposed  new  EIT 
Hubs105  

Agglomeration economies, in  a general  sense, refer to  productivity improvements 
accruing to  the co-location of economic activity, typically within, and near cities. 
Economically  useful  innovation  is  centred  on  corporate  functions  such  as  R&D 
which  are  typically  co-located  with  other  high-value  adding  activities  such  as 
marketing, design, or IT services. Economic analysis, most recently on global value 
chains  (OECD  2013;  Belderbos  et  al.,  2016),  confirms  that  these  corporate 
activities  thrive  in  cities,  where  they  benefit  from  large,  dynamic  pools  of  highly 
qualified professionals and a dense network of complementary services, including 
public research.  Such effects are clearly visible in the KICs.  

However,  excellent  research  and  innovation  do  not  take  place  only  in  cities. 
Converging evidence (Varga et al., 2013; De Backer et al., 2017) suggest that the 
geographical distribution of business-driven research differs considerably to that of 
public  research-driven  science  and  innovation.  There  is  evidence  to  suggest  that 
agglomeration  is  not  particularly  relevant  for  the  creation  of  this  latter  type  of 
knowledge (Bonaccorsi and Daraio, 2005; Varga et al., 2013).  Therefore it can be 
assumed that regional outreach activities of the EIT such as those proposed by EIT 
Hubs can help connect businesses and public knowledge providers irrespective of 
location. 

Table 15: Agglomeration economies and EIT Hubs, an overview of arguments 

As in option 2, synergies and complementarities with other EU programmes and funding 
instruments  would  increase  due  to  closer  alignment  with  the  proposal  for  Horizon 

105  Based  on  literature  review  of:  OECD  (2013),  Supporting  Investment  in  Knowledge  Capital,  Growth  and  Innovation,  OECD 
Publishing,  Paris;  De  Backer,  K.,  Destefano,  T.  and  Moussiegt,  L.  (2017),  “The  links  between  Global  Value  Chains  and  Global 
Innovation  Networks:  An  Exploration”,  OECD  Science,  Technology  and  Innovation  Policy  Papers,  No.  37,  April;  Belderbos,  R., 
Sleuwaegen,  L., Somers, D. and De Backer, K. (2016), “Where to  Locate  Innovative  Activities in Global Value Chains: Does Co-
location  Matter?”,  OECD  Science,  Technology  and  Industry  Policy  Papers,  No.  30,  OECD  Publishing,  Paris.;  Bonaccorsi,  A.  and 
Daraio, C. (2005), “Exploring size and agglomeration effects on public research productivity”,  Scientometrics, Vol. 63, pp. 87-120; 
Varga,  A.,  Pontikakis,  D.  and  Chorafakis,  G.  (2014),  “Metropolitan  Edison  and  cosmopolitan  Pasteur?    Agglomeration  and 
interregional  research  network  effects  on  European  R&D  productivity”,  Journal  of  Economic  Geography,  Volume  14(2),  pp.  229–
263.  

48 

 
 
 
 
 
 
 
                                                           
Europe,  and  in  particular  Pillars  II  and  III.    In  addition,  specific  synergies  would  be 
innovation  policies  such  as  smart 
expected 
specialisation strategies or the European Regional Development Fund (ERDF).    

to  emerge  with  relevant  regional 

Option 3 would mean an increase in EIT administrative costs (EUR 90 million compared 
to EUR 70 million in Option 2 and the baseline value of EUR 48 million), primarily in 
order to manage the significant coordination and transaction costs incurred by the launch 
of a new Action, the EIT Hubs. Within this option, the staff provisions and duration of 
staff contracts of the EIT would be aligned with those of other agencies in order to ensure 
the continuity of the EIT operation. 

49 

 
 
 
 
 
6.4. Outputs of options 

The following tables present a summary of the outputs of the presented options:  

Option 1 
(baseline)106 

Option 2107 

Option 3108 

# of HEI involved in EIT activities109  

300 

750110 

530111 

# of students involved in EIT activities112 

10000 

30000113 

14600114 

# of businesses involved in EIT activities115 

# of start-ups supported by EIT116  

800 

400 

950 

680 

#  of  products,  services  or  processes  on  the 
market117 

3500 

4300 

KIC  partners’  co-funding  in  EUR  million 
(2021-2027)118 

# of participating organisations from moderate 
or modest innovator countries119 

500 

200 

1800 

500 

Table 16: Outputs of options; own projections based on past EIT performance 

1030 

490 

4100 

1520 

850 

106 All figures in baseline refer to projections based on past performance and derive from the performance achieved by the KICs in 
2013-2017. 
107 See Table 12 on the new action under option 2 for detailed assumptions.  
108 See Table 13 on the new action under option 3 for detailed assumptions.  
109 HEIs refer to Higher Education Institutions involved the EIT educational activities. Baseline figure includes KIC partners.  
110 Figure includes baseline + all HEIs to participate in the new action launched under option 2.  
111 Figure includes baseline + all HEIs to participate in the new action launched under option 3. 
112 Baseline includes students participating in EIT Label and related activities.  
113 Figure includes students participating in the new action launched under option 2. It is assumed that 150 students are involved in 
each project.  
114 Figure includes students participating in the new action launched under option 3. It is assumed that 20 students are involved in 
each project.  
115  Baseline  includes  business  partners  in  KICs.  Option  2  and  3  figures  include,  respectively  business  partners  in  actions  under 
Options 2 and 3.  
116 Baseline includes start-ups supported by EIT through KICs. Option 2 and 3 figures include, respectively start-ups emerging from 
actions under Options 2 and 3. Under Option 2 at least 2 Start-ups are expected to emerge from each supported project, i.e. 280 start-
ups  over  7  years.  Under  Option  3  it  is  assumed  that  1  start-up  is  created    per  3  projects  as  the  focus  is  on  knowledge  triangle 
integration more generally.  
117  Baseline  includes  new  products,  services  or  processes  brought  to  the  market  through  KICs.  Option  2  and  3  figures  include, 
respectively business partners in actions under Options 2 and 3. It is assumed that at least 3 new products/services/processes/ideas are 
brought to the market as a result of each start-up, i.e. 840 new solutions over 7 years  
118 Baseline includes co-funding attracted at a rate of 20% (slightly higher than today). 
119  Baseline  includes  the  number  of  EIT  RIS  partners.  Option  2  and  3  include  the  expected  number  of  additional  partners 
participating in the actions supported by those options.  

50 

 
 
 
 
 
 
 
                                                           
7.  HOW DO THE OPTIONS COMPARE?  

The  following  chapter  summarises  the  evidence  and  arguments  outlined  above  and 
presents the effectiveness, efficiency and coherence of the Options. It presents the risks 
associated to the Options.  

Effectiveness 

Objective 1:  
KIC funding 

Option 1 

Option 2 

Option 3 

0 

++ 

++ 

No particular effect as 
business as usual will 
continue.  

Introduction of co-funding 
rates will increase long-
term impact of investment 
and support the financial 
sustainability strategies.  

Identical to Option 2 

0 

++ 

++ 

Objective 2: 
Regional outreach 

No particular effect as 
business as usual will 
continue. 

New action supporting 
HEIs will positively 
impact institutions from 
countries so far not 
reached by the EIT. 
Widening dimension of the 
action will further support 
regional outreach. 

Actions addressing the 
regional disparities in 
innovation capacity would 
be implemented through 
the EIT hubs.  The impact 
is expected to be highest in 
regions from countries that 
are moderate and modest 
innovators. 

0 

+ 

++ 

Objective 3: HEIs 
innovation 
capacity 

No particular effect as 
business as usual will 
continue. 

New EIT actions would 
create a structuring effect 
supporting the 
transformation of the HEI. 
Increased impacts through 
engagement of a high 
number of organisations 
and students. 

Spill-over effects expected 
from Knowledge Triangle 
Integration projects 
supported by the Hubs due 
to the participation of at 
least one HEI per project. 

0 

++ 

+ 

Objective 4: Other 
technical issues  

No particular effect as 
business as usual will 
continue. 

Significant improvements 
and adjustments resulting 
from adapting the technical 
issues. 

Identical to Option 2. 

0 

++ 

++ 

51 

 
 
 
 
 
 
 
 
 
Efficiency 

Cost-benefit of 
managing KICs 

No particular effect as 
business as usual will 
continue.  

0 

++ 

+ 

Cost of new 
actions  

0 

Not applicable 

Identical to Option 2 

Higher cost-effectiveness 
due to the establishment of 
co-funding rates, clearer 
measures for openness and 
collaboration.  
Reduction of 
administrative burden  
for KICs. 

++ 

++ 

Low additional 
administrative costs due to 
use of established shared 
services (procurement, 
project management, IT, 
legal).  

Increase in the capacities 
of the EIT, its staffing 
levels as well as the 
overhaul of its operational 
systems to manage EIT 
Hubs will incur significant 
costs. Administrative 
burden on the EIT and its 
regional operational hubs 
will increase. Given the 
ratio of spending moving 
towards the EIT hubs 
operation and their 
relatively marginal role in 
contributing to the 
objectives, the overall 
efficiency of spending will 
decrease. 

0 

- 

-- 

Administrative 
burden  

Significant as no 
mitigations measures  
are taken 

Decrease in the 
administrative burden due 
to introduction of co-
funding model and clearer 
measures on openness, 
transparency  
With regard to new action 
supporting HEIs, no 
significant burden as 
shared services of the EIT 
will be used. 

Identical to Option 2.  

With regard to EIT Hubs, 
administrative burden is 
likely given the need to 
establish new structures. 

0 

++ 

+ 

52 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coherence 

Horizon Europe 
coherence 

0 

++ 

+ 

Alignment with European 
Partnerships; EIC; 
Strategic Planning Process. 

Similar to baseline.  

Similar to baseline.  

High coherence with 
Horizon Europe mandate 
for the EIT in terms of 
education.  

Role of EIT in tackling 
regional disparities. 
However, possible 
ambiguities between 
excellence and cohesion 
principles.  

0 

++ 

+ 

Synergies with 
other EU 
programmes or 
policies 

No particular effect as 
business as usual will 
continue.  

Strong synergies with 
other Commission 
initiatives (e.g. 
HEInnovate, smart 
specialisation strategy).  

Strong synergies through 
alignment with smart 
specialisation strategies via 
EIT Hubs.  

0 

++ 

++ 

Table 17: Comparison of options. Key: The Options are  rated according to their impact. Policy Option 1 
(baseline scenario) is set to zero and the impacts of the rest of the policy Options on the stated/foreseen 
KPIs are expressed as net changes compared to it, i.e. + positive effect, ++ significantly positive effect, - 
negative effect and – significantly negative effect. 
Source: own analysis 

7.1. Risks associated with policy options  

There  are  risks  associated  with  all  options  that  are  set  out  in  Table  17  below.    The 
analysis is conceptual and based on qualitative assessment. It covers economic, consumer 
welfare, environmental quality and health risks. Due to the nature of the policy there will 
not  be any particular health or environmental risks.  Risks to  consumer welfare are also 
considered to be low as it is deemed unlikely that the options will reduce the availability 
of  goods  or  services,  or  make  those  available  significantly  more  expensive.  There  are 
three principal economic risks:  

Risk  of  closed  ecosystems  –  i.e.  the  establishment  of  KICs  as  integrated  legal  entities 
leads to collusive behaviour between partners involved in the KIC. Such risk has a low 
probability with a potential moderate impact on economic welfare. A related risk is that 
EU  actions  in  this  area  could  distort  markets  if  EU  funds  simply  subsidise  activities 
which would have occurred anyway and thus ‘crowd out’ private sector investment. This 
risk is estimated as high with a moderate impact on net economic welfare. Due to these 
dead-weight  risks  the  overall  risk  of  market  distortion  is  moderate  with  a  potential 
moderate  impact  on  economic  welfare.  The  risk  can  be  mitigated  with  increased 
openness and transparency of KICs.  

Risk of disparities in economic growth due to EU support for KICs – i.e. supporting the 
development  of  a  limited  number  of  centres  of  excellence  would  enhance  their 
economies  and  create  positive  externalities  leading  to  the  increased  growth  of  these 
centres compared to other parts of the EU. The probability of this occurring is high whilst 
the magnitude of the effect on disparities in economic growth is likely to be moderate, all 
other things being equal. The establishment of integrated entities of firms and institutions 
of  higher  education  and  research  could  also  create  barriers  to  new  market  entrants  in 
locations outside the centres of operation. This would be due to a more difficult access of 
external institutions and actors to knowledge, talent and finance. The probability of this 
occurring is high with effects of moderate magnitude if realised.  

53 

 
 
 
 
 
 
 
 
 
 
This  risk  can  be  mitigated  through  measures  under  Option  2  and  3  (deepening  the 
Regional  Innovation  Scheme,  the  set  up  of  new  actions  to  support  the  entrepreneurial 
capacity  of  HEIs  across  the  EU  and  the  establishment  of  EIT  Hubs)  and  boosting  the 
dissemination of best practices beyond the EIT and KIC Communities. 

Risk  of  KICs  not  reaching  financial  sustainability.  The  probability  of  this  occurring  is 
high whilst the magnitude of the economic effect on existing innovation ecosystems will 
be considerable. A continued low level of private funding may provide disincentives to 
KICs  pursuing  financial  sustainability.  Unclear  guidance  on  the  future  relationship 
between EIT and KICs that stop receiving EIT grants after 15 years may further increase 
the risk. Potential future benefits and gains from long-term investments made by the KIC 
over  their  programming  period  may  be  forfeit.  The  risk  can  be  mitigated  with  the 
introduction of specific co-funding rates that will increase private investment and with a 
clearer  model  for  the  future  relationship  between  EIT  and  KICs  that  cease  to  receive 
funding from the EIT. Guidance from the EIT is also important - evidence suggests that 
the  second  and  third  generation  of  KICs  incorporate  financial  sustainability  objectives 
more effectively than the first generate of KICs.  

Risk 

Probability 

Magnitude 

Consumer welfare 

Negative health impacts 

Environmental degradation 

Economic well-being 

Collusive behaviour 
Deadweight 

Disparities in economic growth 

Agglomeration economies 

Barriers to market entry 

Low 

Low 

Low 

Moderate 

Moderate 
High 

High 

High 

High 

Slight 

Slight 

Slight 

Moderate 

Moderate 
Moderate 

Moderate 

Moderate 

Moderate 

A  potential  risk  is  one  of  incomplete,  or  no  policy  implementation.    It  is  possible  that 
calls for proposals for future KICs would not attract interest. However, based on current 
experience this is unlikely. Currently, there seems to be sufficient demand in consortia to 
apply for new KICs.120  

120 In the 2018 call for new KICs there were 6 and 4 proposals for Urban Mobility and Added-Value Manufacturing, respectively.  
54 

 
 
 
 
 
 
 
                                                           
8.  PREFERRED OPTION 

The baseline would see a business as usual with essential but limited adjustments of the 
EIT  into  the  Horizon  Europe  framework  but  without  addressing  the  problems  the  EIT 
faces.    Options  2  and  3  would  address  the  identified  problems,  respond  to  the  Horizon 
Europe  ambitions  in  terms  of  education  and  regional  outreach  and  include  adaptations 
and improvements to address the technical issues identified.   

Option 2 would see a concerted action by the EIT aimed at supporting the development 
of  innovative  capacity  of  HEIs  that  would  lead  to  economic  and  social  spill-overs  and 
higher  competitiveness.  This  would  come  at  a  relatively  low  cost  and  by  using  the 
existing  administrative  capacity  of  the  EIT  and  economies  of  scale  to  a  considerable 
extent. Involving HEIs from across the EU through the new Action would contribute to 
mitigate the unbalanced strengthening of existing centres of excellence at the expense of 
regions from countries with modest or moderate innovation performance.  

Stronger  openness  and  transparency  measures  would  help  to  unlock  the  innovative 
potential in a wide range of organisations. Sharing knowledge and expertise in a targeted 
way  beyond  KICs  would  further  add  EU  value.  The  introduction  of  co-funding  would 
lead to  greater levels  of private investment  in  KICs and enhance the promotion  of new 
business development and creation. This would increase the potential of reaching the EIT 
financial  sustainability  objectives  in  the  medium-  to  long-term.  There  would  be 
improvements in the regional outreach due to the integration of RIS in the KIC strategies 
and an increased RIS budget. 

Option  3  in  comparison  would  see  the  EIT  increasing  its  regional  outreach  to  local 
innovation  ecosystems  via  a  distributed  network  of  EIT  Hubs  that  support  small-scale 
knowledge  triangle  integration  projects.  This  would  gradually  lead  to  knowledge  spill-
over  effects  resulting  in  increased  innovative  behaviour  of  participating  institutions. 
However, the relative cost of achieving this would be significantly higher than in Option 
2. The impact of the regional outreach would be likely to occur only in the long-term due 
to the time lag between set up of EIT Hubs and any activities they would support. The 
financial and administrative resources required for setting up the structures to implement 
Option  3  would  be  high.  Finally,  the  administrative  burden  created  from  the 
implementation  of  this  Option  in  multiple  locations  and  the  need  to  coordinate  at  a 
centralised  EIT  level  would  not  be  commensurate  to  the  potential  benefits  within  the 
proposed budget.  

Based  on  the  assessment  of  impacts  presented  above,  Option  2  represents  the  most 
suitable  way  to  implement  the  objectives  of  the  initiative  while  offering  the  highest 
impacts.  It  would  allow  for  a  targeted  and  proportionate  action,  amounting  to  an 
incremental strengthening of the intervention alongside reinforced legal certainty. Option 
2 would be a significant improvement over the baseline Option, it would reflect well the 
stakeholders views and could be implemented within the suggested timeframe. Particular 
attention has been paid to the contribution of each Option to the attainment of the overall 
delivery of EU priorities as set in the Horizon Europe proposal and the role of the EIT in 
that programme, while also comparing their effectiveness, efficiency and coherence.  

55 

 
 
 
 
 
 
 
 
 
8.1. Implications of the preferred Option for the EIT Regulation and the SIA 

EIT Regulation  

A clear objective of the amendment to the EIT Regulation through the recast legislative 
technique  would  be  to  ensure  greater  legal  certainty  and  stability  of  the  Regulation  in 
accordance  with  the  Commission’s  better  regulation  and  law-making  principles121  in 
terms of structure and legal drafting. This would enable the EIT Regulation to focus on 
the main principles of the functioning of the EIT/KICs and, at  the same time, facilitate 
the application of its provisions.   

In  light  of  the  above,  the  recast  EIT  Regulation  would  be  time-neutral  and  principle-
based.  This  would  be  achieved  by  putting  greater  emphasis  on  the  principle-based 
approach  in  the  EIT  Regulation,  avoiding  maximum  harmonization  and  focusing  on 
necessary provisions enabling the functioning of EIT and KIC, and at the same time, by 
developing and detailing these principles in the proposed new SIA. In addition, the new 
EIT Regulation would be time-neutral in the sense that the need for its amendments at the 
end of each MFF would in principle not be necessary or only minimal.  It would be for 
the  SIA  to  ensure  the  necessary  alignments  with  the  objectives  of  the  European 
Framework programme for research and innovation funding the EIT, with the monitoring 
and  obligations  of  that  programme,  and  also  to  foster  synergies  with  the  other  relevant 
programmes of the respective MFF. 

Moreover, the EIT Regulation would be amended in order to reinforce the role of the EIT 
in  developing  innovation  capabilities  through  addressing  global  challenges  and  to 
strengthen the legal clarity of its provisions. Additional adjustments would be needed to 
ensure  compliance  of  the  EIT  Regulation  with  the  new  Commission’s  Framework 
Financial Regulation.  

Strategic Innovation Agenda 2021-2027 

The  SIA  will  set  the  priorities  of  the  EIT  for  2021-2027.  It  will  align  the  EIT  future 
development  with  the  Horizon  Europe  general  framework  and  ensure  synergies  and 
complementarities with the latter. The SIA will include the specific objectives of the EIT. 
It will propose concrete measures to enhance the transparency and openness of the KIC 
model in line with Horizon Europe criteria for European partnerships and define guiding 
principles  for  the  role  of  KIC  co-location  centres.  The  SIA  will  set  clear  co-funding 
modalities for implementation  by the  KICs.  It  will  provide  guidance to  the KICs  when 
they reach the maximum 15 year limit after which the EIT grant support to the KIC will 
stop. It will include the main principles of the post-15 year relationship between the EIT 
and KICs.  

The  SIA  will  include  clear  objectives  for  and  in  particular  define  the  new  action  in 
support of increasing the innovation capacity of HEIs to be launched by the EIT in the 
next programming period. It  will strengthen the regional impact of the EIT through the 
new actions and through strengthening of the RIS. The SIA will include an overview of 
the financial and human resources needed for the implementation of the EIT objectives. 
Clear  monitoring  and  evaluation  provisions  will  be  defined  taking  into  account  the 
Horizon Europe framework and the EIT’s specificities.  

121 Commission’s Better Regulation Guidelines; SWD(2017) 350 final.  Interinstitutional Agreement on Better  Law-Making; OJ L 
123,  12.5.2016,  p.  1.  Interinstitutional  Agreement  on  a  more  structured  use  of  the  recasting  technique  for  legal  acts.  OJ  C  77, 
28.3.2002, p. 1 

56 

 
 
 
 
 
 
 
 
                                                           
9.  HOW WILL IMPACT BE MONITORED AND EVALUATED? 

Monitoring and evaluation are fundamental tools in measuring the impact of the EIT and 
will  be  further  strengthened  and  continuously  improved  over  the  next  programming 
period. Given the nature of the knowledge triangle integration model, it will be important 
to  apply  a monitoring framework that  allows flexibility  at  all relevant  levels  (EU, EIT, 
KIC) and ensures coherence with the general objectives of Horizon Europe and impacts 
sought.  

Monitoring  

The  EIT  has  developed  metrics  to  measure  the  progress  of  the  KICs.  Several  Key 
Performance  Indicators  (KPIs)  are  applied  to  all  KICs.122  However,  the  KPIs  could  be 
further fine-tuned in terms of the relevance of KICs' performance. There is a need for a 
balance  between  a  clear  set  of  EIT  key  performance  indicators  (horizontal)  to  measure 
the  KICs  overall  performance  on  the  one  hand  and  the  KICs  sector  specific  indicators 
(vertical)  on  the  other.  Moreover,  the  monitoring  model  and  the  KPIs  of  the  EIT  are 
perceived by stakeholders as too focused on input and output (short-term measures) with 
limited  attention  to  results  and  impacts123  and  are  not  aligned  with  the  proposed 
indicators  and  monitoring  system  of  the  Horizon  Europe  Programme,  including 
monitoring aspects of the partnerships.124  

All  inputs,  outputs,  results  and  impacts  identified  in  this  impact  assessment  will  be 
monitored  through  indicators.  Such  indicators  already  exist  for  the  majority  of  the 
examples.  Whenever  they  do  not  exist,  new  indicators  will  be  developed  in  order  to 
enable the EIT to monitor the achievement of its objectives. The chart below provides an 
overview  of  how  operational  objectives  and  related  indicators  link  to  the  specific 
objectives and related indicators.  

122  Full  list  of  core  KPIs:  ec.europa.eu/research/participants/data/ref/h2020/other/guides_for_applicants/h2020-core-kpis-kic-eit-
2018_en.pdf 
123 E.g. ICF (2017), Evaluation of the EIT, pp. 35-36, High Level Group on the EIT (2016), The Future of the EIT, p. 24, European 
Court of Auditors (2016), Special Report on performance of the EIT, pp. 30 and 49 and SWD on the Interim evaluation of the EIT, 
SWD (2017) 351 final, p. 44. 
124 Cf. Horizon Europe impact assessment, SWD (2018) 307; Regulation Horizon Europe, COM(2018) 435 final. Annex III. 

57 

 
 
 
 
 
                                                           
Figure 10: Link between operational objectives and indicators to specific objectives and indicators; own 
illustration 

The table below provides an overview of key indicators that will be collected. 

Targets125 
2023 
2027 

1.500 

4.000 

Sources of data / 
collection methods 

Data 
availa
bility 

Respons
ible 
body 

Link to Horizon 
Europe impact 
pathway 

Annual programme / 
monitoring data 

Yes 

EIT 

Innovation-based 
growth 

Rolling survey of 
organisations in 
receipt of KIC 
support at set time 
intervals (i.e. 1, 3, 
years post support) 

Annual programme / 
monitoring data 

Rolling survey of 
start-ups created as a 
result of EIT activity 

Rolling survey of 
organisations/employ
ers in receipt of KIC 
support at set time 
intervals (i.e. 1, 3 and 
5 years post support) 

No 

Yes 

EIT 

Innovation-based 
growth 

No 

No 

EIT, 
Europea
n 
Commiss
ion 

Strengthening the 
uptake of 
innovation in 
society 

General 
objective 

Monitoring 
Indicator 

Strengthen 
sustainable 
innovation 
ecosystems and 
bring new 
solutions on the 
market 

No. of product 
innovations 
(goods or 
services) 
launched on the 
market 

Start-ups 
supported  and 
survival rate 

300 

700 

Foster innovation 
and 
entrepreneurship 
through 
education 

Reduction in 
skills mismatches  

No. of direct and 
indirect jobs 
created by 
organisations 
benefiting from 
KIC support 

40% increase 

100% increase 

125 Baseline for comparison is 2020  

58 

Improve effectiveness and efficiency of EIT fundingIncrease regional outreach of EIT by addressing regional disparities in innovation capacity across the EUIncrease innovation capacity of higher education by promoting entrepreneurial transformation of HEIsImprove operational effectiveness and efficiency of EITMonitoring IndicatorsMonetary value of non-EIT KIC funding Financial sustainability ratio(total revenues / total expenditure )HEIs involved in EIT and KIC activitiesNo. and % of organisations involved in EIT/KIC activities from regions outside the KIC CLC regionsNo. of participants completing eligible EIT programmeReduction in skills mismatchesNo. of product innovations launched Start-up creation and survival rateStrengthen sustainable innovation ecosystems   across EuropeFoster innovation and entrepreneurship through better education Bring new solutions to global challenges to market Time to grantNo. of new KIC partners every yearNo. of entities participating in EIT/KIC activitiesIncrease oppeness and transparencyOperationalSpecificGeneral 
 
 
 
 
 
 
 
 
 
 
 
                                                           
Specific 
objective 

Monitoring 
Indicator 

Targets 
2023 
2027 

Sources of 
data / 
collection 
methods 

Data 
avail
abilit
y 

Respo
nsible 
body 

Link to Horizon 
Europe impact pathway 

Increase impact 
of KIC through 
more effective 
EIT funding 

Monetary value 
of non-EIT KIC 
funding  

700 MEUR 
1500 MEUR 

Increase 
innovation 
capacity of 
higher education 

Increase 
regional 
outreach 

n.a. 

300 
750 

10.000 
30.000 

50% increase 
100% increase 

Financial 
sustainability 
ratio 
(total revenues / 
total expenditure 
) 

HEIs involved in 
EIT and KIC 
activities 

No. of 
participants 
completing 
eligible EIT/KIC 
education 
programme 

No. of 
entities/organisat
ions 
participating in 
EIT/KIC 
activities from 
regions outside 
the KICs’ CLC 
regions 

Annual 
programme / 
monitoring 
data 

Annual 
programme / 
monitoring 
data 

Annual 
programme / 
monitoring 
data 

Annual 
programme/ 
monitoring 
data 

Annual 
programme / 
monitoring 
data 

Yes 

EIT 

n.a. 

Yes 

EIT 

n.a. 

Yes 

EIT 

Strengthening human 
capital in R&I 

Yes 

EIT 

Strengthening human 
capital in R&I 

Yes 

EIT 

Strengthening the uptake 
of innovation in society 

Operational 
objectives 

Monitoring 
Indicator 

Sources of 
data / 
collection 
methods 

Data 
avail
abilit
y 

Respo
nsible 
body 

Link to Horizon 
Europe impact pathway 

Improve 
operational 
effectiveness 
and efficiency of 
EIT 

Increase 
openness and 
transparency  

Time to grant 

n.a. 

20% increase 
50% increase 

No. of 
entities/organisat
ions 
participating in 
EIT/KIC 
activities 

Annual 
programme / 
monitoring 
data 

Annual 
programme / 
monitoring 
data 

Yes 

EIT 

n.a. 

Yes 

EIT 

Innovation-based growth 

Table 19: Specific and operational objectives to be monitored by indicators; own illustration 

In parallel and in full compatibility with existing monitoring tools, a close alignment will 
be  sought  between  the  EIT  monitoring  provisions  and  those  that  are  put  in  place  for 
Horizon  Europe.  For  example,  the  EIT  will  align  its  monitoring  tools  with  the  Impact 
Pathways  of Horizon Europe that seek to  address the need for scientific, economic and 

59 

 
 
 
 
 
 
 
 
 
 
 
societal impacts indicators more comprehensively. It will be a responsibility of the EIT to 
regularly  monitor  the  operational  performance  of  the  KICs  and  to  adapt  its  monitoring 
and  reporting  systems  continuously.  The  results  of  such  monitoring  will  feed  into  the 
business  planning  processes  of  the  KICs  and  into  the  EIT  decision-making  on  the 
allocation  of  the  budget  and  preparation  of  the  framework  partnership  agreements  with 
the  KICs  as  beneficiaries.  The  monitoring  results  should  feed  continuously  into  the 
policy-making process.   

Evaluation  

The evaluation of the performance of the EIT will be carried out by the Commission in 
line with the requirements of the EIT Regulation and will feed into the overall Horizon 
Europe  programme  evaluation  that  will  be  carried  mid-term  and  ex-post.  This  will 
include  an  assessment  of  the  synergies  of  the  EIT  with  the  other  instruments  of  the 
programme.  

With  regard  to  the  KICs,  a  specific  indicator  framework  will  be  used  to  assess  the 
performance of the KICs during the next Strategic Innovation Agenda (2021-2027). The 
framework  draws  from  current  and  previous  indicators,  fills  gaps  and  deficiencies 
identified in the existing performance measurement system and is aligned to the Horizon 
Europe  indicator  framework.  While  this  is  still  in  development,  some  key  parts  are 
outlined in more detail in Annex 8. Further work on evaluation will be pursued with the 
JRC's Competence Centre on Microeconomic Evaluation. 

60 

 
 
 
 
 
 
10. ANNEXES 

10.1. 

Annex 1: 

Procedural information  

Lead DG, DEcide Planning/CWP references 

The  work  on  the  impact  assessment  was  led  by  the  Directorate-General  for  Education, 
Youth,  Sport  and  Culture  (DG  EAC)  which  is  responsible  for  the  coordination  of  the 
activities related to the functioning of the EIT.  

The Impact assessment supports two Decide Planning initiatives as follows: 

  EAC - PLAN/2017/987 - Amendment of the Regulation on the European Institute 

of Innovation and Technology (EIT) 

  EAC - PLAN/2017/1516 -  Strategic Innovation Agenda for the period 2021-2027 

of the European Institute of Innovation and Technology (EIT) 

Organisation and timing 

The impact assessment covers all the elements needed for (1) the EIT Regulation revision 
and  (2)  the  SIA  2021-2027,  i.e.  the  EIT  vision,  mission,  objectives,  governance  and 
operation model as well as funding model.   

Both  the  revisions  of  the  EIT  Regulation  and  the  SIA  are  part  of  the  wider  Horizon 
Europe process and hence the timely adoption of both initiatives is of utmost importance.  

The Impact assessment steering group (IASG) was established in January 2018 and held 
five meetings to steer the various phases of the process including the preparation of the 
Open Public Consultation (OPC).  

The Commission’s adoption of the proposal for a new Strategic Innovation Agenda (SIA) 
for the EIT for the period 2021 – 2027 as well as the amendment of the Regulation on the 
EIT are expected in May 2019.  

Consultation of the RSB 

The Impact Assessment Report was submitted to the Regulatory Scrutiny Board on xx 22 
January 2019 and discussed at the meeting of the Board on 13 February 2019. The Board 
issued  a  negative  opinion  on  15th  February.  The  impact  assessment  report  was  revised 
taking into account the Board’s comments and recommendations. 

The following table explains how the Board's recommendations have been addressed in 
the revision of the report. 

61 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Main RSB considerations 

Measures taken and the changes 
introduced in the revised IA report 

Where 

1. The report does not explain what 
still needs to be decided and what 
is covered under Horizon Europe.  

  It is also unclear which elements 
pertain to the new SIA and the 
amended EIT Regulation, 
respectively. 

The report has been revised to explicitly 
state what decisions on the future of the 
EIT have already been made in the 
Horizon Europe proposal and what issues 
are left for the EIT Regulation and SIA.  

The report now contains clarifications as 
regards the scope of the impact 
assessment, the legal and operational 
context of the EIT and KICs and how the 
EIT Regulation and the SIA link to the 
Horizon Europe programme.  

Chapter 1.3. and 
1.4 

Chapter 1.4. and 
1.5 

2. The report does not provide 

evidence that demonstrates the 
need to act on alleged problems.  

The problem definition has been 
restructured and additional evidence on 
problems, drivers and effects has been 
added. 

Chapter 2 

The core problems have been identified as 
(i)  suboptimal funding model 
(ii)  limited impact of EIT’s 
educational activities 

(iii) limited impact of EIT’s regional 

outreach 

Chapter 2.1.-2.3 

To better illustrate the linkages and 
relations, a problem tree (Figure 4) with 
drivers and consequences has been added. 

Chapter 2.5. 

An intervention logic (Figure 7) has been 
added to explain how problems are 
addressed. The three options address all 
identified problems, but to a different 
extent. 

The chapter on impacts provides additional 
argumentation on the effects of the 
reallocation of funds proposed under 
option 3. The same section incudes a brief 
discussion on agglomeration economies in 
the context of option 3.  

Chapter 5.4. 

Chapter 6.3  

Additional details have been added on the 
functions of the EIT Hubs.  

Chapter 5.3 

3. It is also not clear how the options 
respond comprehensively to the 
reported problems. 

4. The report does not explain why 
the reallocation of funds works in 
opposite directions for different 
options, nor does it explain what 
the regional hubs achieve. 

62 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
RSB further considerations and 
adjustments required 

Measures taken and the changes 
introduced in the revised IA report 

Where 

1. The report should better explain 
what the Commission needs to 
decide at this stage. It should 
clarify the urgency to act and 
coherence with other initiatives. 
The elements already covered 
under the Horizon Europe proposal 
should come out more clearly. 
Also, the policy context should 
explain the alignment with the 
priorities and strategic planning of 
the programme. In particular, the 
report should clarify the timing and 
coherence between the choice of 
additional KICs in the SIA and the 
ongoing strategic planning process 
of Horizon Europe. It should 
acknowledge any possible risks in 
this respect. It should better 
delineate between the content of 
the SIA and the EIT Regulation. 

2. The intervention logic should show 
how the identified problems get in 
the way of achieving the policy 
objectives, and how measures 
contained in the alternative options 
would resolve this. The report 
should better explain why the 
problems require a legislative 
solution. It should better use the 
available evidence, e.g. the interim 
evaluation and the Court of 
Auditors report. The problems and 
their magnitude need more in-depth 
analysis, notably in the areas of 
education and regional outreach. 
Other relevant problems need 
assessment, such as administrative 
costs or burdens for SMEs. The 
section should also better outline 
the problems specific to KICs, 
especially the choice of new ones. 

Decisions made and to be made with 
regard to the EIT have been explicitly 
outlined.  

Chapters 1.4 and 
1.5  

An explanation of the need to act has been 
added.  

Chapter 1.5 

The  introduction  has  been  restructured  to 
include the policy context and the strategic 
planning  process  (SPP)  of  the  Horizon 
Europe  programme,  its  scope,  timing  as 
well  as  the  approach  of  aligning  the 
EIT/KIC  priority  areas  in  the  new  SIA 
proposal  with  the  SPP  of  the  Horizon 
Europe.  Risks  were  clearly  identified.  A 
clearer  delineation  between  SIA  and 
Regulation was added.  

Chapter 1.3 and 
1.4 

Chapter 2 

Chapter 2.1.- 2.3 

Chapter 2.4 

The problem definition has been 
restructured. Core problems have been 
identified. Additional evidence on 
problems, drivers and effects have been 
added. A problem tree has been added.  

The remaining issues (e.g. openness, 
transparency, KICs collaboration, EIT 
governance) that need to be addressed 
through legislative changes or technical 
operational adjustments are brought under 
the separate heading of “technical issues”. 

legislative  changes  or 

The  chapter  presents  a  summary  of  how 
problems  and  technical  issues  can  be 
tackled  through  the  available  instruments, 
i.e. 
technical 
adjustments  in  the  current  legislative  base 
in  order  to  increase  EIT’s  efficiency, 
effectiveness 
coherence, 
and  overall 
whenever  applicable  in  combination  with 
operational and managerial measures. 

The intervention logic has been revised 
and the relations between  problems 
identified and objectives to be achieved are 
now made clearer. 

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chapter 5.4 

3. Based on the improved 

description of the scope of this 
initiative, the baseline should 
include all elements that the 
Horizon Europe proposal has 
already determined. It should not 
assume elements which are still 
undecided. It should explain the 
consequences of not acting. 

The baseline option has been revised to 
clearly represent the continuation of EIT’s 
activities as they are today with essential 
adjustments necessary to align it with the 
Horizon Europe framework programme. 
These include in particular collaboration 
and synergies with relevant Horizon 
Europe, alignment with the Strategic 
Planning Process of Horizon Europe, and 
synergies with the European Innovation 
Council. 

4. The options should contain 
alternative solutions to the 
identified problems and for the 
decisions to take, such as the 
choice of themes for new KICs. 
The report should make clear 
what measures are contained in 
each option, and how they would 
tackle the problems in practice. 
The options should explore 
alternative uses of the available 
budget. In particular, they should 
better explain alternatives 
regarding the number, funding 
and management of the KICs 
and of centralised EIT actions. 
They should also explain how 
incentives would result in 
adequate private co-financing. 
The report should report on the 
opinions of stakeholders on the 
options. 

The consequences of not acting are 
explained in the introductory chapters. 

Chapter 1.5 

The policy options have been  
differentiated further and additional 
clarifications on the individual elements of 
each option have been added. 

Chapter 5.3. 

See also point 3 above.  

The report makes clear what measures are 
contained within each option and 
distinguishes more clearly between them 
in terms of KIC activities (no. of new 
KICs), EIT horizontal activities and 
budget allocation for these.  

Option 2 comprises the direct support 
actions for entrepreneurial and innovative 
capacity development of HEIs and 
introduces the key assumptions and 
rationale for the action.  

Option 3 key feature is the creation of EIT 
hubs in all MS as a main instrument to 
achieve EIT operational and specific 
objectives. The key assumptions and 
rationale for the EIT Hubs are explained.  

Chapter 5.3 

Chapter 6.2. 

Chapter 6.3. 

All options are presented with their 
proposed budgets.  

Chapter 5.3 

The report further explains how incentives 
would result in private co-financing and 
lists also mitigation measures.  

Annex 10 + Chapter 
5.3.3. 

The inputs into the individual options in 
terms of budget are provided. The 
differentiation for each option is made 
clear as regards the administrative budget, 
the budget to KICs and the budget to 
horizontal EIT activities.  

Chapter 5.4.4. 

Intervention logic charts are added to 
outline the links at different levels (i.e. 
between problems, objectives and 
options). 

Chapter 5.4 

5. The report should better explain 
what the probability of success 

The impact chapter of the report has been 
revised in order to better capture the 

Chapter 6 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
is under each option. It should 
better analyse all relevant 
impacts, including regulatory 
costs and benefits, social 
impacts, and impacts on SMEs. 
The report should clarify the 
expected societal return of the 
different options, including the 
regional outreach. It should 
examine whether regional 
outreach might conflict with 
agglomeration economies in 
creating knowledge. How the 
report arrives at the preferred 
option should come out more 
clearly. The report should use 
clear criteria to compare across 
the alternatives. 

relevant impacts including the regulatory 
costs and benefits, social impacts and 
regional outreach and impact. 

The impact analysis is based on the 
projection of the key output indicators as 
follows: 

  HEIs involved in EIT activities 
  Students involved in EIT 

activities 

  Businesses involved in EIT 

activities 

  Products, services, processes or 

ideas generated 
  Start-ups supported 
  Value of KIC co-funding 
  No. of external participants as a 
measure of regional activity 

New set of criteria has been introduced to 
compare the options. 

Chapter 7 

(1)  effectiveness in reaching the 

operational objective 
(2)  efficiency, cost-benefit of 

managing KICs and cost-benefit 
of introducing new actions 
(3)  coherence with Horizon Europe 
and synergies with other EU 
programmes and policies 
Simple and user friendly comparison table 
have been introduced with qualitative 
assessment of options per criteria and 
ratings according to their impact.    

The evaluation and monitoring part  has 
been revised.  
Specific and operational objectives have 
been linked to the monitoring indicators 
for measuring the achievements.  
Sources of data collection have been 
added and the processes of monitoring and 
evaluation as well as responsibilities of 
involved bodies were clarified. 

The different issues in individual chapters 
have been complemented with visual tools 
(charts, graphs, tables) to allow the reader 
easily capture the complex issues.  

A native English speaker has proofread 
the document.  

The overall presentation and reading of 
the report has improved in order to reflect 
a common structure of the presentation.  

Chapter 9 

Entire report 

6. The evaluation arrangements 
should define benchmarks for 
what success of the initiative 
would look like. In doing so, the 
report should identify 
operational objectives and link 
them with monitoring indicators. 

7. The presentation of the report 

should be more reader friendly, 
avoiding jargon and using plain 
language. It should enable the 
reader to understand how the 
EIT works and cooperates with 
KICs. The report should be self-
standing and independent from 
annexes and external documents, 
e.g. the evaluation. The report 
could use more visual aids, e.g. a 
problem tree, illustrations and 
diagrams 

Evidence, sources and quality 

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The impact assessment is based primarily on the results of the latest evaluation, review 
and analysis done by the following  studies, reports and consultations that are presented 
below: 

  Commission Staff Working Document on the Interim Evaluation of the European 

Institute of Innovation and Technology (EIT), SWD (2017) 351 final;  

  Wilkinson,  C.  et  al.  /  ICF  (2017),  Evaluation  of  the  European  Institute  of 

Innovation and Technology (EIT);  

  European Court of Auditors (2016), Special Report on the EIT 
  Report  on  the  strategic  issues,  perspectives  and  future  of  the  EIT  of  the  High 
Level Group set up by Commissioner Tibor Navracsics (published in 2016)  

  Study to support the Impact Assessment (SQW, November 2018) 
  Directorate-General  for  Research  and  Innovation  (2018),  A  new  horizon  for 
Europe. Impact assessment of the 9th EU framework programme for research and 
innovation, SWD(2018) 307.  

66 

 
 
 
 
 
 
10.2. 

Annex 2a: 

Stakeholder consultation activities 

Annex  2A  provides  a  brief  synopsis  of  the  outcomes  of  the  consultation  activities  that 
have  been  undertaken  as  part  of  the  preparation  of  the  impact  assessment  on  the  new 
Strategic  Innovation  Agenda  of  the  European  Institute  of  Innovation  and  Technology 
(EIT) and the revision of the EIT Regulation. Table 1 provides a short overview of the 
nature, scope and timing of the consultations and the next sections present the results.  

Table 1. Scope of the consultation activities 

Issue 

Type of consultations 

Date of consultations 

Challenges hampering innovation 
in Europe 

Open Public Consultation (OPC) with 
157 responses and 14 written position 
papers 

10 October –  
5 December 2018 

EIT objectives 

OPC with 157 responses and 14 written 
position papers 

10 October – 5 
December 2018 

EIT impact indicators 

Options for improvements in 
operation of the EIT and the 
KICs 

Themes for the establishment of 
future KICs 

Interviews with representatives of DG 
EAC, EIT and KICs (16 in total)* 

Online consultation with 
representatives of KICs (8 responses)* 

February – July 2018 

April – May 2018 

Workshop with representatives of EC, 
EIT, and KICs* 

15 May 2018 

OPC with 157 responses and 14 written 
positions 

10 October – 5 
December 2018 

Interviews with representatives of DG 
EAC, EIT and KICs (23 in total) 

February – September 
2018 

Workshop with representatives of EC, 
and EIT * 

15 May 2018 

Stakeholder meeting – Education and 
Research Organisations/ Associations 

Stakeholder meeting – Business and 
Regions Associations  

Interviews with representatives of 
academia, businesses and thematic 
networks (25 in total) 

22 November 2018 

29 November 2018 

February – July 2018 

OPC with 157 responses and 14 written 
positions 

10 October – 5 
December 2018 

* Note: Consultations have been carried out as part of the Study to support the Impact assessment on the 

Strategic Innovation Agenda of the EIT. 

67 

 
 
  
 
 
 
Findings from the consultation activities    

Challenges hampering innovation in Europe 
The open public consultation (OPC)126 conducted by the European Commission showed 
strong agreement amongst respondents that there is scope for further reinforcing the role 
of  research  and  innovation  in  Europe  with  a  view  to  address  global  challenges.  The 
majority of respondents also agreed with the following statements:  

 
 

the European innovation ecosystem is fragmented 
the  transfer  of  ideas,  technologies  and  talents  from  education  and  research  into 
start-ups and technology is not fast enough  

  companies  with  potential  for  international  growth  have  to  cope  with  the 

fragmentation and diversity of national markets.  

The  breakdown  of  the  results  by  respondents  from  different  country  groups  (using 
countries identified as ‘innovation leaders and strong innovators’ and countries identified 
as  ‘moderate  and  modest  innovators’),  showed  that  the  results  were  very  similar,  with 
both  groups  in  agreement  on  many  of  the  statements.  However,  respondents  from 
‘moderate  and  modest  innovators’  tend  to  agree  more  that  joint  activities  between 
education  and  industry  have  not  been  sufficiently  integrated  within  their  regional  and 
local  ecosystems,  and  there  is  insufficient  involvement  of  end-users  and  citizens  in  the 
co-design, experimentation and testing of innovation solutions.  

A high degree of consistency was also found when the statements were broken down by 
respondents  distinguishing  between  citizens  and  representatives  of  company/business 
organisations,  academic/research  organisations  and  others.  When  asked  in  an  open-
response  question  about  the  factors  that  hinder  active  involvement  in  existing  pan-
European innovation ecosystems, the most common factors noted were ‘lack of visibility 
and  awareness  of  existing  innovation  ecosystems  and  opportunities’,  ‘bureaucracy  and 
administrative complexity’ and ‘the barriers between nation-states’. 

EIT objectives 

The respondents to the OPC (157 responses and 14 written positions) provided their view 
on  how  best  to  achieve  the  three  EIT  policy  objectives.  The  main  actions  identified  in 
relation to the three EIT policy objectives were as follows: 

  Objective 1: To foster, grow, strengthen and develop current or new sustainable 

innovation ecosystems across Europe. 

o  Supporting  the  involvement  of  final  users  in  the  development  of 

innovative solutions. 

o  Harnessing the synergies among  existing innovation  activities at  EU and 

national levels. 

o  Increasing  the  effectiveness  of  cooperation  and  coordination  of  existing 

KICs and related activities. 

126 An analysis of the results of the OPC is provided in Annex 2B. 

68 

 
 
 
 
 
 
 
 
 
 
                                                           
  Objective  2:  To  improve  the  human  capital  base  for  innovation  through 
to  make 
developing 
entrepreneurship  and  innovation  culture  in  Europe  stronger,  more  inclusive  and 
more  open,  and  to  contribute  to  the  entrepreneurial  transformation  of  higher 
education institutions across the EU. 

skills  and  competences, 

talents  and  enhancing 

o  Providing 

funding 

and 
rewarding/recognising  universities  for  becoming  more  innovative  and 
entrepreneurial. 

capacity  development 

innovation 

for 

o  Launching  new  actions  supporting  education  and  human  capital 

development through the identification of future skills needs. 

  Objective 3: To develop and bring new solutions to global societal challenges to 
the  market  by  integrating  education,  business  and  research,  as  well  as  other 
relevant  players  (such  as  municipalities,  civil  society,  large  industry,  small  and 
medium-sized enterprises, etc.) according to the sector. 

o  Development  of  new  products  and  services,  which  involve  all  relevant 

stakeholders. 

o  Making business support services widely available. 
o  Increasing support for financial and capital raising services and attracting 

private funding. 

EIT impact indicators 

The  consultation  activities  occurred  between  DG  EAC,  the  EIT  and  its  KICs,  and  the 
Joint Research Centre of the Commission tackled two main aspects of the development 
of the impact indicator framework.   

First,  it  helped  in  identifying  a  set  of  key  principles  for  the  indicator  framework  to 
follow, namely: 

  To  maximize  the  consistency  and  coherence  of  the  impact  indicators,  including, 
where possible, to introduce consistent definitions for specific indicators and a more 
harmonised approach to  the measurement of impact, particularly in terms of impact 
indicators of the new Horizon Europe Programme. 

  To  include  a  balanced  coverage  across  the  three  levels  of  impact:  1)  economic 
development  (e.g.  jobs,  economic  growth),  2)  innovation  and  education  system 
effects (e.g. capacities to innovation, collaborations, networks, and ecosystem effects) 
and  3)  societal  benefits  (e.g.  to  cover  the  foci  of  KICs,  such  as  on  climate,  health, 
energy etc.). 

  To address prevailing gaps in the existing core indicator set, in particular to address 
the outcomes and the longer-term impacts, as well as the effects on different regions. 

Second,  a  set  of  aspects  to  be  duly  taken  into  account  to  best  meet  the  different 
stakeholders’ perspectives on the impact indicators. The following four key points were 
pertinent in developing the final set of recommended indicators. 

69 

 
 
 
 
 
 
 
 
 
 
 
 
 
  Clarifying  the  core  purpose  of  the  Indicator  Framework  –  i.e.  to  provide  evidence 
about  the  long-term  socio-economic  impacts  of  the  KIC  model  but  also  to 
acknowledge the role of initial indicators as per the results chain (or logic chain) in 
terms of how these impacts are brought about. 

  Acknowledging  the  challenges  to  decide  on  resource  allocation  using  long-term 
indicators  –  i.e.  KICs  contribute  to  long-term  effects  but  should  not  be  accountable 
for them. 

  Some  expected  outcomes/impacts  do  not  fit  easily  within  the  indicator  framework 
and would be best assessed through multiple methods of research (rather than single 
indicators),  and  in  particular  through  evaluative  research  where  a  degree  of 
judgement will be required. 

  Challenges to provide evidence about the causality and attribution in the indicator set, 
and the importance of evaluative research for helping to test causality, or at least the 
contribution of the KIC model and KIC activities to outcomes and impacts. 

The  subsequent  workshop,  survey  and  consultations  with  stakeholders  on  the  impact 
indicators were used to gather further feedback, in particular on the perceived importance 
and  value  of  different  indicators,  and  the  specific  challenges  and  possible  solutions  in 
defining and measuring certain indicators. The results were fed into the refinement and 
finalisation of the recommended indicator set.   

Options for improving the operation of the EIT and the KICs 

The  respondents  to  the  OPC  provided  their  views  on  the  most  important  aspects  for 
ensuring  the  financial  sustainability  of  KICs.  According  to  them,  a  robust  financial 
strategy  for  a  KIC  from  the  outset  and  continuous  monitoring  and  evaluation  of  its 
implementation would be the best strategy.  

With regard to the criteria for selecting and implementing new KICs the prevailing views 
point to the societal impact of the proposed activities, including their potential to address 
the Sustainable Development Goals. 

The main points raised by the representatives of the university/research associations 
and organisations highlight the negative cost-benefit ratio for a university involvement 
in  a KIC and the ineffectiveness  of too  many currently  existing  university labels.  They 
also point to 1) the need to make the conditions for university participation simpler and 
more enabling, and 2) the importance of the regionalisation of universities and their link 
to Smart Specialisation Strategies. In addition,  academic stakeholders consider that EIT 
educational activities should be complementary and build on already existing experience 
of innovative universities with regard to collaborative research, problem based learning, 
developing  entrepreneurial  courses,  creation  of  incubators  with  regional  authorities  and 
companies, etc. Many of them also stressed the limited involvement of KIC partners in 
KIC  educational  activities  and  the  need  for  more  integrated  system  that  would  allow 
innovative educational  institutions  to  participate in  KICs on  an informal  and simplified 
basis.  

70 

 
 
 
 
 
 
 
 
 
The  main  issues  raised  by  the  representatives  of  business  and  regional  associations 
related  to  the  necessity  of  linking  the  EIT  and  KIC  activities  to  the  regional  and  local 
Smart  Specialization  Strategies  including  the  unmet  potential  for  synergies  with  other 
funding  opportunities  (ESFI,  regional/local  funds).  Representatives  of  business 
associations  pointed  out,  in  particular,  to  the  need  to  make  KICs  more  open  and  more 
easily  accessible  by  potential  partners.  Furthermore,  involvement  of  all  (big  and  small) 
companies  is  considered  important.  With  regard  to  education,  the  prevailing  views  are 
that the HEIs should play a key role for a more entrepreneurial environment in Europe. 
Last but not least, emphasis is put on the lack of ambition of the EIT as an institute, in 
view of the need to further develop its model, to scale up the good lessons learned and to 
better exploit the critical mass attained.  

The  interviews  with  representatives  from  the  EIT,  KICs,  European  Commission, 
European Parliament and Academia, as well as the stakeholder workshop, provided input 
on the challenges to the current EIT/KIC model and the options for improvement which 
has been incorporated in the Impact assessment report. 

Possible themes for future KICs 

The  interviews  with  representatives  of  academia,  businesses  and  thematic  networks 
focused on the feasibility and relative merits of setting up future KICs in the following 
possible areas taking also into account the proposal of the EIT Governing Board: Security 
and  Resilience;  Inclusion,  Integration  and  Migration;  Water,  Marine,  and  Maritime; 
Cultural and Creative Industries. The prevailing  opinion of the interviewees is  that the 
EU has competitive advantage and can deliver further economic growth within all these 
areas  due  to  its  strong  R&I  base.  Furthermore,  the  KIC  model  is  perceived  to  be  well 
suited to addressing bottlenecks for innovation in relevant industries and thematic areas.  

The respondents  to  the  OPC also  suggested other themes such  as  artificial intelligence; 
mobility; cultural and creative sectors; sustainable development; and transport.  

With regard to the criteria for new KICs the following were particularly identified: 

  New  KICs  should  have  the  potential  to  enhance  the  wider  EU  economic 
competitiveness  without  being  limited  to  a  specific  economic  sector  (e.g. 
sufficient water availability and security is required for many sectors to prosper). 
KICs  should  also  aim  to  contribute  to  the  evidence-based  decision  making  in 
public and private sectors, and contribute to EU policy objectives, in particular to 
sustainable development and quality of life. 

  The  implementation  of  new  KICs  should  address  the  geographical  disparity  in 
economic,  innovation  and  social  terms  so  that  the  benefits  of  KICs  activities 
could be distributed equally among European regions. 

71 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
10.3. 

Annex 2b: 

Public consultation - Synopsis Report 

The  Open  Public  Consultation  (OPC)  was  run  as  a  component  of  the  European 
Commission’s broad-based Impact assessment to support its proposals for revision of the 
Regulation establishing the European Institute of Innovation and Technology (EIT) (EC 
No 294/2008) and adoption of a new Strategic Innovation Agenda of the EIT for 2021-
2027.  

The  purpose  of  the  OPC  was  to  gather  information,  opinions  and  views  from  a  wide 
range of stakeholders on 1) the challenges and opportunities in the European research and 
innovation area, 2) the policy objectives of the EIT, and 3) the policy options to tackle 
the  challenges.  The  OPC  provided  an  opportunity  to  ‘open  up’  the  data  collection 
exercise  to  a  broad  community  of  individuals  and  organisations,  and  give  them  the 
opportunity to provide input to the evaluation. 

The OPC was managed by DG EAC in line with the principles for consultations set out 
by  the  Commission’s  Better  Regulation  Guidelines  –  i.e.  participation,  openness  and 
accountability, effectiveness, and coherence. 

Consultation questionnaire design 

The OPC consisted of a structured questionnaire  designed by the Commission  Services 
and was accessible for completion online (via the EUSurvey platform). The majority of 
the questions were closed and provided a number of opportunities for the respondents to 
provide  more  detailed  open-ended  comments.  To  encourage  a  good  response  rate,  the 
length of the questionnaire was kept short, covering 20 questions in total. It consisted of 
an introductory part (details on the respondents), and three thematic parts - on challenges 
and  opportunities,  policy  objectives,  and  options.  In  addition  to  responding  to  concrete 
questions,  the  respondents  had  an  opportunity  to  also  submit  separate  written 
contributions.  

Sample design and questionnaire distribution 

The OPC was launched on 10 October 2018 and closed on 5 December 2018. It was open 
to  anybody  interested  in  sharing  their  opinion  on  the  topic.  The  consultation  was 
primarily accessible via the European Commission’s dedicated public initiatives webpage 
and  was  promoted  via  the  European  Commission’s  standard  channels  for  running  a 
public consultation.  

The OPC received the following responses:  

  157 completed questionnaires 
  14  written  positions127  –  two  of  these  were  specific  proposals  for  particular 
themes to focus on in the future. The remaining 12 provided further detail in line 
with  the  points  raised  in  the  online  questionnaire  and/or  advocated  the  specific 
role(s) that different communities/groups/organisations could play. 

127 There were 16 written documents, though two of these duplicated the online responses to the open questions. 

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
The response rate is consistent with what would be expected for an OPC carried out as 
part of an evaluation exercise.  

Data analysis  

Both the quantitative and qualitative data from the OPC were analysed. The analysis of 
the results is based on the following considerations and analytical protocols:  

  The  data  were  anonymized  with  only  the  key  characteristics  (e.g.  organisation 
type,  and  level  of  innovativeness  of  the  country  of  residence  of  the  response) 
being attributed to the responses. 

  The relatively small sample size did not allow for a quantitative disaggregation by 

country of origin of the participants. 

  Where  relevant,  quantitative  data  were  disaggregated  between:  i)  respondents 
from  leading  innovators  and  moderate  innovators;  and  ii)  type  of  organisation 
respondents represented. However, these disaggregated results need to be treated 
with  some caution as well given the small sample sizes. The following analysis 
points out where substantial differences between respondents form different types 
of organization appear.  

Results of the OPC 

Types of respondents 

As  Figure  1  shows,  the  most  common  types  of  respondent  to  the  OPC  were  those 
replying  in  their  private  capacity  as  EU-citizens  (32%  of  all  respondents)  and  those 
responding  as  representatives  of  an  academic  or  research  organisation  (32%).  
Business  organisations made  up  16%  of  respondents.  The  ‘other’  category  includes  a 
mix  of  representatives  from  public  authorities,  non-governmental  organisations, 
environmental  organisations  and  non-EU  citizens.  Five  responses  were  submitted  on 
behalf of KIC organisations. 

Figure 1. The type of the organisation that respondents represented  

Q: I am giving my contribution as: 

16% 

32% 

20% 

EU citizen

Other

Base: all participants (N=157) 
Source: Open Public Consultation 

32% 

Academic/research organisations

Company/business organisation

73 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Size of organization or institution 

Figure  2  shows  the  types  of  organisations  represented  in  the  consultation.  For  those 
responding on behalf of organisations, more than half (56%) participated on behalf of a 
large organization (i.e. 250 or more employees). The remainder were split fairly evenly 
between micro, small and medium-sized entities. 

Figure 2. The size of the organisation that respondents represented 

Q: Organisation size 

60%

50%

40%

30%

20%

10%

0%

17% 

15% 

12% 

56% 

Micro (1 to 9
employees)

Small (10 to 49
employees)

Medium (50 to 249
employees)

Large (250 or more)

Base: all participants responding on behalf of organisations (N=101) 
Source: Open Public Consultation 

Country of origin of respondents 

As  visible  from  Figure  3  below,  the  two  countries  with  highest  number  of  respondents 
were  Belgium  (15%)  and  Germany  (12%).  These  were  followed  by  France  and  the 
Netherlands, accounting for 9% and 8% of all respondents respectively. 

Figure 3. Country of origin of respondents 

Q: Country of origin 

%
5
1

%
2
1

16%

14%

12%

10%

8%

6%

4%

2%

0%

%
9

%
8

%
6

%
6

%
6

%
5

%
5

%
4

%
4

%
4

%
  2
%
3

%
2

%
2

%
1

%
1

%
6

Base: all participants (N=157) 
Note: ‘Other’ includes countries with one respondent (Latvia, Malaysia, Austria, India, Egypt, Lithuania, China, Brazil, 
and Ireland); Source: Open Public Consultation 

74 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Questions on challenges and opportunities in the European innovation area 

The open public  consultation  included questions  on the challenges and opportunities in 
the European innovation area. The former category included a set of statements related to 
structural  weaknesses  that  have  been  identified  as  hampering  innovation  in  Europe. 
Respondents were asked to rate these on a scale from strongly agree to strongly disagree.  

In  the  present  section,  the  results  are  firstly  presented  in  aggregate,  before  providing 
analysis  by  country  groups  (‘innovation  leaders  and  strong  innovators’  and  ‘moderate 
and  modest  innovators’)  and  respondent  type  (EU  citizens,  a  company/business 
organisation,  an  academic/research  organisation  or  other).  After  the  statements,  the 
respondents were provided with two open-response questions to share views/feedback on 
the factors that hinder active involvement of interested parties in existing pan-European 
innovation  ecosystems  and  other  challenges  and  opportunities  in  the  research  and 
innovation area that are relevant to the operations of the EIT. The analysis of these open-
response questions can be consulted at the end of this section. 

Aggregate results 

The  results  show  that  almost  all  (96%)  respondents  agreed  or  strongly  agreed  with  the 
statement  that  “there  is  scope  for  further  reinforcing  the  role  of  research  and 
innovation in Europe to address  global challenges”. The majority of respondents  also 
agreed with statements about the fragmentation of the European innovation ecosystem 
(85%),  the  slow  transfer  of  ideas,  technologies  and  talents  from  education  and 
research  into  start-ups  and  technology  (84%)  and  the  issue  of  companies  with  the 
potential  for  international  growth  facing  the  fragmentation  and  diversity  of  national 
markets (78%). 

At the other end other scale, over a third (34%) disagreed or strongly disagreed with the 
statement  that  “there  are  not  enough  measures  supporting  entrepreneurship  in 
Europe”  whilst  over  a  quarter  (26%)  disagreed  or  strongly  disagreed  that  there  are 
insufficient  training  opportunities  in  Europe  to  become  more  entrepreneurial  and 
innovation-minded.  Nevertheless,  although  both  statements  received  the  greatest  levels 
of disagreement from respondents, the majority of the participants in the consultation still 
agreed or strongly agreed with them (50% and 65%, respectively). 

75 

 
 
 
 
 
 
 
 
Figure 4. Rating of structural weaknesses, hampering innovation in Europe 

Q:  A  number  of  structural  weaknesses  have  been  identified  as  hampering  innovation  in  Europe. 
Based on your personal experience, how would you rate the following statements? 

Base: all participants (N=157) 
Source: Open Public Consultation 

Results by country groups 

Responses to each of the statements have also been broken down by whether respondents 
are ‘innovation leaders and strong innovators’ (n=94), ‘moderate and modest innovators’ 
(n=54) or ‘non-EU’ (n=9). As there were only nine non-EU respondents, the results for 
this group have been excluded from our reporting (though they are shown in the charts 
below for completeness). 

On  the  whole,  for  a  number  of  statements,  the  results  are  remarkably  similar  when 
broken  down  by  ‘innovation  leaders  and  strong  innovators’  and  ‘moderate  and  modest 
innovators’. Similar responses were given on statements about the fragmentation of the 
European innovation ecosystem, (84% and 87% agreed or strongly agreed, respectively) 
and  further  reinforcing  the  role  of  research  and  innovation  in  Europe  to  address 
global challenges (97% and 96%, respectively). 

76 

 
 
 
 
 
 
 
For some statements, however, there are some notable differences in the responses from 
the two groups (see Figure 5). For example, 89% of ‘moderate and modest innovators’ 
agreed  or  strongly  agreed  with  the  statement  that  “the  joint  activities  between  higher 
education  institutions,  businesses  and  research  organisations  are  not  sufficiently 
integrated  within  their  regional  and  local  ecosystems”,  compared  with  72%  of 
‘innovation  leaders  and  strong  innovators’.  In  addition,  a  slightly  higher  proportion  of 
‘moderate and modest innovators’ (85%) agreed or strongly agreed that, in Europe, there 
is insufficient involvement of end-users and citizens in the co-design, experimentation 
and  testing  of  innovation  solutions,  compared  with  ‘innovation  leaders  and  strong 
innovators’ (70%). 

Figure 5: Statements replies by country groups 

Base: all participants; Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54, Non-EU 
N=9. 
Source: Open Public Consultation 

Results by respondent type 

Responses to each of the statements have also been broken down by whether respondents 
are  responding  in  their  quality  of  EU  citizens,  a  company/business  organisation,  an 
academic/research organisation or other. Any interpretation of these results should start 
with an acknowledgement that these results are based on small sample sizes (EU citizens 
N=51,  company/business  organisations  N=25,  academic/research  organisations  N=50, 
other N=31).  

Overall, there was a high degree of consistency between the groups. For example, almost 
all  respondents  across  the  different  groups  agreed  or  strongly  agreed  with  the 
statement  that  “There  is  scope  for  further  reinforcing  the  role  of  research  and 
innovation  in  Europe  to  address  global  challenges”  (96%  of  EU  citizens,  100%  of 
company/business  organisations,  94%  of  academic/research  organisations  and  94%  of 
other respondents). 

77 

 
 
 
 
 
 
 
 
 
 
For some statements there were more mixed responses across respondent types. Almost 
two-thirds (63%) of EU citizens and over half (52%) of company/business organisations 
agreed  or  strongly  agreed 
there  are  not  enough  measures  supporting 
entrepreneurship in Europe, but only 46% of academic/research organisations and 35% 
of  other  respondents  did  so.  In  addition,  60%  of  company/business  organisations  and 
60% of academic/research organisations, compared with 75% of EU citizens, agreed  or 
strongly  agreed  that  there  are  insufficient  training  opportunities  to  become  more 
entrepreneurial and innovation-minded. 

that 

Figure 6: Statements replies by respondent type 

Base: all participants; Academic/research organisations N=50, Company/business organisations 
N=25, EU citizens N=51, Other N=31. 
Source: Open Public Consultation 

78 

 
 
 
 
 
 
 
 
 
 
 
“Insufficient information on existing  
innovation ecosystems and opportunities;  
lack of knowledge on how one can  
participate or get involved” 

“[Need more] awareness  
of the opportunities and a  
common platform to meet  
and exchange ideas” 

“Visibility for pan - 
European innovation  
ecosystems needs to be  
increased ” 

“More efforts should be directed to better reach  
potential interested parties of the existing  
European innovation ecosystems to increase  
their possibilities of  networking” 

Factors that hinder involvement in existing pan-European innovation ecosystems 

The  first  open-ended  question  in  this  section  of  the  survey  asked  the  respondents  to 
comment  on  the  key  factors  that  hinder  the  active  involvement  of  interested  parties  in 
existing  pan-European  innovation  ecosystems.  88  respondents  answered  this  question 
and  raised  a  variety  of  barriers  to  involvement.  The  content  within  each  response  was 
coded into one or more categories and later analysed. 

From  this  analysis,  the  three  most  common  factors,  mentioned  over  20  times  in  the 
responses,  were  ‘lack  of  visibility  and  awareness  of  existing  innovation  ecosystems 
and opportunities’, ‘bureaucracy and administrative complexity’ and ‘the barriers 
between nation-states’. Other notable factors mentioned repeatedly (between 5 and 20 
times)  were  ‘fragmentation’,  ‘insufficient  collaboration  and  networking’,  ‘funding’ 
and ‘a lack of understanding about the needs of small and medium-sized enterprises 
(SMEs)’.  Finally,  other  factors  raised  less  than  five  times  in  the  responses  were  ‘risk 
aversion’,  ‘a  lack  of  an  entrepreneurial  mindset’,  ‘insufficient  sharing  of  good 
practice’ and ‘issues with measurement’. 

Lack  of  visibility  and  awareness  around  the  existing  innovation  ecosystems  and 
opportunities was among the most common factors of hindering innovation. Some of the 
comments are highlighted below: 

Source: Open Public Consultation 

79 

“Insufficient information on existing innovation ecosystems and opportunities; lack of knowledge on how one can participate or get involved”“More efforts should be directed to better reach potential interested parties of the existing European innovation ecosystems to increase their possibilities of networking”“[Need more] awareness of the opportunities and a common platform to meet and exchange ideas”“Visibility for pan-European innovation ecosystems needs to be increased” 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
One respondent offered a solution to this problem by suggesting that as information “on 
competitions  and  grants  does  not  reach  those  concerned”,  a  “single  portal”  should  be 
developed  and  used  across  European  agency  projects.  This  was  echoed  in  separate 
written  submissions,  where  a  recommendation  to  develop  a  simpler  access  to  what  is 
available through European support was made. 

Another key factor that many raised was bureaucracy and administrative complexity. 
This was often linked to the large amount of paperwork that needed to be filled out, long 
lead in times for submitting projects, the scope of the work for the application, and the 
complexity of reporting outputs and impact.  This was a common theme in the separate 
written  submissions  made  to  the  OPC.    These  highlighted,  for  example,  the  need  to: 
simplify  KIC  tools  and  rules;  address  administrative  barriers  facing  KICs,  including 
through  multi-annual  funding;  and  align  financial  management  and  reporting  with 
Horizon Europe. 

Many  respondents  noted  that  national  differences  and  local  context  were  hindering 
factors. Some of the national differences were cultural, educational or linked to language 
or regulations: 

Source: Open Public Consultation 

Linked to this, some highlighted fragmentation either with a lack of connection between 
different  initiatives  or  with  too  many  unconnected  networks  and  ecosystems  without 
critical mass. Instead, respondents asked for a “one-stop shop” or a few strong “places to 
be”. 

The  issue  of  collaboration  and  networking,  particularly  across  different  actors,  was 
also  highlighted  along  with  the  need  to  join  up  potential  partners  at  the  right  time  (see 
quotes  below).    The  additional  written  submissions  echoed  this  strongly,  which  partly 
reflected  the  nature  of  the  respondents,  coming  from  associations  of  particular 
universities,  SME  communities  etc. 
to  various 
recommendations,  including:  drawing  in  Research  and  Technology  Organisations 
(RTOs); recognising the role of universities that may not be part of the core stakeholder 
groups  of  KICs,  e.g.  through  greater  outreach  and  information-sharing;  and  adopting 
appropriate incentives to engage SMEs. 

  These  contributions  pointed 

80 

“Still the national barriers, [e.g.] understanding of regional cultures and behaviour, languages,…missing…a seamless qualification and education system with recognition at all levels”“Not all member states are equally represented in the different EU structures targeting innovation in the EU. Measures targeting Central and Eastern Europe and the Balkans should be tailor-made to the local context.”“Different rules in different countries…different regulations regarding personal data” 
 
 
 
 
 
 
 
Source: Open Public Consultation 

A number of issues  related to  funding were raised by respondents.  Alongside the need 
for funding, other issues included complex funding rules, lack of commitment to multi-
year or long-term funding, and little low risk follow-up funding for completed projects. 

A  lack  of  understanding  around  the  needs  of  SMEs  that  hinder  them  from  getting 
involved was highlighted: 

Source: Open Public Consultation 

81 

“Insufficient knowledge and networking of academic and business is also an issue”“The facilitators should put extra focus on matchmaking among members within their own ecosystem. Focus should be put on knowledge sharing and promoting partners, there capacities and values for others within the ecosystem”“Culture of actors according to their affiliation (basic research organisation, RTO, universities/teaching facilities, enterprises). The EIT is necessary to bring together these actors and to “collaborate” together (integration)”“Need more local / regional supports for identifying the appropriate partners for them at different moments of their projects”“Uneven balance between academic expertise and business knowledge of opportunities -academic environment seems much better suited for current setup of innovation projects. Only those companies with sufficient size or very specific expertise seem to be joining innovation ecosystems due to workload and prioritization issues”“Time investment needed, especially for SMEs. Too low chance of success, especially for SMEs, compared to the administrative burden”“Support programs have not been designed with entrepreneurs in mind. Most seem to be structured such that their target audience appears to be large universities or large corporate innovation divisions. For example, when you win a Climate-KIC grant, you must manage all cashflow for that grant for 18 months before you receive a pay-out. For a large entity this isn't a problem, but for a technology start-up that cannot access debt, this is a major challenge.”“Low participation of SMEs in innovation activities (lack of financial resources and skills)”.“Too many administrative burdens for SMEs” 
 
 
 
 
 
 
 
 
Challenges and opportunities in the research and innovation area 

The second open-ended question asked respondents to comment on any other challenges 
and  opportunities  in  the  research  and  innovation  area  relevant  to  the  operations  of  the 
EIT. One of the opportunities that came up most frequently  among respondents  was to 
build  upon  and  strengthen  collaborations  and  networks  at  many  different  levels  – 
between  businesses,  institutions,  KICs,  and  regional  and  pan-European  innovation 
ecosystems: 

Source: Open Public Consultation 

This was also a common theme in a number of written submissions. Some of the raised 
points include: 

  The  integration  across  KICs  was  identified  as  an  opportunity.    This  included 
learning  exchanges  between  KICs,  and  in  particular  from  more  to  less  well-
developed KICs, though there was a cautionary note on the context-specificity of 
certain  KICs.    In  addition,  it  was  noted  that  tools  or  mechanisms  should  be 
developed to facilitate cross-KIC activity more readily when the opportunities are 
identified.  A broader point was made that technologies developed through KICs 
are likely to be relevant across boundaries, and often companies do not even see 
these  artificial  boundaries.  Mechanisms  that  can  facilitate  knowledge  sharing 
would be beneficial to industry. 

 

It was identified that Horizon Europe needs to provide mechanisms to facilitate 
connections  and  links  between  innovation  ecosystems,  for  example  through 
greater emphasis of European Innovation Ecosystems action under Pillar III. 

  A cautionary note was made that KICs face the risk to become closed clubs. They 
need  to  have  better  outreach  to  other  higher  education  institutions  to  share 
lessons, and to provide information on opportunities relevant to the institutions.  

Other  opportunities,  mentioned  less  frequently  by  respondents,  related  to  raising 
awareness and promoting the EIT among the general public, connecting the education 
system  to  industry  –  “EIT  should  be  a  driving  force  to  implement  a  more  business-
oriented  approach  in  Universities  and  research  centres”  –  and  improving  the 
implementation and commercialisation of innovations. 

82 

 
 
 
 
 
 
 
 
On the other hand, many mentioned challenges related to funding and investment. For 
example, Europe “lack[s] a platform offering more visibility of high-potential early stage 
ventures and technologies among competent investors”; “High quality ‘frontier science’ 
needs  to  be  matched  equally  with  high  quality,  diverse  and  ‘deep’  long  term  funding”; 
and  “Short  term  budgets…hinder  sustainability  in  innovation  partnerships  and  more 
long-term strategies”.  

Other  challenges,  mentioned  less  frequently  by  respondents,  related  to  barriers  to 
participation such as bureaucracy, the  “missing alignment between regional, national 
and  EU  research  and  innovation  activities”  and  the  difficulties  entrepreneurs  and 
start-ups face to access funding and contribute to the EIT and the KICs as they “lack the 
operational diversity and internal organizational infrastructure [that] the large companies 
and the universities have in place to support the formalities of the EU and the EIT KIC”.  
Separate  written  submissions  identified  potential  routes  to  addressing  these  challenges, 
for  instance  through  associations  representing  SMEs  or  the  intermediaries  that  could 
provide  a  structured  approach  to  doing  so  (e.g.  the  European  Business  and  Innovation 
Centre Network). 

Questions on policy objectives for the EIT 

The respondents to the online public consultation were asked to share their opinions with 
respect  to  the  three  policy  objectives  set  for  the  operation  of  EIT  for  the  period  2021-
2027. In their replies, the participants could choose more than one action to achieve each 
policy  objective.  The  three  most  popular  suggestions  for  activities  to  help  pursue  each 
objective are described in the section below. 

Policy  objective  1:  To  foster,  grow,  strengthen  and  develop  current  or  new 
sustainable innovation ecosystems across Europe.  

The  most  often  selected  action  to  achieve  this  policy  objective  was  supporting  the 
involvement  of  final  users  in  the  development  of  innovative  solutions  (67%).  This 
approach  was  most  popular  among  respondents  from  ‘other’  organisations,  EU  citizens 
and  company  representatives  and  less  so  among  respondents  from  academic/research 
institutions. 
Another popular action for achieving the policy objective was harnessing the synergies 
among  existing  innovation  activities  at  EU  and  national  levels  (65%).  This  option 
was cited most often by representatives of academic/research organisations and it was 
more favoured by innovation leaders as opposed to moderate and modest innovators.  

Increasing  the  effectiveness  of  cooperation  and  coordination  of  existing  KICs  and 
related  activities  was  another  popular  option  (61%),  selected  particularly  by 
representatives of academic/research organisations and EU-citizens. 

83 

 
 
 
 
 
 
 
 
 
 
 
Figure 7. The most relevant activities for the EIT to achieve the Policy Objective 1 

 Q:  In  your  opinion,  what  are  the  most  relevant  activities  for  the  EIT  to  best  achieve  the 
following policy objectives? 

  Policy  objective  1:  To  foster,  grow,  strengthen  and  develop  current  or  new  sustainable 
innovation  ecosystems  across  Europe  by  connecting  people,  disciplines,  sectors, 
organisations and resources within a specific Knowledge and Innovation Community (KIC). 

Setting up new KICs in a number of thematic
areas in line with European priorities and
global challenges

Accelerating support to regions towards
excellence in European countries that are
modest/moderate innovators

Harnessing synergies among existing
innovation activities at EU and national level
and thus improving the environment within
which innovation can flourish.

Supporting the involvement of final users and
citizens in the co-design, experimentation and
testing of innovative solutions

Enhancing participation of partners from
public authorities (national/regional/local) in
the KICs, including for social innovation and
public sector innovation

Increasing effectiveness of cooperation and
coordination of existing KICs and related
activities

47% 

34% 

65% 

67% 

53% 

61% 

0% 10% 20% 30% 40% 50% 60% 70% 80%

Base: all participants (N=157) 
Source: Open Public Consultation 
Note: the figures demonstrate the distribution of answers among all respondents. As the respondents had an ability 
to select several answers  up to four), the percentages do not add up to 100%   

Setting up new KICs in a number of thematic
areas in line with European priorities and global
challenges

Accelerating support to regions towards
excellence in European countries that are
modest/moderate innovators

Harnessing synergies among existing
innovation activities at EU and national level
and thus improving the environment within…

Supporting the involvement of final users and
citizens in the co-design, experimentation and
testing of innovative solutions

Enhancing participation of partners from public
authorities (national/regional/local) in the KICs,
including for social innovation and public…

Increasing effectiveness of cooperation and
coordination of existing KICs and related
activities

52% 

44% 

41% 

48% 

28% 

24% 

45% 

35% 

72% 

60% 

63% 
61% 

58% 

36% 

50% 

51% 

68% 

71% 

74% 

74% 

68% 

52% 

61% 

55% 

Academic/research organisations

0% 10% 20% 30% 40% 50% 60% 70% 80%

Company/business organisation

EU citizen Other

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU citizens 
N=51, Other N=31.  

84 

 
 
 
 
 
   
Setting up new KICs in a number of thematic
areas in line with European priorities and
global challenges

47% 

44% 

Accelerating support to regions towards
excellence in European countries that are
modest/moderate innovators

21% 

Harnessing synergies among existing
innovation activities at EU and national level
and thus improving the environment within…

Supporting the involvement of final users and
citizens in the co-design, experimentation and
testing of innovative solutions

Enhancing participation of partners from
public authorities (national/regional/local) in
the KICs, including for social innovation and…

Increasing effectiveness of cooperation and
coordination of existing KICs and related
activities

57% 

56% 

71% 

68% 
67% 

51% 

54% 

61% 
61% 

0% 10% 20% 30% 40% 50% 60% 70% 80%

Innovation leaders and strong innovators

Moderate and modest innovators

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54. Non-
EU (N=9) respondents are excluded due to the very small sample size. 
Source: Open Public Consultation 

The  respondents  were  given  the  option  to  suggest  any  additional  activities  they 
considered  important  for  achieving  the  first  policy  objective.  Making  KICs  more 
inclusive  by  enhancing  the  participation  of  a  wider  range  of  stakeholders,  such  as 
SMEs,  investors,  and  non-EU  stakeholders,  was  the  most  widely  agreed  upon  solution 
(30%), and the breadth of potential stakeholders and means of engagement is illustrated 
in  the  quotes  below.  This  appeared  to  be  a  particularly  important  issue,  underscored  in 
some of the position papers provided by respondents, which emphasised the importance 
of creating stronger ties with higher education institutions. 

This  activity  was  followed  by  other  suggestions,  such  as  building  a  strong  network 
through partnerships with other initiatives (e.g. Digital  Innovation Hubs) (21%) and 
removing  administrative  red  tapes,  as  the  system  was  perceived  as  too  slow  and 
complex  and  some  requirements  such  as  financial  sustainability  were  put  forward  for 
reinterpretation  (10%).  Fostering  complementarity  and  avoiding  duplication  with 
other  current  and  future  EU  initiatives,  as  well  as  reducing  the  administrative 
workload of KICs, associated with application, reporting and evaluation, were some of 
the more prominently discussed issues in the position papers. 

Lastly,  introducing  a  more  bottom-up  approach  by  involving  municipalities  and 
citizens and supporting cross-KIC innovation synergies and projects were recommended 
by  6%  of  respondents  each,  illustrated  in  some  of  the  quotes  below  and  also  was 
elaborated in several position papers. 

85 

 
 
 
 
 
 
 
Source: Open Public Consultation 

Policy  objective  2:  To  improve  the  human  capital  base  for  innovation  through 
developing talents and enhancing skills and competence; to make entrepreneurship 
and  innovation  culture  in  Europe  stronger,  more  inclusive  and  more  open,  and  to 
contribute  to  the  entrepreneurial  transformation  of  higher  education  institutions 
across the EU. 

The most popular suggestion for achieving this policy objective was providing funding 
for  innovation  capacity  development  and  rewarding/recognising  universities  for 
becoming  more  innovative  and  entrepreneurial  (71%).  It  was  embraced  most 
predominantly  among  academic/research  organisation  representatives,  EU  citizens  and 
respondents within the ‘other’ category as opposed to business representatives. 

Another  similarly  often-selected  option  was  launching  new  actions  supporting 
education and human capital development through the identification of future skills 
needs (69%). There was consensus across different types of respondent for this option.  

Some  actions  were  much  less  popular,  in  particular  strengthening  the  EIT  label 
(supported by 23%).  Several of the separate written submissions discussed the EIT label.  
There  was  a  sense  that  it  was  not  very  well-known,  though  it  was  noted  by  one 
respondent  that  it  potentially  had  some  value  outside  of  Europe.    Two  respondents 
highlighted the need to go beyond postgraduate degrees when considering the EIT label, 
or the education aspect of KIC activities more generally, as innovation needed to be part 
of the “main” curriculum. 

86 

 
 
 
 
 
 
 
 
 
 
 
Figure 8. The most relevant activities for the EIT to achieve the Policy Objective 2 

Q: In your opinion, what are  the most relevant activities for the EIT to best achieve the following 
policy objectives? 

  Policy objective 2: To improve the human capital base for innovation through developing 
talents  and  enhancing  skills  and  competences;  to  make  entrepreneurship  and  innovation 
culture  in  Europe  stronger,  more  inclusive  and  more  open,  and  to  contribute  to  the 
entrepreneurial transformation of higher education institutions across the EU. 

can be best achieved through 

Providing funding for innovation capacity
development and rewarding/recognising
universities becoming more entrepreneurial
and innovative institutions

Exploiting synergies and coordination with
other actions and innovation activities

41% 

Providing support for mainstreaming innovative
practices into the schools or the Vocational
Education and Training (VET) sector or into
non-formal educational context

Launching new actions supporting education
and human capital development such as the
identification of future skills needs for industry
to tackle global challenges and related…

Strengthening the EIT label (certificate of
quality for programmes) by improving its
quality and having external quality assurance
and recognition

71% 

51% 

69% 

23% 

0% 10% 20% 30% 40% 50% 60% 70% 80%

Base: all participants (N=157) 

Providing funding for innovation capacity
development and rewarding/recognising
universities becoming more entrepreneurial and
innovative institutions

Exploiting synergies and coordination with other
actions and innovation activities

Providing support for mainstreaming innovative
practices into the schools or the Vocational
Education and Training (VET) sector or into non-
formal educational context

Launching new actions supporting education and
human capital development such as the
identification of future skills needs for industry to
tackle global challenges and related training
programmes

Strengthening the EIT label (certificate of quality
for programmes) by improving its quality and
having external quality assurance and recognition

70% 

56% 

75% 

81% 

44% 

56% 

31% 

39% 

40% 
40% 

69% 

48% 

72% 

68% 

65% 

74% 

24% 

20% 

18% 

32% 

Academic/research organisations

Company/business organisation

EU citizen

Other

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU 
citizens N=51, Other N=31. Source: Open Public Consultation 

87 

 
 
 
 
Providing funding for innovation capacity
development and rewarding/recognising
universities becoming more entrepreneurial
and innovative institutions

69% 

72% 

Exploiting synergies and coordination with
other actions and innovation activities

47% 

30% 

Providing support for mainstreaming
innovative practices into the schools or the
Vocational Education and Training (VET)
sector or into non-formal educational context

Launching new actions supporting education
and human capital development such as the
identification of future skills needs for
industry to tackle global challenges and
related training programmes

49% 

59% 

67% 

74% 

Strengthening the EIT label (certificate of
quality for programmes) by improving its
quality and having external quality assurance
and recognition

17% 

31% 

Innovation leaders and strong innovators

Moderate and modest innovators

0% 10% 20% 30% 40% 50% 60% 70% 80%

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54. 
Non-EU (N=9) respondents are excluded due to the very small sample size. 
Source: Open Public Consultation 

The  respondents  were  also  given  the  option  to  suggest  any  additional  activities  they 
considered  important  for  achieving  the  second  policy  objective.  The  most  often-
suggested  activity  was  providing  affordable  and  easy  access  to  training  (21%),  by 
creating  continued  education  online  course  platform  of  developing  short  training  and 
empowerment  programmes  for  entrepreneurs.  This  was  followed  propositions  for 
strengthening  collaboration  between  stakeholders  (8%)  by  creating  partnership 
between industry and higher education and aligning with other programmes (8%), such 
as  Erasmus+.  Cross-disciplinary  collaboration,  which  allows  for  the  exchange  of 
practices,  and  encouraging  innovation  at  universities  by  incorporating  entrepreneurial 
courses were each supported by 6% of respondents. 

In general, creating and fostering synergies appeared to be a prominent issue as it was 
discussed at length in the position papers. For example, there were suggestions to create 
specific  tools  that  facilitate  the  connection  between  different  KICs  around  common 
topics,  thus  avoiding  overlaps  and  fostering  collaboration.  Additionally,  it  was 
emphasised  that  the  focus  should  not  only  be  on  increasing  university-business 
collaborations  but  also  on  ensuring  the  active  involvement  of  local  and  regional 
stakeholders. It was suggested that this can be achieved by introducing more transparent 
participation rules. 

88 

 
 
 
 
 
 
Source: Open Public Consultation 

Policy objective 3:  To develop and bring new solutions to global societal challenges 
to the market.  

When  asked  how  the  third  policy  objective  could  be  best  achieved,  the  most  favoured 
approach  by  the  respondents  was  the  development  of  new  products  and  services, 
which involve all relevant stakeholders (64%). The proportion of responses was evenly 
distributed among all respondent groups.  

Another  similarly  popular  choice  was  making  business  support  services  widely 
available (63%). The distribution between respondent groups was not even, as business 
respondents seemed to agree with this approach to a lesser extent than the other groups. 
Additionally,  respondents  from  moderate  and  modest  innovators  were  more  supportive 
compared to innovation leaders.  

Lastly, the majority of respondents also favoured increasing support for financial and 
capital raising services and attracting private funding (61%). This approach seemed 
to be supported the most by the respondents within the ‘other’ category and EU-citizens 
as  opposed  to  academic/research  organisation  representatives.  It  also  appeared  to  be 
much less likely to be selected by innovation leaders. 

Conversely, provision of customised support for specific target groups (36%) did not 

Figure 9. The most relevant activities for the EIT to achieve the Policy Objective 3 

Q: In your opinion, what are the most relevant activities for the EIT to best achieve the following policy 
objectives? 

  Policy  objective  3:  To  develop  and  bring  new  solutions  to  global  societal  challenges  to  the 
market by integrating education, business and research, as well as other relevant players (such 
as  municipalities,  civil  society,  large  industry,  small  and  medium-sized  enterprises,  etc.) 
according to the sector. 

can be best achieved through: 
receive  a  lot  of  support,  particularly  by  business  representatives  and  respondents  from 
innovation leaders. 

89 

 
 
 
 
 
 
 
 
Specific actions based on new business
models and digital strategies for business

48% 

Increased support for financial and capital
raising services and attracting private funding

Increased support to development of new
products and services where all relevant
players, including municipalities and civil…

Customised support for specific target groups
(young people, women, etc.)

Increased support for legal and regulatory
advice

Increased attention to mentoring, coaching,
technical assistance and other advisory
activities to make business support services…

61% 

64% 

63% 

36% 

41% 

Base:  all participants (N=157) 

0% 10% 20% 30% 40% 50% 60% 70%

Specific actions based on new business models
and digital strategies for business

38% 

31% 

Increased support for financial and capital
raising services and attracting private funding

Increased support to development of new
products and services where all relevant
players, including municipalities and civil
society, take part

Customised support for specific target groups
(young people, women, etc.)

12% 

Increased support for legal and regulatory
advice

Increased attention to mentoring, coaching,
technical assistance and other advisory
activities to make business support services
widely available and accessible, covering both…

76% 

68% 

52% 

60% 

63% 

74% 

64% 

60% 

65% 
65% 

36% 

39% 

48% 

52% 

28% 

37% 

42% 

48% 

62% 

65% 

74% 

Academic/research organisations

Company/business organisation

EU citizen Other

0% 10% 20% 30% 40% 50% 60% 70% 80%

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU citizens N=51, 
Other N=31.  Source: Open Public Consultation 

90 

 
 
 
 
 
Specific actions based on new business
models and digital strategies for business

Increased support for financial and capital
raising services and attracting private funding

Increased support to development of new
products and services where all relevant
players, including municipalities and civil…

Customised support for specific target groups
(young people, women, etc.)

Increased support for legal and regulatory
advice

Increased attention to mentoring, coaching,
technical assistance and other advisory
activities to make business support services…

51% 

43% 

52% 

72% 

65% 

65% 

31% 

41% 

43% 

39% 

57% 

74% 

Innovation leaders and strong innovators

Moderate and modest innovators

0% 10% 20% 30% 40% 50% 60% 70% 80%

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators 
N=54. Non-EU (N=9) respondents are excluded due to the very small sample size. 
Source: Open Public Consultation 

the 

important  for  achieving 

The respondents were also given the option to put forward any additional activities they 
considered 
third  policy  objective.  Inclusion  and 
collaboration  with  other  European  and  national  programmes  was  the  most-often 
suggested  activity  (24%)  by,  for  example,  ensuring  a  greater  eligibility  for  the 
participation  of  local  and  regional  authorities  in  project  proposals.  Involvement  of  a 
wider  range  of  stakeholders,  such  as  regional  ecosystems  (15%),  collecting  and 
popularising  best  practices  and  successful  cases  (5%),  incentivising  the  private 
sector  to  take  part  in  innovative  projects  (5%)  and  standardisation  across 
alternative  and  competitive  technology  solution  providers  (5%)  were  some  of  the 
more popular activities among the respondents of the survey.  
The  importance  of  regional  authorities  and  ecosystems,  as  well  as  closer  cooperation 
between the nodes of the knowledge triangle are illustrated in the quotes below: 

91 

 
 
 
 
 
  
The respondents were also asked to list any other policy objectives they deemed 
important for the future of the EIT. Overall, nurturing the existing innovation 
ecosystems was the most popular policy objective among the respondents (30%). 
They placed emphasis on the role of EIT as a connector. Similarly, better coordination 
between stakeholders, resources and initiatives (17%) involvement of new 
stakeholders such as students (17%), and provision of SME-specific support (13% ) 
were some of the other objectives put forward by the respondents of the survey. 

Source: Open Public Consultation 

Questions on options to tackle the challenges 

The  respondents  were  asked  to  share  their  opinions  with  respect  to  the  options  for 
tackling  challenges.  First,  they  provided  answers  with  respect  to  the  most  important 
aspects  for  ensuring  the  financial  sustainability  of  KICs.  According  to  them,  a  robust 
financial  strategy  from  the  outset  of  a  KIC  and  the  continuous  monitoring  of  its 
implementation  and  evaluation  was  the  best  strategy  (64%),  an  opinion  particularly 
prevalent among respondents within the ‘other’ category.  

Similarly,  securing  other  sources  of  public  funding for  the  operations  of  KICs  was 
favoured by respondents (60%) and in particular by those within the ‘other’ category and 
academic/research  organisations.  Strategies  such  as  strict  application  of  quality 
management  principles  (27%)  and  regular  membership  fees  (27%)  were  the  least 
popular among the respondents. 

The participants were also asked to suggest any other aspects they considered important 
for achieving the financial sustainability of KICs. The most popular solution according to 
them  was  securing  funding  from  other  sources,  through  national  funding, 
sponsorship by private actors, and grants, among others (36%). They also suggested 
increased monitoring and regulation (18% ), multi-annual budget planning (9%) and 
increased entrepreneurial focus within KICs (6%).  
The requirement that funding be awarded for one year at a time rather than for multiple 
years was presented in several position papers as impeding participation and suggestions 
were made to switch to a multi-annual funding model.  

92 

 
 
 
 
 
 
 
 
 
Source: Open Public Consultation 

The respondents were also invited to give suggestions for other suitable  thematic areas 
that  could  be  implemented  through  future  EIT  KICs  to  deliver  on  EU  priorities  and 
challenges.  The following list contains the most-often suggested themes128: 

  Water - suggested by 17% (23 respondents) 
  Marine sciences - suggested by 9% (12 respondents) 
  AI - suggested by 6% (8 respondents) 
  Mobility - suggested by 6% (8 respondents) 
  Cultural and creative sectors - suggested by 6% (8 respondents) 
  Sustainable development - suggested by 5% (7 respondents) 
  Transport - suggested by 5% (7 respondents) 
  Space and space technologies - suggested by 4% (6 respondents) 
  Security - suggested by 4% (6 respondents) 
  Circular economy - suggested by 4% (5 respondents) 
  Robotics - suggested by 4% (5 respondents) 
  Smart cities - suggested by 3% (4 respondents) 

The  separate  position  papers  also  included  suggestions  for  KICs,  notably  on 
water/marine/maritime  with  a  vision  statement  offered  for  BlueGrowth,  and  with  a 
similar  vision  statement  offered  for  nutrients  sustainability  (relating  to  agricultural 
networks). 

128 The themes suggested where KICs already exist have been filtered out. These are: Energy - suggested by 20% (27 respondents), 
Health - suggested by 14% (19 respondents), Climate change - suggested by 13% (18 respondents), Digitalisation - suggested by 13% 
(18 respondents), Food - suggested by 7% (10 respondents) 

93 

 
 
 
 
 
 
                                                           
 
 
Figure 10. The most important aspects to ensure financial sustainability of KICs 

Q:  According  to  the  EIT  Regulation,  KICs  shall  develop  strategies  for  financial  sustainability  beyond  the 
funding  from  the  European  Research  and  Innovation  Framework  Programme  (in  a  time-frame  of  seven  to 
fifteen  years).  In  your  view,  which  of  the  following  aspects  are  the  most  important  for  ensuring  financial 
sustainability of KICs? 

Establishment of a dedicated fund by KICs
(with KIC investments or with external
investments) to facilitate financing of the their
operations

Regular (e.g. annual, commensurate to the
level of participation, etc.) membership fees
applied for partners participating in KIC
activities
A robust financial sustainability strategy from
the outset of a KICļs operation, and the
continuous monitoring of its implementation
and periodic evaluation (e.g. regular…

51% 

27% 

Securing of direct equity investments into
businesses supported by a KIC

46% 

Securing of other sources of public funding for
the operations of KICs, beyond the funding
from the European Research and Innovation
Framework Programme

Strict application of quality management
principles in operations of the KICs

27% 

64% 

60% 

Base:  all participants (N=157) 

0% 10% 20% 30% 40% 50% 60% 70%

Establishment of a dedicated fund by KICs
(with KIC investments or with external
investments) to facilitate financing of the their
operations

56% 

40% 

49% 

55% 

Regular (e.g. annual, commensurate to the
level of participation, etc.) membership fees
applied for partners participating in KIC
activities

20% 

19% 

32% 

37% 

A robust financial sustainability strategy from
the outset of a KICļs operation, and the
continuous monitoring of its implementation
and periodic evaluation (e.g. regular…

Securing of direct equity investments into
businesses supported by a KIC

Securing of other sources of public funding for
the operations of KICs, beyond the funding
from the European Research and Innovation
Framework Programme

Strict application of quality management
principles in operations of the KICs

58% 

64% 

59% 

84% 

38% 

56% 

47% 
48% 

62% 

48% 

57% 

71% 

30% 

28% 

20% 

35% 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Academic/research organisations

Company/business organisation

EU citizen Other

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU 
citizens N=51, Other N=31. Source: Open Public Consultation 

94 

 
 
 
Establishment of a dedicated fund by KICs
(with KIC investments or with external
investments) to facilitate financing of the…

46% 

57% 

Regular (e.g. annual, commensurate to the
level of participation, etc.) membership fees
applied for partners participating in KIC…

29% 

30% 

A robust financial sustainability strategy from
the outset of a KICs operation, and the
continuous monitoring of its implementation…

Securing of direct equity investments into
businesses supported by a KIC

39% 

Securing of other sources of public funding for
the operations of KICs, beyond the funding
from the European Research and Innovation…

Strict application of quality management
principles in operations of the KICs

24% 

28% 

57% 

70% 

57% 

62% 

59% 

Innovation leaders and strong innovators

Moderate and modest innovators

0% 10% 20% 30% 40% 50% 60% 70% 80%

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators 
N=54. Non-EU (N=9) respondents are excluded due to the very small sample size. 
Source: Open Public Consultation 

The respondents were also asked to indicate what the most important  criteria were for 
the selection and implementation of new KICs in pre-defined thematic areas based on 
EU priorities. The most popular criterion by far was the societal impact of the proposed 
activities,  including  their  potential  to  address  the  Sustainable  Development  Goals 
(77%). This  option was particularly popular  among the representatives of business  and 
academic/research organisations alike. 

Two other criteria that were selected by more than half of the respondents were expected 
economic  competitiveness  and  structure  of  the  value-added  chain  and  production 
strategies of the proposed partnerships (57%) and synergies with existing Research 
and Innovation Partnerships and other types of actions at European, national and 
regional level (55%). The former was significantly more popular among representatives 
of  the  academic/research  organisation  than  any  of  the  other  groups  of  respondents  and 
least favoured by moderate/modest innovators. In contrast, the latter criterion was most 
popular among business organisation representatives. 

Conversely, criteria such as  suitability of the EIT/KIC  model  for implementation of 
the  proposed  activities  and  degree  of  higher  education  excellence  of  the  proposed 
partnership  in  this  area  and  potential  for  reinforcement  of  relevant  skills  and 
Figure 11. The most important criteria for the selection and implementation of new KICs 

Q: In your opinion, which should be the most important criteria for the selection and implementation of 
new KICs in pre-defined thematic areas based on EU priorities? 

talents, were viewed as the least important by the respondents.  

95 

 
 
 
 
 
Measures to ensure transparency and
openness as regards the wide involvement of…

Expected economic competitiveness and
structure of the value added chains and…

Degree of research and innovation excellence
of the proposed partnership in this area

Potential of the proposed partnership to ensure
financial sustainability; clear exit strategy…

Degree of higher education excellence of the
proposed partnership in this area and…

Synergies with existing Research and
Innovation Partnerships and other types of…

Measures to ensure transparency and
openness as regards the setting of priorities…

50% 

57% 

46% 

55% 

50% 

34% 

32% 

Suitability of the EIT/KIC model for
implementation of the proposed activities

30% 

Societal impact of proposed activities of the
partnership in this area, including potential to…

77% 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Base:  all participants (N=157) 

Measures to ensure transparency and
openness as regards the wide involvement of
partners from different sectors including…

Expected economic competitiveness and
structure of the value added chains and
production strategies of the proposed…

Degree of research and innovation excellence
of the proposed partnership in this area

Potential of the proposed partnership to ensure
financial sustainability; clear exit strategy and
phasing-out measures

Degree of higher education excellence of the
proposed partnership in this area and potential
for reinforcement of relevant skills and talent…

Synergies with existing Research and
Innovation Partnerships and other types of
actions at European, national or regional level

Measures to ensure transparency and
openness as regards the setting of priorities
and objectives as well as dissemination,…

64% 

54% 

57% 
55% 

36% 

27% 

48% 

24% 

36% 

35% 

39% 

24% 

36% 

35% 

39% 

12% 

31% 

29% 

44% 

52% 

68% 

72% 

47% 

61% 

54% 

48% 
49% 
48% 

48% 

Suitability of the EIT/KIC model for
implementation of the proposed activities

26% 
24% 
25% 

Societal impact of proposed activities of the
partnership in this area, including potential to
address the Sustainable Development Goals…

84% 

88% 

69% 

71% 

Academic/research organisations

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Company/business organisation

EU citizen Other

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU 
citizens N=51, Other N=31. Source: Open Public Consultation 

96 

 
 
 
 
Measures to ensure transparency and
openness as regards the wide involvement…

Expected economic competitiveness and
structure of the value added chains and…

Degree of research and innovation excellence
of the proposed partnership in this area

Potential of the proposed partnership to
ensure financial sustainability;  clear exit…

Degree of higher education excellence of the
proposed partnership in this area and…

Synergies with existing Research and
Innovation Partnerships and other types of…

Measures to ensure transparency and
openness as regards the setting of priorities…

55% 

65% 

52% 

33% 

29% 

29% 

41% 

41% 

28% 

39% 

56% 
57% 

57% 

45% 

Suitability of the EIT/KIC model for
implementation of the proposed activities

32% 

20% 

Societal impact of proposed activities of the
partnership in this area, including potential…

76% 

78% 

Innovation leaders and strong innovators

Moderate and modest innovators

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54. 
Non-EU (N=9) respondents are excluded due to the very small sample size.  
Source: Open Public Consultation 

The  respondents  were  also  given  the  opportunity  to  indicate  what  other  criteria  they 
considered  important  for  the  selection  and  implementation  of  new  KICs  in  pre-defined 
thematic areas  based on EU priorities. The most popular criterion  among them was the 
potential of the KICs to address important sustainability issues (e.g. by using metrics 
such  as  CO2  reduction  impact)  (26%).  Other  suggestions  included  the  potential  for 
closing an existing knowledge gap or meeting specific market needs (13%), potential 
or  intention  for  collaboration  with  other  KICs  (13%),  potential  positive  impact  on 
quality  of  life  (9%)  and  potential  for  achieving  specific  EU  policy  objectives  (9%). 
The range of criteria are illustrated in the quotes below.  

97 

 
 
 
Source: Open Public Consultation 

98 

 
 
 
 
 
 
10.4. 

Annex 3: 
Practical implications of the initiative 

Who is affected and how?  

This  annex  assesses  the  different  impacts  of  the  identified  preferred  policy  option 
(Option  2)  on  the  main  stakeholders,  as  well  as  on  the  economy  as  a  whole.  The  key 
stakeholders  that  would  be  affected  by  the  proposed  legislation  include  in  particular 
higher education institutions, businesses and public bodies at EU level (the EIT) as well 
as various regional actors. Since the proposed intervention is an enabling legislation, the 
impact  both  in  terms  of  potential  benefits  and  potential  costs  would  depend  on  the 
magnitude of the KIC activities as autonomous organisations.  

The  general  benefits  and  costs  of  the  preferred  option  are  summarised  in  Table  1  and 
Table  2  below,  respectively.  They  present  the  key  costs  and  benefits  which  have  been 
identified and assessed during the Impact Assessment process. 

99 

 
 
 
 
Table 1: Overview of benefits 

I. Overview of Benefits (total for all provisions) – Preferred Option (Option 2) 

Description 

Direct benefits 

Amount129 

Comments 

Number of students involved in 
EIT entrepreneurial education 
actions 

22.500 students 

The impact of the new action of the EIT on supporting 
entrepreneurial and innovative capacity of HEIs will 
increase through engaging more partners in the education 
activities, reaching out to more students, facilitating the 
transformation of good ideas in new ventures and 
supporting capacity development of higher education 
institutions 

Number of graduates of EIT 
labelled programmes 

10.000 graduates  KICs  offer  technical  education  programmes  (mainly 
Masters  and  PhDs)  with  a  strong  focus  on  soft  skills, 
entrepreneurship  and  innovation  management,  mobility 
aspects,  trans-disciplinarity.  The  EIT  Label  will  be 
strengthened in its quality assurance mechanisms and will 
be extended to lifelong learning activities.  

Number of Higher Education 
Institutions (HEI) participating 
in the EIT entrepreneurial 
capacity actions 

450 HEIs 

4300 products  

Number of innovative products 
(goods or services) launched on 
the market as well as new 
processes, methods, ideas or 
marketing innovations 
implemented 

Start-ups supported  

680 start-ups 

The EIT will launch a new action by providing support to 
higher  education  institutions  to  further  develop  their 
entrepreneurial  and  innovation  capabilities  using  the 
HEInnovate  framework  to  design  action  plans  and 
implement  them.  By  linking  financial  support  (through 
specific calls for proposals addressing beneficiaries which 
are  not  necessarily  partners  of  a  KIC)  to  develop 
education  & 
the 
entrepreneurial capacities of higher education institutions 
in  low  innovation  performing  regions,  the  EIT  will 
contribute to reducing the innovation divide.  

training  programmes  and  support 

The number of product innovations (goods or services) 
launched on the market during and following KIC support 
or the number of processes and marketing innovations or 
new/significantly improved methods introduced following 
KIC support. By innovations, we mean new or 
significantly improved products (goods or services), 
processes, ideas or marketing innovations implemented. 

implemented 

Innovative technological solutions can be commercialised 
to  market  by  existing 
by  new  start-ups,  brought 
businesses, 
existing 
businesses,  or  used  as  a  basis  for  further  technological 
development.  Through  the  policy  of  supporting  ‘better’ 
and not ‘more’ start-ups, it is assumed that the number of 
start-ups  generated  will  not necessarily  increase in 2021-
2027, but that the quality of the start-ups increases. 

strengthen 

to 

Participating organisations from 
moderate or modest innovator 
countries 

500 

Table 2: Overview of the costs 

Overall participation in ETI and KIC activities of 
organisations from moderate and modest innovation 
countries will comprise the current and future RIS 
participating organisations as well as organisations 
participating in new action of the EIT on supporting 
entrepreneurial and innovative capacity of HEIs. 

129 The numbers, where available, arise from the calculations and projections that are detailed in chapter 6  of the main report, the 
impact analysis. 

100 

 
 
 
 
                                                           
II. Overview of costs – Preferred option (Option 2) 

Citizens/ 
Consumers  

KICs (and its partners – businesses, 
universities, RTOs) 

EIT Administrations 

One-off  Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

None  

None 

Direct 
costs 

All 
considered 
actions   

Increased 
administrative 
costs due to the 
need to widen the 
scope of their 
monitoring 
activities and 
report on additional 
performance 
indicators.   

Annual 
membership fees of 
KIC partners -  
recurrent cost  

For existing 
KICs: Adapt the 
monitor system 
in order to 
account for the 
indicators’ 
framework.  

Compliance and 
implementation 
costs arising 
from adaptation 
of the funding 
model for 
already existing 
KICs.   

Costs of 
applying to 
become a KIC.  

Put in place 
the new 
monitoring 
system.  

Admin costs for 
improved 
monitoring and 
supervision of 
KICs  

Increased number 
of EIT staff to 
monitor KICs and 
to manage the EIT 
own’s activities 
(i.e. support to 
HEIs to develop 
their 
entrepreneurial and 
innovation 
capacity).   

Overall costs of 
EIT as a central 
service over 7 
years is EUR 70 
million 

Indirect 
costs 

None 

None 

None 

None 

None 

101 

 
 
 
 
 
 
 
 
 
10.5. 
Source: EIT data 

Annex 4A:  Key achievements of the EIT 

EIT Climate-KIC 

EIT InnoEnergy 

EIT Digital 

EIT Health 

EIT Raw Materials 

EIT Core KPIs 2013-2017  
- EIT labelled programme 
graduates: 375  
- New or improved products/ 
services/ processes launched: 306  

EIT Core KPIs 2013-2017  
- EIT labelled programme 
graduates: 707  
- New or improved products/ 
services/ processes launched: 73  

EIT Core KPIs 2013-2017  
- EIT labelled programme 
graduates: 610  
- New or improved products/ 
services/ processes launched: 219  

EIT Core KPIs 2013-2017  
- EIT labelled programme 
graduates: n/a  
- New or improved products/ 
services/ processes launched: 22  

EIT Core KPIs 2013-2017  
- EIT-labelled programme 
graduates: 0  
- New or improved products/ 
services/ processes launched: 7  

EIT Core KPIs 2017  
- Start-ups created by students & 
graduates from EIT labelled 
programmes: 2  
- Start-ups created as a result of 
innovation projects: 2  
- Start-ups supported by KICs: 
266  
- Investment attracted by start-
ups supported by KICs: 
187,832,231.25 EUR  
- Success stories submitted and 
accepted by EIT: 58  
- External participants* 
(individuals) in EIT RIS 
programmes: 22  
- External participants* 
(organisations) in EIT RIS 
programmes: 33  
- Financial Sustainability; 
revenue of KIC LE: 2,629,576.44 
EUR  
- Financial Sustainability; FS 
coefficient: 3.72% 

EIT Core KPIs 2017  
- Start-ups created by students & 
graduates from EIT labelled 
programmes: 4  
- Start-ups created as a result of 
innovation projects: 0  
- Start-ups supported by KICs: 80  
- Investment attracted by start-ups 
supported by KICs: 32,000,000.00 
EUR  
- Success stories submitted and 
accepted by EIT: 12  
- External participants* 
(individuals) in EIT RIS 
programmes: 17  
- External participants* 
(organisations) in EIT RIS 
programmes: 110  
- Financial Sustainability; revenue 
of KIC LE: 4,932,738.41 EUR  
- Financial Sustainability; FS 
coefficient: 6.50%  

EIT Core KPIs 2017  
- Start-ups created by students & 
graduates from EIT labelled 
programmes: 2  
- Start-ups created as a result of 
innovation projects: 9  
- Start-ups supported by KICs: 33  
- Investment attracted by start-ups 
supported by KICs: 5,850,000.00 
EUR  
- Success stories submitted and 
accepted by EIT: 8  
- External participants* 
(individuals) in EIT RIS 
programmes: 0  
- External participants* 
(organisations) in EIT RIS 
programmes: 9  
- Financial Sustainability; revenue 
of KIC LE: 2,448,785.07 EUR  
- Financial Sustainability; FS 
coefficient: 3.80%  

EIT Core KPIs 2017  
- Start-ups created by students & 
graduates from EIT-labelled 
programmes: 0  
- Start-ups created as a result of 
innovation projects: 0  
- Start-ups supported by KIC: 100  
- Investment attracted by start-ups 
supported by KIC: 27,900,000.00 
EUR  
- Success stories submitted and 
accepted by EIT: 26  
- External participants* 
(individuals) in EIT RIS 
programmes: 0  
- External participants* 
(organisations) in EIT RIS 
programmes: 7  
- Financial Sustainability; revenue 
of KIC LE: 6,620,836.00 EUR  
- Financial Sustainability; FS 
coefficient: 19.94%  

EIT Core KPIs 2017  
- Start-ups created by students & 
graduates from EIT-labelled 
programmes: 0  
- Start-ups created as a result of 
innovation projects: 3  
- Start-ups supported by KIC: 34  
- Investment attracted by start-ups 
supported by KIC: 3,601,433.00 
EUR  
- Success stories submitted and 
accepted by EIT: 8  
- External participants* 
(individuals) in EIT RIS 
programmes: 0  
- External participants* 
(organisations) in EIT RIS 
programmes: 12  
- Financial Sustainability; revenue 
of KIC LE: 7,148,045.45 EUR  
- Financial Sustainability; FS 
coefficient: 21.69%  

102 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
10.6. 

Annex 4B: 
interim evaluation130:  

key  achievements  and  challenges  as  outlined  in  the  EIT 

Key achievements  

The  EIT  evaluation  has  come  to  the  conclusion  that  the  rationale  behind  the 
establishment of the EIT is still valid. The EIT/KICs model which aims at contributing to 
the  development  of  the  EU  and  Member  States  innovation  capacity  in  order  to  tackle 
societal  challenges,  through  the  integration  of  the  knowledge  triangle131,  is  unique  and 
highly relevant.  It targets major structural weaknesses of the innovation capacities in the 
EU (in key thematic areas) such as  the limited entrepreneurial culture, the low level  of 
cooperation between academia and industry and the insufficient development of human 
potential,  and  aims  to  contribute  to  closing  the  innovation  gap  between  the  EU  and  its 
key competitors.   

The  EIT  and  the  KICs  contribute  to  the  Horizon  2020  specific  objectives  on  "societal 
challenges" and on "Leadership in enabling and industrial technologies". In particular as 
a  result  of  the  strong  involvement  of  industrial  participants,  KICs  innovation  activities 
brought solutions closer to the market and paved the way for industrial and commercial 
implementation  in  areas  of  societal  challenges.  The  KICs  innovation  projects  comprise 
demonstrators, pilot plants, proofs of concept and help develop solutions in response to a 
specific business opportunity.   

The  EIT-KICs  model  delivers  concrete  results.  The  first  wave  KICs132  has  gained 
recognition for its activities in the areas of innovation, entrepreneurship and education133. 
The EIT and the KICs add value beyond national initiatives, primarily by focusing on the 
integration  of  the  knowledge  triangle,  building  new  types  of  cooperation  links  and 
facilitating cross-border interactions.  

The co-location centres  (CLCs)134   represent  a key aspect  of the  KICs´ business model 
needed  to  deliver  concrete  results  on  the  local  level  and  have  an  impact  on  local 
innovation ecosystems in thematic areas. They have been instrumental for widening the 
KICs’  geographical  scope  to  EU's  moderate  innovation  performers.  CLCs  have 
successfully  built  links  with  local  governments  and  other  institutions  or  organisations 
where they are located. However, further efforts are needed for the KICs to become fully 
integrated  into  the  local  innovation  ecosystems.  Furthermore,  KICs'  support  to  the 
organisations  from  EU-13  Member  States135,  while  better  than  the  average  of  Horizon 
2020, remains limited to a small number of these Member States.   

KICs  cross-border  operations  give  KIC  partners  and  beneficiaries  access  to  peers, 
investors  and  customers  that  they  might  otherwise  find  difficult  to  identify  and  build 
links with.  

The  EIT  educational  programmes  attract  high  calibre  students.  Graduates  from  EIT 
labelled  courses  appreciate 
technical 
knowledge with entrepreneurial and innovation education, the direct access to businesses 
and  the  international  mobility.  However,  their  integration  in  KICs  innovation  and 

the  multidisciplinary  approach,  combining 

130 SWD (2017) 351 final 
131 Knowledge triangle refers to the interaction between research, education and innovation and to an attempt to better link together 
these key concepts which are key drivers of a knowledge-based society. 
132 EIT Climate-KIC, EIT Digital and EIT InnoEnergy 
133 EIT (2017), Our Impact from 2010 to 2016, pp. 34-39, provides examples of this recognition.   
134  Co-location  centre  means  a  geographical  area  where  the  main  knowledge  triangle  partners  are  based  and  can  easily  interact, 
providing the focal point for the KICs’ activity in that area. 
135 Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia 
103 

 
 
 
 
 
 
 
                                                           
entrepreneurship  activities  is  still  under-exploited  and  there  is  room  for  improvement. 
Furthermore, KICs´ education activities did  not  generate so far  a significant  number of 
student-led start-ups.  

While taking into account the evidence about the concrete results achieved by the EIT in 
the past years, the impacts are mainly limited to the partners (especially higher education 
institutions  and  companies),  graduates  and  start-ups  that  have  directly  cooperated  with 
the KICs. When extending the analysis to the systemic impacts of the EIT, the evidence 
is less clear.  

The  potential  of  the  EIT  and  the  KICs  to  contribute  to  EU  policy-making  in  specific 
fields  is  apparent  although  this  potential  has  not  been  utilized  at  its  best.  The  KICs´ 
efforts to address national and regional administrations and authorities, in particular those 
involved  in  designing  and  delivering  Research  and  Innovation  Strategies  for  Smart 
Specialization (S3) should be improved.  

The administrative expenditure of the EIT has been steadily decreasing over time and is 
significantly below the 5% threshold set out for Horizon 2020. The time required for the 
EIT to finalise the grant procedure has steadily decreased overtime.  In 2016 the average 
time to grant was five months.   

The  KICs´  external  revenues  mostly  originate  from  membership  fees  but  also  from 
sponsorships,  educational  services,  revenue  sharing  agreements,  equity  participation, 
consulting services, third party (mainly national and regional) grants. The KICs' capacity 
to  achieve  financial  sustainability  is  an  issue  and  it  may  be  challenging  for  KICs  to 
become fully self-financing after 15 years, while maintaining the full range of knowledge 
triangle activities. Activities which generate less income (e.g. education ones) would be 
under  particular  risk  as  well  as  other  activities  with  a  limited  market  value.  This  is 
confirmed by the High Level Group report of 2016136.  

The  EIT  model  is  unique  among  the  EU  and  Member  States  innovation  support 
initiatives  in  tackling  relevant  societal  challenges  through  strengthening  cooperation 
between  partners  in  business,  higher  education  and  research  –  KTI.137  The  KICs  have 
been  successful  in  involving  the  diversity  of  actors  in  the  knowledge  triangle,  thus 
their  sectoral  ecosystems.  Better 
contributing 
dissemination of information about the KTI model, both within the KICs and beyond, in 
order to make it better understood and foster the implementation of the model in practice, 
is however needed. 

the  fragmentation 

to  reduce 

in 

KICs  are  perceived  as  communities  with  a  fairly  balanced  representation  of  all 
knowledge  triangle  actors.  Furthermore,  KICs  managed  to  attract  the  most  relevant 
European  actors  in  their  respective  fields.  Most  KICs  have  gone  beyond  the  ‘classical’ 
actors  of  the  knowledge  triangle  to  also  involve  other  actors  such  as  public  authorities 
(e.g. EIT Climate-KIC) and civil society organisations (e.g. EIT Health) and also actively 
participated in EU initiatives that promote partnerships among the EC, governments and 
private  actors  (e.g.  EIT  InnoEnergy  involvement  in  the  Strategic  Energy  Technology 
Plan's various working groups).   

136  Report  of  the  High  Level  Group  on  the  EIT  set  up  by  Commissioner  Tibor  Navracsics,  2016,  pp.8  and  9; 
https://ec.europa.eu/education/sites/education/files/eit-hlg-final-report_en.pdf     
137 Knowledge Triangle Integration 

104 

 
 
 
 
 
 
 
 
                                                           
The flexibility of the EIT model is suitable and allows for testing potential new initiatives 
in the area of innovation support, e.g. the EIT Regional Innovation Scheme initiative.  

The  cross-KICs  interactions,  through  the  active  support  of  the  EIT,  have  been  steadily 
increasing.  They  have  resulted  in  mutual  learning  and  sound  evolution  of  KICs 
governance and management model.  

Key challenges 

Key  challenges  that  would  need  to  be  addressed  to  improve  the  EIT/KIC  model  have 
been identified and are presented below: 

  Strengthening  the  EIT/KICs  model  as  a  relevant  mechanism  at  EU  level  in 
addressing key societal challenges and delivering on Horizon 2020 objectives, in 
particular,  to  further  improve  the  linkages  between  the  knowledge  triangle 
activities, especially between innovation and business creation activities 

  Better articulating the EIT model and objectives, and further raise the awareness 
of the EIT brand through strengthening the EIT/KIC communication efforts with 
a focus on concrete examples, case studies, success stories, results achieved and 
impact. 

  Encouraging  cross-KIC  collaboration  and  ever  stronger  participation  of  the 

private sector, in particular SMEs, in KICs activities.  

  Making the selection process (through which KICs provide support to innovation 
projects)  more  transparent  and  communicate  the  selection  results  to  the  wider 
KIC community more efficiently. 

  Ensuring synergies and complementarities with other innovation initiatives at EU, 

national and regional level at both implementation and programming level;  

 

 

 

Increasing  the  dialogue  and  interaction  with  policy-makers  at  EU,  national  and 
regional level with a view to better contribute to EU policy-shaping in respective 
fields of action;   

Improving  the  practical  integration  of  KIC  activities  within  regional  and  local 
innovation  ecosystems  and  enhance  cooperation  with  regional  and  local 
innovation actors, in particular, through better use of the co-location centres, for 
inter-regional cooperation. 

Increasing  further  the  attractiveness  and  competitiveness  of  KICs'  education 
programmes  by  better  monitoring  the  education  offer,  in  view  of  improving 
recruitment  procedure  and  ensuring  a  high  quality,  with  the  goal  of  increasing 
KICs´ outreach and reduce the drop-out rate at the application stage; fostering and 
sharing  experience across  KICs;  strengthening the EIT label,  and systematically 
monitoring the skills acquired, and the outcomes and impact of the courses;   

  Taking concrete actions to link KICs and public-private partnerships with similar 
goals,  in  order to  promote new and emerging curricula in  a variety of industrial 
sectors 

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
  Exploring  synergies  with  Commission's  skills  development  policies  and  further 
promote the human capital, entrepreneurial and digital skills development in both 
formal  and  informal  /  non-formal  contexts  as  important  elements  in  any 
successful innovation ecosystems, in particular at the design of KICs educational 
programmes.  

  Fostering an entrepreneurial mind-set at a broader scale by going beyond formal 
education  and  engaging  inter  alia  in  executive  education,  short  courses,  online 
learning and vocational training including professional development.  

  Enhancing  efforts  in  making  KICs’  management  structures  more  efficient  and 

effective.   

  Measuring and reporting more extensively on activities and achievements related 
to  EU  policy  priorities  in  thematic  areas;  further  improving  and  reviewing  the 
system  for  monitoring  the  implementation  of  EIT  and  KICs'  activities  towards 
Horizon  2020  objectives  in  order  to  better  measure  and  capture  their  direct  and 
indirect results and impact, and taking measures that would allow to better assess 
the cost effectiveness of KICs in achieving their results. 

  Exploring ways to optimise the administrative procedures and reduce the burden 
imposed  on  KICs’  operations,  while  making  sure  the  data  to  assess  the  actual 
performance is collected.  

106 

 
 
 
 
 
 
 
 
10.7. 

Annex 5: 
Horizon Europe 

Discarded  policy  options  regarding 

the  EIT  under 

As  part  of  the  Horizon  Europe  Impact  assessment,  taking  into  account  the  stakeholder 
input  and  suggestions  on  the  improvement  of  the  EU  R&I  partnership  landscape,  the 
following  policy  alternatives  regarding  the  EIT’s  future  role  and  operation  have  been 
considered and discarded. 

Reduction/Discontinuation of EIT KICs interventions  

The EIT is highly relevant and has a clear EU added value as there is no other instrument 
that builds EU-wide ecosystems of education, research, business and other stakeholders 
(EIT interim evaluation). The reduction of the EIT scope of its intervention or a full or 
partial  phasing  out  of  KICs  from  the  current  operating  model  would  bear  severe 
implications and negative impact on the knowledge triangle integration development, the 
research and innovation performance and the overall research and innovation landscape 
in Europe.   

Continuation of strategic approach to EIT/KICs as implemented under Horizon 2020  

EIT/KICs  would  operate  on  the  basis  of  initial  objectives,  scale  and  operating  modes. 
The key challenge of rationalization of the European R&I partnerships landscape in line 
with  the  overall  objectives  of  the  future  Horizon  Europe  Programme  would  not  be 
realised. The coherence between the EIT and other EU innovation policy initiatives and 
instruments at programming as well as implementation level would not be matched. The 
key difference between hereby discarded option and the baseline option analyzed in the 
main body report lies in the proper alignment of the EIT operations with the requirements 
of Horizon Europe programme in case of baseline option.   

Direct integration of KICs into the Framework Programme (without EIT)  

As  confirmed  by  the  past  evaluations,  the  EIT  model  comprising  the  EIT  and  its 
Knowledge  Innovation  Communities  (KICs)  is  valid  and  working  well.  The  EIT  has 
tailored  its  support  structure  to  the  specific  needs  and  goals  of  the  KICs  by  providing 
coordination  and  steering  (i.e.  requirements  for  setting  up  KICs,  performance  based 
funding,  simplification).  Through  systematic  focus  on  cross-KIC  activities,  sharing  of 
best  practices  and  integrating  lessons  learnt  from  the  past,  the  EIT  has  built  up 
knowledge and experience on which each KIC can draw (i.a. framework for guidance to 
set up new KICs). In turn, the KICs provide the EIT with practical insights and feedback 
on  what  works  on  the  ground  and  what  does  not  (thus  increasing  effectiveness  and 
synergies).   

The EIT/KIC model is based on a long-term approach to innovation, i.e. KICs are set up 
bearing  in  mind  a  long-term  perspective  to  achieve  the  impact  and  their  sustainability 
beyond  the  direct  public  financial  support.  The  EIT  provides  a  wide  range  of  services, 
from education, training and coaching, building and maintaining networks where young 
entrepreneurs and enterprises connect with future partners and investors in order to take 
up  the  research  results  and  bringing  them  to  the  market.  This  goes  far  beyond  the 
management  of  EU  contracts  and  projects.  The  EIT  has  thus  built  up  a  wealth  of 
knowledge  and  experience  on  innovation  that  is  unique  at  a  European  scale  and 
decoupling of EIT and KICs would cause the effectivity loss. The gradually built-up EIT 
Community of regular exchange, mutual support and trust would disappear.  Further, the 
current efficiency at the EIT central management level as well as in the management of 
KIC operations would be lost. 

107 

 
  
10.8. 

Annex 6: 

Selection criteria for establishing KICs 

The Commission proposal for establishing the Horizon Europe programme stipulates that 
European  Partnerships,  including  KICs,  should  be  selected,  implemented,  monitored, 
evaluated  and  phased-out  according  to  five  criteria  as  outlined  in  Annex  III  of  the 
proposal138. In that light it is necessary to assess to what extent the new Horizon Europe 
criteria  framework  on  partnerships  covers  the  aspects  of  the  current  KIC  selection 
criteria, and whether there is a need for additional selection criteria specific to KICs. 

Table  1  provides  a  mapping  of  the  proposed  criteria  for  the  selection  of  European 
Partnerships  and  the  criteria  the  EIT  currently  uses  for  the  selection  of  proposals  to 
establish a KIC139. The results suggest that the new criteria cover well most of the aspects 
of  the  current  selection  criteria  for  KICs,  and  only  minor  deviations  (i.e.  additional 
criteria) will be needed to reflect KICs’ specificities. 

Annex 9 provides analysis of possible thematic areas for future KICs taking into account 
criteria for selection and implementation of European partnerships.  

Table  1:  Mapping  of  criteria  for  selection  of  KICs  and  the  criteria  for  establishing 
European Partnerships. 

Criteria for selection of KICs 

1.1. Strategic approach: 
relevance, specificity and value-
added of the strategic approach and 
proposed focus within the theme; 
applicability of the KIC model to 
tackle the societal challenge(s) of 
Horizon 2020 via a 
multidisciplinary approach by 
integrating the Knowledge 
Triangle and fostering 
entrepreneurship and innovation 
throughout Europe 
1.2. KIC partnership innovation 
potential: Innovation potential of 
the partnership to implement the 
KIC’s strategy, demonstrated by 
the combined strength and quality 
of the partners (including SMEs), 
forming a diverse, balanced, 
collaborative and world-class 
partnership 
1.3. Synergies: Demonstrate value 
added and readiness to establish 
concrete synergies and 
complementarities, positioning of 
the KIC vis-à-vis other relevant 
public, private and third sector 
initiatives at EU and other levels 
2.1. Operations: The quality of the 
KIC leadership team profiles 
(management and governance 

Assessment 

Overall the criteria are well 
aligned.  
Assessment of the extent to 
which a KIC is more effective 
than other forms of partnerships 
in achieving the related 
Programme objectives should be 
carried out as part of the EIT 
SIA.  

Criteria for establishing 
European Partnerships 

Evidence that the European 
Partnership is more effective in 
achieving the related objectives 
of the Programme, in particular 
in delivering clear impacts for 
the EU and its citizens, notably 
in view of delivering on global 
challenges and research and 
innovation objectives, securing 
EU competitiveness and 
contributing to the strengthening 
of the European Research and 
Innovation Area and 
international 
commitments; 

Coherence  and  synergies  of  the 
European Partnership  within  the 
EU 
innovation 
landscape 

research  and 

The criteria are well aligned 

Transparency and openness of 
the European Partnership as 
regards the identification of 

Alignment can be achieved by 
pursuing one of the two options: 
-  Set general standards for all 

138  European  Commission  (2018)  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  Horizon 
Europe  –  the  Framework  Programme  for  Research  and  Innovation,  laying  down  its  rules  for  participation  and  dissemination, 
COM(2018) 435 final. Annex III 
139 
Call 
<https://eit.europa.eu/sites/default/files/evaluation_criteria_call_for_kics_2018.pdf> 

02519.EIT.2017.I.GB46. 

Evaluation 

proposals 

Criteria, 

(2017) 

2018 

KIC 

EIT 

for 

- 

108 

 
 
 
                                                           
Criteria for selection of KICs 

teams); effectiveness of the 
operational structure including 
selection and connectivity of 
colocation centres and 
demonstration how the Knowledge 
Triangle Integration approach will 
be implemented on the operational 
level 

Criteria for establishing 
European Partnerships 
priorities and objectives, and the 
involvement of partners and 
stakeholders from different 
sectors, including international 
ones when relevant 

Assessment 

KICs regarding the 
requirements for selection of 
specific thematic priorities 
and involvement of partners 
and stakeholders 

-  Amend the selection criteria 
and request all applicants to 
reflect the proposed principles 
for selection of priorities and 
involvement of partners, and 
stakeholders in the proposals 
for KICs’ partnership (at the 
application stage). 

The criteria are well aligned 

Ex-ante demonstration of the 
partners’ long term commitment, 
including a minimum share of 
public and/or private 
investments 

2.2. KIC business model and 
financial plan: feasibility of the 
KIC’s business model and 
financial plan (including EIT and 
non-EIT resources) for attracting 
financial resources and achieving 
financial sustainability in the long 
term; a plan for the management 
and exploitation of intellectual 
property supporting the KIC’s 
business model. 
3.1. Impact and KIC scoreboard: 
planned pan-European impact on 
the societal challenge, human 
capital, job creation, economic 
growth demonstrated by the 
strategy; quality and relevance of 
the outreach (in particular EIT 
Regional Innovation Scheme); 
relevance and feasibility of the 
expected outcomes, outputs and 
Key Performance Indicators (KPIs) 
included in a KIC Scoreboard and 
their contribution to the EIT 
Scoreboard 

Ex-ante demonstration of 
additionality and directionality 
of the European Partnership, 
including a common vision of 
the purpose of the European 
Partnership. This vision will 
include in particular: 
-  identification of measurable 

expected outcomes, 
deliverables and impacts 
within specific timeframes, 
including key economic value 
for Europe; 

-  demonstration of expected 
qualitative and quantitative 
leverage effects; 
-  approaches to ensure 

flexibility of implementation 
and to adjust to changing 
policy or market needs, or 
scientific advances; 

The criterion for European 
Partnerships is broader and will 
require some integrations to the 
corresponding KICs’ selection 
criteria.. However, some 
elements are already covered 
under other KIC selection 
criteria: 
-  KICs should demonstrate 
leverage effects when 
outlining their business model 
and financial plan as well as 
the expected synergies.  
-  KICs should demonstrate 
approaches to ensure 
flexibility of implementation 
under the proposed plan of 
operations  

-  Maximum duration of the 

financial support is indicated 
in the EIT Regulation; 

-  exit-strategy and phasing-out 

-  KIC exit strategy (including 

measures 

long-term financial 
sustainability) should be 
outlined in the KIC business 
model and financial plan.  

109 

 
 
 
3.2  Dissemination  of  results  and 
communication: 
dissemination 
plans  for  KIC  results,  including 
sharing  good  practices  within, 
between  and  beyond  the  KICs, 
across EU Member States, regions 
to  ensure  a 
and 
widening  of  the  reach  of  the  EIT 
and  increase  of  its  impact;  quality 
and 
the  KIC 
communication  strategy  including 
the  contribution  to  building  the 
EIT brand identity 

institutions 

relevance 

of 

The EIT criteria has a scope that 
includes (and goes beyond) what 
relevant 
is  covered  by 
Horizon  Europe 
partnership 
criteria. 

the 

“Evidence 

Key elements are covered by the 
criteria 
of 
effectiveness  in  achieving  the 
objectives  of 
the  Framework 
Programme” and “Openness and 
transparency”  where  partnership 
to  describe 
proposals  have 
mechanisms 
to 
communication 
and 
dissemination of results.  

related 

Source: IA support study of SQW 

110 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.9. 

Annex 7: 

Social network analysis of KICs’ partnerships 

The Social network analysis140 examines the level and intensity of cooperation between 
the KICs partners and supports some of the statements in the problem definition as well 
as in the impact analysis section of the main IA report, in particular those related to the 
transparency,  openness,  effectiveness  and  efficiency  of  the  activities  and  operations  of 
the KICs.  

The  analysis  covers  the  first  three  KICs  as  they  are  most  mature:  EIT  Digital,  EIT 
Climate,  and  EIT  InnoEnergy.  It  is  based  on  four  main  indicators:  density  and 
distribution of the network, distribution of KIC beneficiaries by a number of projects and 
by  a  number  of  partners  as  well  as  the  distribution  of  funding.  The  data  on  KICs’ 
partners  has  been  extracted  from  KICs  Business  Plans  for  2014  –  2017141  manually  as 
well as by the use of automatic text analysis and extraction algorithms.  

The analysis came with three main findings: 

  EIT  Digital  and  EIT  Climate  KIC  have  developed  relatively  dense  networks  of 
partners, whereas the network of EIT InnoEnergy proves to be more fragmented 
segregated around three clearly pronounced clusters. 

  All  three  KICs  have  a  large  share  of  partners  (ranging  between  30%  in  EIT 
Digital and 83% in EIT InnoEnergy) that participated in less than three projects 
and  engaged  in  partnerships  with  a  small  number  of  organisations  in  the  period 
2014 – 2017.  

  The  funding  is  highly  concentrated  -  5%  of  the  organisations  claimed  between 
31%  (EIT  Digital)  and  64%  (EIT  InnoEnergy)  of  -  the  total  funding  for  a 
respective  KIC  in  2016  and  2017.  When  excluding  the  KIC  central  offices  and 
co-location centres, then the top 5% of the beneficiaries receive from 30% (EIT 
Digital) to 43% (EIT Climate KIC) of total EIT KAVA funding.  

EIT Digital 

The social network analysis  suggests  (see figure  B4-1) that the partnership  structure of 
EIT Digital cannot be characterised as fragmented. The figure demonstrates that there is 
only  one  large  cluster  and  no  separate  islands  of  organisations  are  visible.  The  results 
remain valid when additional constraints are introduced to the network, such as limiting 
the  network  to  organisations  that  cooperate  frequently  (see  figure  B4-2)  or  introducing 
budgetary constraints (see Notes below figures B4-1 and B4-2). The density of the social 
network142  is  0.195  (with  maximum  possible  value  of  1)  further  strengthening  the 
conclusion that all participating organisations are strongly clustered.  

140 This analysis has been carried out by ICF and was part of the study to support the Impact assessment of the EIT, Annex B4, pp. 
130-sq. 
141 For EIT Climate it covers 2015-2017, because the received Business Plan for 2014 did not contain the relevant Annexes.  
142 Density - proportion of direct ties in the network compared to the total number of possible ties. 

111 

 
 
 
 
 
  
 
 
 
 
 
 
                                                           
Though  the  organisations  are  in  a  cluster,  around  30%  of  beneficiaries  of  EIT  Digital 
participated in one or two projects and engaged with less than 11 partners (see Figure B4-
3  and  B4-4).  Sparse  participation  could  indicate  weak  ties  within  the  cluster  or  the 
disparities between the small number of core and the large number of peripheral partners. 
In  fact,  seven  organisations  (5%  of  all  partners)  claimed  31%  of  the  funding  in  2016-
2017.  If the estimates exclude KIC central  offices and co-location centres, then the top 
5% (7 organisations) claimed approximately 30% of the funding. 

Source: EIT data; IA support study of SQW 

Figure  B4-1.  Social  network  of  all  organisations  that 
participated in EIT Digital (2014-2017) 

Figure  B4-2.  Social  network  of  organisations  that  had  5  or 
more cooperation’s in EIT Digital (2014-2017) 

Source: SQW estimates, based on EIT Digital Business Plans (2014/2015/2016/2017) 

112 

 
 
 
 
 
 
Figure B4-3. Number of organisations that in 2014-2017 partnered up with a specified number of unique 
partners in EIT Digital projects 

i

s
e
i
r
a
c
i
f
e
n
e
b
C
K

I

f
o

.
o
N

60

50

40

30

20

10

0

53 

23 

21 

16 

9 

9 

9 

10 

9 

5 

 1-10

 11-20

 21-30

 31-40

 41-50

 51-60

 61-70

 71-80

 81-90

91+

Number of partners 

Figure B4-4. Number of organisations that in 2014-2017 participated in a specified number of EIT 
Digital projects 

Notes:  

1.  The  number 
blue 
inside 
circles  refers  to 
a 
unique 
identifier  of  an 
organization 
that 
in 
Digital 

participated 
EIT 
2014-2017; 

2.  The  width  of 
line 
the  grey 
the 
indicates 
of 
number 
cooperation’s 
organisations 

had;  

3.  The  results 
changes 
marginally 
when budgetary 
constraints 
of 
EUR  10,000  or 
100,000 
EUR 
were 
introduced in to 
the 
social 
networks. 

i

s
e
i
r
a
c
i
f
e
n
e
b
C
K

I

f
o

o
N

57 

60

50

40

30

20

10

0

28 

26 

19 

12 

14 

 1-2

 3-5

 6-10

 11-15

 16-25
 26-50
Number of projects 

Source: EIT data; IA support study of SQW 

EIT Climate KIC 

5 

1 

2 

 51-75

 76-99

100+

The  social  network  of  organisations  participating  in  the  EIT  Climate  KIC  looks 
similar to the EIT Digital one (see figures B4-5). There is one large cluster without 
an  indication  of  smaller  islands  of  activities.  The  density  of  this  network  is  0.219. 
This result also stands with additional constraints (see figure B4-6).  

113 

 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
However,  47%  of  KIC  beneficiaries  participated  in  only  one  or  two  projects  (see 
figure B4-7). This implies that even though there is a strong singular cluster, some 
organisations are weakly integrated into the system. In addition, this also indicates 
that activities are strongly concentrated around several organisations. This claim is 
further  supported  by  the  fact  that  11  organisations  (5%  of  all  organisations  that 
participated  in  EIT  Climate  in  2016-2017)  claimed  52%  of  the  budget.  If  the 
estimates  exclude  KIC  central  offices  and  co-location  centres,  then  top  5%  (10 
beneficiaries) claimed approximately 43% of the funding. This disparity in funding 
is much stronger in EIT Climate KIC in comparison to EIT Digital.  

Figure  B4-5.  Social  network  of  all  organizations  that 
participated in EIT Climate (2015-2017)* 

Figure B4-6. Social network of organisations that had 5 or 
more cooperation’s in EIT Climate (2015-2017)* 

Source: SQW study and estimates, based on EIT Climate KIC Business Plans (2015/2016/2017) 

114 

 
 
 
 
 
 
 
Notes:  

1.The number inside blue circles refers to a unique identifier of an organization that participated in EIT Digital 2014-2017; 

2.The width of the grey line indicates the number of cooperation’s organisations had;  

3.The results changes marginally when budgetary constraints of EUR 10,000 or EUR 100,000 were introduced in to the social networks. 
* The 2014 data was excluded from the analysis as we did not have access to the complete Business Plan for that year 

Figure  B4-7.  Number  of  organisations  that  in  2015-2017*  partnered  up  with  a  specified  number  of  unique  partners  in  EIT 
Climate KIC projects 

i

s
e
i
r
a
c
i
f
e
n
e
b
C
K

I

f
o

.
o
N

60

50

40

30

20

10

0

41 

33 

28 

 1-10

 11-20

 21-30

56 

33 

35 

17 

14 

14 

 31-40

 41-50
Number of partners 

 51-75

 76-99

 100-150

 151+

Figure B4-8. Number of organisations that in 2015-2017* participated in a specified number of EIT  Climate  KIC 
projects 

i

s
e
i
r
a
c
i
f
e
n
e
b
C
K

I

f
o

.
o
N

140

120

100

80

60

40

20

0

126 

65 

33 

22 

14 

9 

1 

1 

 1-2

 3-5

 6-10

 11-15

 16-25

 26-50

 51-75

 76+

Number of projects 

Source: Own estimates, based on EIT Climate KIC Business Plans (2015/2016/2017) 
* The 2014 data was excluded from the analysis as we did not have access to the Business Plan from that year 

115 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EIT InnoEnergy 

Unlike  other  KICs,  EIT  InnoEnergy  is  more  fragmented.  Figure  B4-9  shows  that 
organisations  participating  in  the  EIT  InnoEnergy  are  divided  into  three  pronounced 
clusters,  while  a  large  number  of  organisations  are  on  the  outskirts.  Figure  B4-10 
provides  additional  insight  by  showing  that  after  removing  all  organisations  that 
participated  in  EIT  InnoEnergy  only  several  times  (less  than  5),  the  network  becomes 
very  thin.  This  implies  that  the  fragmentation  seen  in  figure  B4-9  is  due  to  some 
organisations only participating in EIT InnoEnergy ones or twice, and hence not having 
had  the  chance  to  work  with  many  partners.  A  low  Social  network  density  of  0.116 
further supports this conclusion. The network in B4-10 could be considered as the core of 
EIT InnoEnergy community. 

The above conclusions are further supported by  Figure B4-11, which demonstrates that 
around 83% of all organisations participated in only one or two EIT InnoEnergy projects. 
In addition, 5% (11 organisations) in this KIC claimed around 64% of the overall funding 
in  2016 and 2017.  If the estimates exclude KIC  central  offices and  co-location centres, 
then top 5% (11 organisations) claimed approx. 37% of the funding. 

Figure  B4-9.  Social  network  of  all  organizations 
participated in EIT InnoEnergy (2014-2017) 

that 

Figure B4-10. Social network of organisations that had 5 or 
more cooperation’s in EIT InnoEnergy (2014-2017) 

Source:  SQW study and estimates, based on EIT InnoEnergy Business Plans (2014/2015/2016/2017) 
Notes: The number inside blue circles refers to a unique identifier of an organization that participated in EIT Digital 2014-2017; 
The width of the grey line indicates the number of cooperation’s organisations had;  
The results changes marginally when budgetary constraints of EUR 10,000 or EUR 100,000 were introduced in to the social networks.   

116 

 
 
 
 
 
 
 
 
 
 
Figure B4-11. Number of organisations that in 2014-2017 partnered up with a specified number of unique 
partners in EIT InnoEnergy projects 

i

s
e
i
r
a
c
i
f
e
n
e
b
C
K
C
K

I

I

f
o

.
o
N

70

60

50

40

30

20

10

0

66 

55 

52 

29 

 1-10

 11-20

 21-30

 31-40

 41-50

 51-60

 61-70

 71-80

 81-90

6 

5 

3 

2 

1 

4 

91+

Number of partners 

Figure  B4-12.  Number  of  organisations  that  in  2014-2017  participated  in  a  specified  number  of  EIT 
InnoEnergy projects 

i

s
e
i
r
a
c
i
f
e
n
e
b
C
K

I

f
o

.
o
N

90 

95 

100

90

80

70

60

50

40

30

20

10

0

22 

6 

6 

3 

1 

Number of projects 

117 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.10. 

Annex 8:  

Impact Indicator Framework 

The  Annex  8  sets  out  the  comprehensive  Indicator  Framework  for  the  EIT  and  the  KICs.  The  indicator  framework  is  comprised  of  the  system  of 
indicators proposed for regular monitoring and review by EIT and the KIC. The Framework also includes a sub-set of indicators recommended for less 
frequent review as part of the evaluative research, which will be timed to coincide with evaluation cycles. The framework comprise the indicators directly 
relevant to economic development outcomes that stem from the three nodes of the knowledge triangle, the indicators associated with cross-KTI outputs 
and the development of ecosystems, and the indicators associated with the performance of KICs in operational terms. The Framework does not comprise 
the societal development indicators, which will be subject to discussion and agreement between the EIT and KICs in terms of definitions, data sources, 
collection frequencies, etc. 

Category 

Indicator 

Definition 

e
c
r
u
o
s
e
R

e
r
o
C

t
n
e
r
r
u
C

I
P
K

s
n
w
o
d
k
a
e
r
B

e
c
r
u
o
S

y
c
n
e
u
q
e
r
F

r
e
h
t
O

Education 

No.  participants  completing  eligible 
EIT/KIC 
/ 
programmes 

education 

courses 

Outputs 

Participants should have completed one of the 
following: 
  EIT Label courses/programmes 
  Professional/  workforce  courses  lasting  for 

at least 5 days 

  Other 

non-degree 

programmes 

(e.g. 
Summer  schools  of  5  days  or  more  and 
other  extra-curricular  courses  such  as 
entrepreneurship training of 5 days or more) 

  MOOC/MOOPs of 3 modules or more. 
Unit of analysis is completions, so individuals 
completing  more  than  one  can  be  counted 
twice  (or  more).  No.  days  and  modules 
completed  are  provided  based  on 
testing 
feedback  but  would  be  subject  to  agreement 
between EIT/KICs. 

118 

Note (e.g. changes to Core KPI) 

Indicator  to  be  expanded  to 
include a fuller range of courses 
to reflect the broader suite of education 
activities of the KICs. The breakdowns 
required  will  ensure  that  time-series 
comparisons  can  be  made  with  data 
already collected on EIT Label courses. 
Breakdown  by  each  type  of 
education  course/  programme. 
The number of days/modules represent 
our recommendation to the EIT and are 
based on the feedback from the testing 
phase. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business  and 
enterprise 

No. businesses supported 

contributes 

To  measure  the  number  of  business  supported 
by  KIC  activities  -  using  current  Core  KPI 
definition  but  extended  to  businesses  of  all 
stages, e.g. KICs should justify that the support 
the  businesses 
provided 
growth/potential  growth.  Examples  of  such 
services  are  mentoring,  consultancy  (e.g. 
access to finance and  markets, product/service 
marketing,  legal  advice,  internationalisation, 
innovation,  match-making,  etc).  The  services 
should  be  provided  for  a  minimum  period  as 
set by EIT (see “Note” column). 

to 

Research and 
innovation 

No. of innovation projects progressing 
towards commercialisation 

To  measure 
innovations 
the  number  of 
resulting  from  innovative  projects  that  have 
progressed towards commercialisation, defined 
as  one  or  more  of:  progress  by  at  least  one 
technology  or  manufacturing  readiness  level 
(TRL/MRL);  prototype/proof  of  concept/beta 
version 
product/service/model 
piloted.  The  definition  may  be  extended  for 
KIC-specific measures (see “Note” column) 

developed; 

TRL 

Core  KPI  broadened  to  include 
the  total  number  of  businesses 
that  have  received  some  form  of 
eligible support (i.e. not just start-ups). 
Breakdown  by:  business  stage 
(i.e.  start-ups  up  to  two  years 
old,  and  established  businesses  of  two 
years old or more); business size 
(i.e.  SME  and  large  company); 
and  route/type  of  support  received  by 
business-supported 
education 
courses/programmes,  start-up  support, 
innovation projects). 
The  current  definition  used  by  EIT  is 
based  on  services  provided  for  a  total 
period  of  at  least  two  months.  We 
recommend  seeking  to  redefine  the 
eligibility  criteria  in  terms  of  person-
days of support provided. 

(i.e. 

The  indicator  will  be  useful  for 
intermediate 
providing 
measure of the progress of innovations, 
and  to  help  in  the  contextualisation  of 
outcome indicators. 

an 

EIT  to  agree  with  KICs  the 
precise definition for measuring 
towards  commercialisation, 
progress 
due to the use of different measures by 
KICs. 

Indicator  to  contribute  to  the 
measurement  of  Horizon 
impact  pathway  No.7  –

Europe 
innovation outputs. 

Research and 
innovation 

No. of innovations produced that have 
filed  for  some  form  of  intellectual 
property (IP) protection 

To  measure 
innovations 
the  number  of 
resulting  from  innovative  projects  (i.e.  filings 
intellectual  property 
for 

form  of 

some 

119 

TRL  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and 
innovation 

No.  of  peer 
publications 

reviewed  scientific 

protection  -  patents,  trademarks,  registered 
designs, copyrights). 
No.  of  peer  reviewed  scientific  publications 
that  have  been  produced  as  a  result  of  KIC-
funded innovation projects. 

WoS 

 Definition 
aligned  with 
Horizon  Europe  indicator  to 
measure  number  of  peer-reviewed 
scientific  publications. 
to 
contribute 
the  measurement  of 
Horizon  Europe  impact  pathway  No.1 
–publications. 

Indicator 

to 

KTI 
nodes) 

(2+ 

No.  non-Education  partners  involved 
in Education activities 

KTI 
nodes) 

(2+ 

No. non-business partners involved in 
business start-up activities 

Operational 

No.  of  organisations  'engaged'  with 
the RIS (by engagement frequency) 

(e.g. 

To  measure  the  number  of  business  and  other 
non-Education  organisations 
tertiary 
sector  organisations)  that  are  involved  in  KIC 
education programmes. Involvement defined as 
from 
any 
attending  an  education  service  to  involvement 
in the delivery of education programmes. 

formal  engagement, 

form  of 

a 

(e.g. 

start-up 

attending 

To measure the number of education, research 
and  other  non-business  organisations  (e.g. 
tertiary-sector  organisations)  that  are  involved 
in  KIC 
activities/programmes. 
Involvement  is  defined  as  any  type  of  formal 
start-up 
engagement 
service/activity, involvement in the delivery of 
start-up activities/programmes). 
To  measure  the  number  of  organisations  that 
have  engaged  with  each  KIC  who  have  also 
engaged with the RIS – covering the origin of 
the  partner  and  destination  of  the  engagement 
(i.e. location and route/type of support). 
Engagement  should  be  a  formal  and  active 
participation that has involved dedicating time, 
resources or funding to an activity. 

120 

It  is  important  to  note  that 
although  it  is  not  immediately 
obvious  what 
'good'  performance 
means  for  this  indicator,  it  is  designed 
to provide contextual information when 
analysed 
related 
indicators  that  measure  the  extent  of 
knowledge 
integration  (e.g. 
Network  strength  analysis).  It  also 
enables 
any 
particularly  high or low concentrations 
by location. 

combination 

assessment 

triangle 

an 

of 

in 

As above. 

Disaggregated  in  terms  of  the 
type/intensity  of  engagement 
(classified  from  low  to  high-intensity 
engagement,  and 
the  frequency  of 
engagement). 

Location to include the origin of 
the  partner  and  destination  of 
the  engagement  –  e.g.  location(s)  in 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operational 

No.  and  %  of  partners  from  EIT  RIS 
countries 

As per indicator name. 

Operational  Measure  of  operational  efficiency 

(e.g. time to grant) 

Operational   No.  of  partners  making  financial 
contributions to the KIC 

To  measure  operational  efficiency, 
“options” are proposed, as follows:  
  time  to  grant  -  %  of  grants  signed  within  a 

two 

pre-determined time frame (90 days)  

  grant utilisation rate – % grant utilised each 

year 

To  measure  a  number  of  partners  and  donors 
making  cash  and  in-kind  contributions,  to  be 
broken down as follows: 
  contributions  to  KIC  KAVA  and  KCA 

activities 

  contributions  to  fund  KIC  operations  (e.g. 

membership fees) 

analysed 

which engagement occurs. 
indicator 

This 
important 

provides 
contextual 
in 
information  when 
related  outcome 
combination  with 
indicators  linked  to  KIC  performance 
in  RIS  countries  (e.g.  to  inform  steps 
towards  improving  the  performance  of 
'modest  and  moderate'  innovators)  and 
provides  evidence  on  countries  with 
high or low concentrations. 

Core  KPI  expanded 
'engaged' 

to  all 
and 
whether  they  have  engaged  with  RIS 
countries. 

organisations 

Following the testing phase,  we 
recommend  that  the  EIT  select 
one or both of the  proposed “options”, 
through an agreement with the KICs.  

by 

nature 

contribution 

Breakdown 
financial 

of 
and 
route/type  of  support  received  by 
business  receiving 
investment  (e.g. 
education  courses/  programmes,  start-
innovation  projects). 
up 
Financial 
breakdowns 
include: 

contribution 

support, 

 contributions  to  KAVA  and  KCA 

activities 

 contributions to KIC operations (e.g. 

membership fees) 

Following testing with KICs, we 
following 
the 
propose 
breakdowns by the size of the financial 

121 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
contribution, as follows: 
  EUR 0 to 9,999k 
  EUR 10,000 to 49,999 
  EUR 50,000 to 99,999 
  EUR 100,000 to 249,999 
  EUR 250,000 to 499,999 
  EUR 500,000 to 999,999 
  EUR 1,000,000 plus 

122 

 
 
 
Economic 
development 

Value  of  private  /  public  investment 
mobilised  /  attracted  within  N  years 
by supported businesses 

Short-term Outcomes 

To measure the EUR value of private / public 
capital  attracted  by  businesses  in  receipt  of 
KIC support (as under output indicator above) 
or receipt of innovation project funding, within 
a  three  years  post-support  (e.g.  last  received 
KIC KAVA support activity). 

Economic 
development 

No.  start-ups  created  and  surviving 
for 12 months 

To measure the number of sustainable start-ups 
created  as  a  result  of  KIC  activities,  e.g. 
entrepreneurship  support,  innovation  projects, 
graduate  training.  Outcome  eligible  once  a 
business  has  started  trading  and  been  trading 
for 12 months. 

Economic 
development 

No.  and  %  of  businesses  supported 
that 
either 
reported  growth 
employment or turnover 

in 

is  attributable 

To  measure  the  number  and  %  of  businesses 
that report employment and/or turnover growth 
to  KIC  support.  The 
that 
indicator  will  be  dependent  on  self-reporting. 
%  should  be  based  on  a  sample,  and  then  no. 
calculated  through  appropriate  scaling  up  and 
weighting to respondent profile. 

123 

investment 

Core KPI expanded to the value 
attracted  by 
of 
businesses  supported  across  activities 
(as  defined  in  output  indicator  above) 
and  also  including  those  in  receipt  of 
innovation project funding. 

Breakdown  by  route/type  of 
support  received  by  business 
receiving  investment  (e.g.  education 
courses/programmes,  start-up  support, 
innovation projects) 

Breakdown  by  route/type  of 
support  received  by  each  start-
up  created  (e.g.  education  courses/ 
programmes, 
support, 
innovation projects). 

start-up 

Data  collection  will  draw 
research, 
on  a  mix  of 
combining programme/monitoring data 
with  a  rolling  survey  with  start-ups 
created as a result of KIC activities one 
year  after  they  are  established,  where 
necessary. 
There  is  scope  to  extend  to  3  years 
post-establishment. 

Breakdown  by  route/type  of 
an 
received 
support 
organisation  supported  (e.g.  education 
courses/  programmes,  start-up  support, 

by 

innovation projects). 
Rolling  survey  of  organisations 
in  receipt  of  KIC  support  at  set  time 
intervals  (i.e.  1,  3  and  5  years  post 
support). 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ecosystem 
development 

intrapreneurial  roles 

No. and % of participants in education 
programmes that are: 
 
 

in employment relevant to the KIC 
/  roles 
in 
their 
supporting 
organisation 
in managerial roles  

 
  contributing to KIC activities (e.g. 
roles on EIT innovation projects) 

innovation 

in 

To  be  measured  through  follow-on  surveys  of 
participants,  and  so  dependent  on  self-
reporting  of  what  participants  are  now  doing. 
This  does  not  need  to  be  attributed  to  their 
participation  in  education  programmes.  % 
should  be  based  on  a  sample,  and  then  no. 
calculated  through  appropriate  scaling  up  and 
weighting to respondent profile. 

Ecosystem 
development 

Value of R&D investment changes by 
engaged businesses 

A  measure  of  the  value  of  R&D  investment 
changes  attributable  to  KIC  support  based  on 
self-reported survey responses. 

Ecosystem 
development 

No.  products  (goods  or  services) 
launched on the market 

A  measure  of 
the  number  of  product 
innovations  (goods  or  services)  launched  on 
the  market  during  and  following  KIC  support 
based  on  self-reported  survey  responses.  By 
innovations,  we  mean  new  or  significantly 
improved  products  (goods  or  services)  sold. 
Innovations  should  be  reported  in  the  year 
when they were introduced on the market. 

124 

Rolling  survey of participants in 
courses/programmes 
education 
at  set  time  intervals  (i.e.  1,  3  and  5 
years post completion). 

Breakdown  by  each  type  of 
education course/ programme. 

Breakdown  by  route/type  of 
support  received  by  each  start-
education 
(e.g. 
created 
up 
courses/programmes,  start-up  support, 
innovation projects). 

Rolling  survey  of  organisations 
in  receipt  of  KIC  support  at  set 
time intervals (i.e. 1, 3 and 5 years post 
support). 

 Indicator to contribute to the 
measurement  of  Horizon 
Europe impact pathway No.9 – amount 
of  public  and  private 
investment 
mobilised. 

Core  KPI  extended  to  measure 
time-
over  a 
intervals  (i.e.  up  to  5  years  rather  than 
only 3). 

range  of  set 

Breakdown  by  route/type  of 
support  received  by  each  start-
up  created  (e.g.  education  courses/ 
programmes, 
support, 
innovation projects). 

start-up 

Rolling  survey  of  organisations 
in  receipt  of  KIC  support  at  set 
time intervals (i.e. 1, 3 and 5 years post 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
support). 

Indicator 
Horizon 

to 
impact 
pathway  No.7  –  the  measurement  of 
innovations. 

to  contribute 
Europe 

Ecosystem 
development 

No.  new  processes,  methods  or 
marketing innovations implemented 

A  measure  of  the  number  of  processes  and 
marketing 
innovations  or  new/significantly 
improved  methods  introduced  following  KIC 
support  over  set  time  intervals  based  on  self-
reported  survey  responses.  Innovations  should 
be  reported  in  the  year  when  they  were 
introduced on the market. 

Core  KPI  extended  to  measure 
time-
over  a 

range  of  set 

intervals. 

Breakdown  by  route/type  of 
support  received  by  each  start-
up  created  (e.g.  education  courses/ 
programmes, 
support, 
innovation projects). 

start-up 

Rolling  survey  of  organisations 
in  receipt  of  KIC  support  at  set 
time intervals (i.e. 1, 3 and 5 years post 
support). 

Indicator 
Horizon 

to 
impact 
pathway  No.7  –  the  measurement  of 
innovations.  

to  contribute 
Europe 

Ecosystem 
development 

Network strength analysis  

Ecosystem 
development 

No. and % high impact (“World-class 
science”) scientific publications 

Recommendation  is  to  assess  the  number  of 
'nodes'  and 
'linkages',  and  their  intensity, 
within  a  defined  network  map  for  a  KIC  (e.g. 
location-based,  market-  or  technology-based). 
This would be an evaluative assessment, which 
would be reproduced to examine changes over 
time. 
Measured  as  the  number  and  share  of  'high 
impact'  (“World-class  science)  publications. 
High  impact  defined  using  SciVal’s  Field-
Weighted  Citation  Impact  (FWCI)  measure. 
Indicator  to  be  aligned  fully  with  Horizon 
Europe indicator. 

125 

Reporting  in  line  with  timings 
of evaluative research. 

Data  collection  will  draw 
on  a  mix  of  research, 
combining programme/monitoring data 
with 
(e.g. 
primary 
surveying/consultations). 

research 

Definition 
aligned  with 
Horizon  Europe  indicator  to 
measure 
science” 
“World-class 
impacts.  Indicator  to  contribute  to  the 
measurement  of  Horizon  Europe 
impact  pathway  No.1  –world-class 
science. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
research. 

evaluative 

Reporting  in  line  with  timings 
In 
of 
addition  to  the  numbers  of  cases,  the 
success  stories  provide  the  basis  for 
case  study  examples  of  the  ways  in 
which  impacts  are  brought  about,  the 
scope of impacts and the potential scale 
be 
of 
should 
synthesised 
an 
to  help  provide 
and 
evidence 
evaluation 
complemented with other in-depth case 
studies  to  understand  instances  where 
the  EIT/KIC  model  has  proved  less 
successful. 

impacts.  These 

base, 

Operational 

No.  success  stories  submitted  to  and 
accepted by EIT 

To  measure  the  number  of  good  practices  or 
success  stories  presented  by  KICs  to  the  EIT 
according to a specific format and accepted by 
the  EIT  including  eligible  nominees  for  the 
EIT  awards.  See  the  “Note”  column  for  the 
links to evaluative research. 

126 

 
 
 
 
 
 
 
 
 
 
Operational  Value of KIC funding secured from 

partners and other donors 

The value of cash and in-kind contributions, 
to be broken down as follows: 
  contributions  KIC  KAVA  and  KCA 

activities 

  contributions  to  fund  KIC  operations 

(e.g. membership fees) 

Operational 

Social 
presence/audience 

media/online 

The  sum  of  followers  on  three  major  social 
media  channels:  Facebook,  Twitter,  and 
LinkedIn. 

SM 

Breakdown  by  nature  of 
contribution  and 
financial 
route/type  of  support  received  by 
business  receiving  investment  (e.g. 
courses/  programmes, 
education 
innovation 
start-up 
support, 
projects).  Financial 
contribution 
breakdowns include: 
  contributions  to  KAVA  and  KCA 

activities 

  contributions  to  KIC  operations 

(e.g. membership fees)  

Indicator  to  contribute  to 
of 
measurement 
the 
Horizon  Europe 
impact  pathway 
No.9 – amount of public and private 
investment mobilised. 

127 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic 
development 

Cost 
savings  achieved  by  direct 
participants  of  KIC  support  (e.g.  as  a 
new 
of 
result 
innovations) 

implementing 

Economic 
development 

Jobs  created  in  organisations  directly 
benefiting from KIC support 

Economic 
development 

Economic 
development 

safeguarded 

Jobs 
directly benefiting from KIC support 

in  organisations 

growth 

in 
Revenue 
organisations  directly  benefiting  from 
KIC support 

achieved 

Rolling  survey  of  organisations 
in  receipt  of  KIC  support  at  set 
time intervals (i.e. 1, 3 and 5 years post 
support).  

Indicator  to  contribute  to  the 
measurement  of  Horizon 
impact  pathway  No.7  – 

Europe 
economic growth. 
As above. 

Indicator  to  contribute  to  the 
measurement  of  Horizon 
Europe  impact  pathway  No.8  –  total 
employment. 

As above.  

Indicator  to  contribute  to  the 
measurement  of  Horizon 
Europe  impact  pathway  No.8  –  total 
employment. 

As above.  

Indicator  to  contribute  to  the 
measurement  of  Horizon 
impact  pathway  No.7  – 

Europe 
economic growth. 

Medium- to Long-term Outcomes 

To measure the value of cost savings achieved 
by direct beneficiaries of KIC support that are 
identified as being due to the support provided 
by  the  KIC.  Values  to  be  estimated  in  EUR 
and based on self-reported assessment as part 
of follow-up surveys of participants. 

To  measure  the  number  of  jobs  created  by 
direct  beneficiaries  of  KIC  support  that  are 
identified as being due to the support provided 
by  the  KIC.  Values  to  be  estimated  in  FTE 
estimates based on self-reported assessment as 
part of follow-up surveys of participants. 
To  measure  the  number  of  jobs  safeguarded 
by direct beneficiaries of KIC support that are 
identified as being due to the support provided 
by  the  KIC.  Values  to  be  based  on  FTE 
estimates based on self-reported assessment as 
part of follow-up surveys of participants. 
To  measure  the  value  of  revenue  growth 
achieved  by  direct  beneficiaries  of  KIC 
support that are identified as being due to the 
support  provided  by  the  KIC.  Values  to  be 
estimated  in  EUR  and  based  on  self-reported 
assessment  as  part  of  follow-up  surveys  of 
participants. 

128 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ecosystem 
development 

%  of  businesses  that  have  benefited 
from KIC support that have engaged 
in  different  forms  of 
innovation 
activities  in  the  last  2  years  (defined 
using CIS activities) 

Ecosystem 
development 

Reduction in skills  mismatches (e.g. % 
of  engaged  employers  reporting  skills 
gaps and skills shortages) 

Ecosystem 
development 

influence  following  Horizon 
Policy 
Europe 
the 
impact  pathways  from 
production  of  policy-relevant  findings, 
to  dissemination/engagement, 
to  a 
material  impact  on  policy  (e.g.  No. 
policies  [“approaches”  or  “practices”] 
influenced [changed or improved]) 

introduction 

A measure of the % of businesses that have 
benefitted  from  KIC  support  that  have 
engaged  in  different  forms  of  innovation 
activities,  using  CIS  categories  (e.g.  In-
house R&D; External R&D; Acquisition of 
software  & 
machinery, 
equipment, 
buildings; 
existing 
of 
Acquisition 
from  other  enterprises  or 
knowledge 
innovative 
organisations;  Training 
for 
of 
activities;  Market 
innovations; Design, Other). 
For all employers that have engaged with the 
relevant  KIC  in  any  way,  to  measure  the 
they  experience  skills 
extent 
challenges. Challenges are defined as the % of 
employers (responding to a survey) that  have 
reported: 
they  have 
i)  skills  gaps  (i.e. 
employees  that  do  not  have  the  necessary 
skills  to  carry  out  their  roles);  and  ii)  skills 
shortages  (i.e.  they  have  unfilled  vacancies 
because  applicants  did  not  possess 
the 
required skills). 
To  assess,  using  a  case-based  approach,  the 
nature and scope of policies (defined in terms 
of “approaches” or “practices”) that have been 
influenced (i.e. changed or improved) by KIC 
activities. 

to  which 

Operational 

Measure of financial sustainability 

To  measure  the  total  revenues  generated  by 
the  KIC  divided  by  the  total  expenditure  on 

129 

As above. 

Rolling survey of organisations/ 
employers  in  receipt  of  KIC 
support  at  set  time  intervals  (i.e.  1,  3 
and 5 years post support). 

Breakdown  by  route/type  of 
to  policy 
support 
changes 
(e.g. 
or 
education courses/programmes, start-up 
support, innovation projects). 

that 
led 
improvements 

Ad-hoc 
research, 

evaluative 
including 
surveys,  consultations  with  expert 
stakeholders  and  textual  analysis  to 
identify  and  verify  cases  of  policy 
influence 
(potentially  as  part  of 
independent evaluation work). 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operational 

Net  Promoter  Score  on  overall 
satisfaction with EIT / KICs 

KIC activities (i.e. KAVAs) in year N. 
To  measure  the  satisfaction  of  all  engaged 
organisations  on  a  scale  of  1-10.  The  Net 
Promoter  Score 
is  compiled  by 
(NPS) 
total  number  of  EIT/KIC 
dividing 
'promoters'  (defined  as  those  scoring  their 
level of satisfaction as 9 or 10) by the number 
of  EIT/KIC  'detractors'  (defined  as  those 
scoring  their  level  of  satisfaction  as  6  or 
below). 

the 

Breakdown  by  route/type  of 
support  received  (e.g.  education 
courses/programmes,  start-up  support, 
innovation projects). 

130 

 
 
 
 
 
 
 
 
 
 
 
 
 
Symbol 

Description 

Indicator is proposed to be used as part of competitive resource allocation 

Indicator is a prevailing core KPI (expansions/extensions to Core KPIs, where relevant, are described in the “Note” column) 

Indicator is fully aligned with the Horizon Europe Indicator Framework 

Indicator  is  to  be  broken  down  by  the  route/type  of  support  received  (e.g.  education  courses/programmes,  start-up  support,  innovation  projects),  or  by  some  other  form  of 
breakdown by “type” (as described in the “Note” column)  

Indicator is to be broken down by location (i.e. country, and reported based on RIS and non-RIS countries) 

Indicator is to be broken down by gender 

Indicator is to be broken down by type of education course/ programme 

TRL 

Indicator is to be broken down by TRL level (or equivalent measure of progress towards commercialisation 

Indicator is to be broken down into value banding (in EUR) 

Data is to be collected using programme/monitoring data 

Data is to be collected using a survey tool and relies on self-reporting. The relevant survey population is described in the “Note” column 

WoS 

Data is to be collected from the Web of Science (WoS) databased 

SM 

Data is to be collected from each KICs social media (SM) account 

Data is to be collected, collated, and reported on annually 

Data is proposed to be collected and analysed in line with evaluative reporting requirements 

Indicator is intended as a learning indicator, or for use in contextualising a combination of indicators. More detail is provided in the “Note” column 

Indicator was included in the testing phase of work  

131 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.11. 
Introduction  

Annex 9: 

Analysis of possible themes for future KICs  

The EIT Regulation stipulates that “the SIA shall define the priority fields and the long-term 
strategy  for  the  EIT  and  shall  include  an  assessment  of  its  socioeconomic  impact  and  its 
capacity to generate the best innovation added-value”143. This Annex provides the outline of 
the  indicative  priority  fields  for  possible  future  KICs.  The  analysis  is  based  on  the  themes 
(=priority fields) proposed by the EIT Governing Board in its Strategic Outline on the Future 
of  the  EIT144    and  reflected  in  the  draft  Strategic  Innovation  Agenda  of  the  EIT  that  was 
submitted  to  the  European  Commission  (DG  EAC)  in  accordance  with  Article  17.    The 
assessment  of  the  individual  priority  fields    is  based  on  criteria  which  are  in  line  with  the 
Horizon Europe Programme and takes into account the Strategic Planning Process of Horizon 
Europe given the need to ensure synergies and coherence of KICs within the EU research and 
innovation landscape.  

The themes identified and put forward by the EIT Governing Board are:  

1) Cultural and Creative Industries,  

2) Security and Resilience;  

3) Water, Marine, and Maritime;  

4) Inclusion, Integration and Migration. 

These  themes  were  also  included  in  the  Open  Public  Consultation  carried  out  in  the  period 
10th October to 5th December 2018 by the European Commission (DG EAC). The main results 
of  this  OPC  show  that  the  EU  has  competitive  advantage  and  can  deliver  further  economic 
growth within these areas due to a strong R&I base.  

The  Commission  has  cross-checked  the  themes  for  future  KICs  proposed  by  the  EIT  by 
applying the criteria listed below. They build on the criteria used by the EIT (under Horizon 
2020)  for  the  themes  proposed  in  the  draft  SIA  that  was  submitted  to  the  European 
Commission  (DG  EAC);  are  aligned  with  the  future  Horizon  Europe  programme;  and  are 
complemented  with  the  new  requirements  for  KICs  that  will  be  introduced  as  part  of  the 
revision of the EIT legal basis: 

1)  Alignment  of  the  theme  with  the  thematic  clusters  of  the  Global  Challenges  and 

Industrial Competiveness pillar of the future Horizon Europe programme145   

2)  EU economic and R&I strengths and weaknesses in the thematic area 
3)  Prospects for financial sustainability of a future KIC in a specific thematic area 
4)  Existing bottlenecks for innovation within a thematic area and extent to which the KIC 

model could address them  

5)  Suitability  and  relevance  of  the  proposed  indicator  framework  (Annex  8)  for 

measuring the impacts of a future KIC within a specific thematic area 

Process  

143 See Article 17 of the EIT Regulation  
144 See for more details the strategic outline published by the EIT GB: https://eit.europa.eu/sites/default/files/eit_strategic_outline_0.pdf  
145  The  thematic  clusters  are  the  following:  1)  Health,  2)  Inclusive  and  Secure  Society,  3)  Digital  and  Industry,  4)  Climate,  Energy  and 
Mobility, 5) Food and Natural Resources. 

 
 
 
                                                           
The following table summarises the process undertaken in identification of the future priority 
fields:  

WHO 

WHAT 

CRITERIA/OBJECTIVES 

OUTCOME 

EIT (with the 
help of external 
experts and the 
JRC) 

EIT (with the 
help of external 
experts) 

Gap analysis based on: 
- Mapping of societal challenges 
already addressed by the existing 
KICs 
- Foresight studies, in particular 
the Bohemia study, and aligned 
with the Sustainable 
Development Goals (SDG)s 

Analysis of the 4 identified 
thematic areas to verify their 
suitability to the EIT model of 
intervention, and stakeholders 
consultation (notably through 
INNOVEIT 2017) 

European 
Commission 
(with the help of 
external experts 
through a 
support study by 
SQW) 

Assessment of the themes 
proposed by the EIT against a 
set of criteria complementary to 
those applied by the EIT and in 
line with Horizon Europe 
Programme.   

European 
Commission 

Inclusion of the themes in the 
Open Public Consultation 
carried out in the period 10th 
October to 5th December 2018 by 
the European Commission (DG 
EAC). 

Criteria: 
- Potential theme should address major 
societal challenges with a citizen-
centred approach, sufficiently broad 
and based on a variety of foresight 
studies. 

4 thematic areas have been identified: 
- Security and resilience 
- Inclusion, integration and migration 
- Water, marine and maritime 
- Cultural and creative industries 

Criteria: 
- Fine-tuning of the scope (broad), the 
(societal) challenge and the citizen-
centred approach. 
- Possibility and advantage for 
Europe (and complementary or similar 
initiatives). 
- Added value of applying the EIT 
Model 
- Extend to which the area is already 
covered through activities by existing 
KICs 

Criteria: 
- Alignment of the theme with the 
thematic clusters of Pillar II of Horizon 
Europe Programme. 
- EU economic and R&I strengths and 
weaknesses in the thematic area. 
- Prospects for financial sustainability 
- Existing bottlenecks for innovation 
within a thematic area and extent to 
which the KIC model could address 
them. 
- Suitability and relevance of the 
proposed indicator framework for 
measuring the impacts of a future KIC 
within a specific thematic area. 

Objectives: 
- Get stakeholders’ input on the 
thematic areas proposed by the EIT as 
well as other possible ones. 

The work of the experts has resulted in four 
reports (outlining the challenges, the  
potential impact of addressing them  and  the 
EIT added value), all concluding that  the 
identified challenges could be successfully 
addressed through the establishment of a 
KIC as this would bring high added value.  

The final result consists of 4 thematic 
factsheets included in the draft Strategic 
Innovation Agenda 2021-2027 submitted to 
the Commission in December 2017.  The 
EIT GB decided to keep the option of an 
open call for KIC that would be further 
explored in view of responding to an 
emerging challenge in the future. 

The assessment resulted in 4 reports on the 
proposed priority fields.  

The main results of this OPC showed that 
the EU has competitive advantage and can 
deliver further economic growth within the 4 
thematic areas proposed by the EIT due to a 
strong R&I base. 

Other areas emerging from the OPC were 
either already addressed to a certain extend 
by the existing KICs or too narrow to be 
addressed under the EIT KIC model. 

133 

 
 
 
 
 
 
 
 
 
Objectives: 
- Identify the thematic areas with the 
potential to be addressed by a KIC 
under Horizon Europe programme.  
- Propose the theme for the first KIC 
to be launched in 2021.  
- Propose the themes that would be 
designated following theStrategic 
Planning Process (2024-2027).   

Criteria: 
- Coherence and synergies with EU 
R&I and Education landscape 
- Not covered by planned similar EU 
initiatives  
- Fragmentation of the innovation 
value-chain  
- Suitability of the EIT model to 
address innovation bottlenecks 
- Ability to mobilize investment and 
sufficient market for innovation  
- Modernisation/transformation 
potential of the Education system and 
skills gap  
- Regional dimension  
- Citizen-focus approach  
- Synergies with and complementarity 
to existing KICs 

The Impact Assessment led to the 
conclusion that the 4 priority fields 
Security and Resilience; Inclusion, 
Integration and Migration; Water, 
Marine and Maritime; and Cultural and 
Creative Industries  are suitable to be 
addressed by a KIC under Horizon 
Europe Programme.   

The analysis also led to the identification 
of Cultural and Creative Industries as the 
thematic priority for the first KIC to be 
launched under Horizon Europe as it 
showed the highest degree of maturity of 
all themes in its assessment against the 
proposed criteria and demonstrated 
strong potential to complement and 
synergise with all existing KICs. 

Furthermore, as regards the 
complementarity with both the EU 
Partnerships as well as the existing KICs, 
the CCI theme scores higher than the 
three other areas studied.  

The remaining 3 thematic areas will be 
further analysed and assessed during the 
Strategic Planning Process (2024-2027)        

European 
Commission 

As part of the Impact 
Assessment, analysis of the 4 
proposed thematic fields 
building on the previous 
analytical steps. 

As preparatory phase of the 
SPP of Horizon Europe, check 
of the coherence and 
complementarity of potential 
themes with potential EU 
partnerships. 

Source: own analysis 

Specific priority fields  

Cultural and Creative Industries146 

Cultural  and  Creative  Industries  represent  a  horizontal  solution  to  an  array  of  rising 
challenges,  which  are  of  a  permanent  nature,  and  can  be  addressed  through  research  and 
innovation  activities.  These  challenges  can  be  grouped  into  four  pillars:  1)  Europeans' 
creativity,  cultural  diversity  and  values;  2)  European  identity  and  cohesion;  3)  European 
employment, economic resilience, and smart growth; and 4) Europe as a global actor. 

146 Creative and Cultural sectors (CCS) means all cultural and creative sectors whose activities are based on cultural values and/or artistic 
and other creative expressions, whether those activities are market-or non-market-oriented, whatever the type of structure that carries them 
out,  and  irrespective  of  how  that  structure  is  financed.  Those  activities  include  the  development,  the  creation,  the  production,  the 
dissemination  and the  preservation  of  goods  and  services  which  embody  cultural,  artistic  or  other  creative  expressions,  as  well  as  related 
functions such as education or management. The cultural andcreative sectors include inter alia architecture, archives, libraries and museums, 
artistic  crafts,  audio-visual  (including  film,  television,  video  gamesand  multimedia),  tangible  and  intangible  cultural  heritage,  design, 
festivals, music, literature, performing arts, publishing, radio and visual arts (EIF) 

134 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                           
The  challenges  related  to  the  first  Pillar,  Europeans’  creativity,  cultural  diversity,  and 
values,  affect  citizens’  resilience,  limit  their  flexibility,  and  threaten  the  preservation  of  the 
quality of life.147 The following points need to be addressed: 

  Shortage of cross-cutting skills  that are needed  for innovation  and crucial  in  light  of 
labour market changes. Video and computer games, literature, publishing, performing 
and  visual  arts  can  offer  innovative  ways  of  obtaining  skills  (e.g.  digital  skills  via 
video games and creativity in general). 

 

Innovative  practices  in  heritage  services,  museums,  and  libraries  and  film  heritage 
institutions are crucial to reveal  the importance of different  cultures  and can  address 
the sense of loss of identity that results from globalization148.  

Societal  challenges  related  to  the  second  Pillar,  European  identity  and  cohesion,  can 
generally be described in terms of lack of ‘bridges’ connecting different parts of the society 
and include the following: 

  Social  exclusion.  CCIs  favour  innovative  forms  of  community  participation. 
Innovations in design, architecture and the use of public spaces, as well as culture-led 
social  innovation,  can  offer  effective  ways  to  raise  the  quality  of  life  of  excluded 
groups.149  

  Development of a European identity: culture regularly tops the list of the factors that 
most create a feeling of community among EU citizens.150 Our creations reflecting our 
common cultural heritage and cultural and linguistic diversity highlight the importance 
of artistic and creative freedom in Europe and are at the heart of the EU project and of 
the EU identity. There is now evidence that when people have wide access to culture 
(physically  or  through  digital  means)  and  are  actively  engaged  in  cultural  activities, 
they  are  more  likely  to  understand  and  adopt  shared  common  values.  The  2018 
European  Year  of  Cultural  Heritage  confirmed  the  importance  that  citizens  attach  to 
their  European  cultural  heritage,  both  national  and  non-national.  Seven  European 
citizens  in  ten  agree  they  feel  pride  in  a  historical  monument  or  site,  work  of  art  or 
tradition from a European country other than their own, and that living close to places 
related  to  Europe's  cultural  heritage  can  give  people  a  sense  of  belonging  to  Europe 
(both 70%)151. 

  Discriminatory attitudes towards different cultures. European society faces challenges 
regarding the inclusion of immigrants and intercultural dialogue. Literature, film, and 
performing and visual arts are a way of becoming familiar with previously unknown 
cultures  and  innovative  solutions  in  museums  and  libraries  (such  as  education 
programs, targeted actions to less-represented communities) can foster interaction with 
migrants and counter stereotyping.  

147 Gustafsson C. and Lazzaro E. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. Culture, 
Cultural Heritage and Creative Industries. 
148 OMC Report on Promoting Access to Culture via Digital Means: Policies and Strategies for Audience Development, June 2017 
149 OMC Report on Participatory Governance of Cultural Heritage, April 2018 
150 Standard Eurobarometer, 2017 
151 https://europa.eu/cultural-heritage/toolkits/special-eurobarometer-europeans-and-cultural-heritage_en  

135 

 
 
 
 
 
                                                           
Pillar  three,  European  employment,  economic  resilience,  and  smart  growth,  addresses 
economic  challenges  such  as  unemployment  (especially  youth  unemployment)  and  global 
competition  for  the  brightest  minds  and  capital.  Culture-based  and  creativity-driven 
innovations  boost  European  competitiveness  either  directly  by  creating  new  enterprises  and 
jobs or indirectly by creating cross-sector benefits to the wider economy, improving quality of 
life and increasing the attractiveness of Europe. The contribution of culture and creativity to 
innovation is not limited to the direct impact of the CCIs, since innovation across-the-board is 
increasingly  driven  by  non-technological  factors  such  as  creativity,  design  and  new 
organisational  processes  or  business  models.  In  particular,  cultural  and  creative  industries 
with distinct value chains (i.e. music, design, fashion, audio-visual, video games, architecture 
…) have a strong innovation capacity in economic terms and are able to drive innovation in 
other sectors of the economy.152 CCIs are early adopters of new technologies and often play a 
central  role  in  the  digital  transformation  and  integration  between  the  digital  and  physical 
worlds, which is at the heart of the fourth industrial revolution. The contribution that culture 
can  bring  to  most  creative  processes  in  industry,  science  or  services  was  highlighted  in 
various experts’ reports153 . 

A potential future KIC on CCIs should address cross-innovation, the process through which 
creative industries share information, collaborate and work with other sectors to promote new 
thinking, is  key to  trigger innovation  in  other sectors of the economy  and help  services and 
manufacturing  to  become  more  competitive  in  the  global  market.  CCIs  can  play  a  role 
triggering  innovation  in  other  sectors’  value  chains  and  in  the  creation  of  new  business 
models. 

The  fourth  pillar  relates  to  the  role  of  Europe  as  a  global  actor  and  aims  at  addressing 
challenges such as: 

  The global dynamic of power is currently shifting, yet EU countries retain significant 
clout in “soft power indexes”, also because of their strong performance when it comes 
to  cultural  assets.154  In  a  world  that  is  becoming  increasingly  inter-connected,  IT 
innovations  would  however  be  essential  to  enhance  the  dissemination  of  the  content 
created in Europe. 

  Sustainability and Climate change. The United Nations’ Agenda 2030 for sustainable 
development defines culture as a “crucial enabler” of sustainable development. Some 
CCIs (e.g. design, architecture, etc.) contribute actively to the sustainable development 
and  drive  green  innovation,  while  cultural  content  (literature,  film  and  the  arts)  can 
raise awareness of ecological problems and inform public opinion.  

152 The content creation process lies at the heart of the CCS i.e. the artistic process.The created content provides input for both the cultural 
as well as the creative sub-sectors of the CCS market. However, beyond the classical CCS sub-sectors, the artistic content created has an 
impact on a wide range of industries that depend on the creative output stemming from CCS: Consumer electronics e.g. TV, Tuners, DVD; 
Telecom services and hardware e.g. smartphones, computers; Industrial design; Tourism e.g. Cultural heritage, historical sites, recreation 
parks; Software; Education e.g. cultural and tertiary education 
153 Policy Handbook on Promotion of Creative Partnerships, an OMC report from March 2014 
154  https://softpower30.com/wp-content/uploads/2018/07/The-Soft-Power-30-Report-2018.pdf,  the  EU  has  placed  seven  countries  among 
the top ten for culture, which helps keeping five EU countries among the top ten in the global index. 

136 

 
 
 
 
                                                           
  The global digital race. New technologies (i.e. ICTs, AI, IoT, blockchain) are radically 
transforming the way we live, work and communicate. Seven out of 10 largest firms in 
terms  of  market  capitalisation  are  digital.  None  are  European.  European  CCIs  are 
important  generators  of  content,  products  and  services  globally  and  could  play  a 
positive role in the creation of new business models and cross-sectoral value chains.  

Alignment with Horizon Europe, including with the Global Challenges and Competitiveness 
pillar  

The Cultural and Creative Industries theme is aligned with EU priorities. It is included as an 
area of intervention on Cultural Heritage under the cluster Inclusive and Secure Society of the 
Global  Challenges  and  Industrial Competitiveness  Pillar of the Horizon  Europe proposal.  A 
future KIC could provide valuable horizontal inputs across various activities to be carried out 
in the Inclusive and Secure Society cluster and the one on Digital and Industry. Furthermore, 
it  could  efficiently  complement  other  parts  of  the  Horizon  Europe  Programme,  the 
intervention  of  the  existing  EIT  Digital  and  the  actions  foreseen  under  the  new  Creative 
Europe  Programme,  as  well  as  other  EU  programmes  (Invest  EU,  cohesion  funds,  Single 
Market Programme).   

Cluster 

Inclusive and 
secure society 

Areas of 
intervention 

Cultural heritage 

Relevant broad lines of activities 

KIC  within  the  theme  can  address  all  lines  of  activity.  It  can 
particularly foster connections between emerging creative sectors and 
cultural  heritage,  embed  cutting  edge  technologies  including  digital 
ones  into  heritage  studies  and  sciences,  and  help  cultural  heritage  to 
contribute to sustainable development.   

Democracy 

KIC  within  the  theme  can  address  the  line  of  activity  related  to  the 
role  of  multi-cultural  citizenship  and  identities  in  relation  to 
democratic citizenship and political engagement. 

Digital and 
Industry 

Manufacturing 
Technologies 

KIC  within  the  theme  can  provide  horizontal  inputs  to  most  lines  of 
activity  since  creative  and  cultural  inputs  are  indispensable  in  the 
development  of  concepts  for  new  products  and  are  vital  to  help 
generate added value. 

Economic and research capacities of the sector 

Culture and creativity are important assets for the economy. Cultural and creative industries in 
Europe are at the forefront of innovation and at the origin of spill-overs to other sectors. They 
provide more than 12 million full-time jobs, which amounts to 7.5 % of the EU’s work force, 
creating approximately EUR 509 billion in value added to GDP. CCIs in the EU employ 2.5 
times  more  people  than  automotive  manufacturers  and  five  times  more  than  the  chemical 
industry.155 

There is an EU trade surplus in cultural goods156 amounting to EUR 8.7 billion. In addition, 
42% of total economic activity in the EU (some EUR 5.7 trillion annually) is generated by IP-

155 http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0486  
156 Eurostat, 2016 figures, http://ec.europa.eu/eurostat/web/culture  

137 

 
 
 
 
 
 
                                                           
intensive industries – which have a strong connection to CCIs - and approximately 38% of all 
employment in the EU (82 million jobs) is in industries that have an above-average use of IP 
rights.157  

Thriving  areas  are  often  places  where  artistic  and  cultural  producers  emerge  which  puts 
culture  high  on  the  agenda  of  cities,  regions  and  territories,  as  recently  recognised  by  the 
OECD.158  As  demonstrated  by  the  EU  Cultural  and  Creative  Cities  Monitor159,  leading 
cultural  and  creative  cities  are  more  prosperous,  have  more  jobs,  and  more  human  capital. 
Former industrial cities are therefore putting investment in culture and creativity at the centre 
of  their  local  development  strategies  to  support  policy  objectives  ranging  from  urban 
regeneration and economic diversification to job creation and social innovation and cohesion.  

Regional smart specialisation strategies are being implemented across the EU, and around 6% 
of all 1,300 regional smart specialisation priorities refer to culture under different angles (e.g. 
cultural  heritage,  creative  industries,  etc.).  Culture  and  creativity  are  also  critical  for  the 
economic  and  social  development  of  low-income  cities  and  regions  and  can  further  help 
address disparity issues across Europe.  

Europe's  cultural  diversity  depends  on  resilient  and  robust  cultural  and  creative  sectors. 
However  those  sectors,  notably  the  audiovisual    or  music  sector,  are  facing  a  number  of 
challenges, as a result of the increased competition from global players and the digital shift. 
Producers,  distributors,  broadcasters,  cinema  theatres  and  all  types  of  cultural  organizations 
need to innovate in order to attract new generations of audiences 

157 https://www.epo.org/about-us/annual-reports-statistics/annual-report/2016/highlights/economic-impact-of-IP.html  
158 http://www.oecd.org/cfe/leed/venice-2018-conference-culture/documents/Culture-and-Local-Development-Venice.pdf  
159 https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/cultural-and-creative-cities-monitor-2017-edition  

138 

 
 
 
 
 
                                                           
Strengths 

Weaknesses 

Strong and growing research base. In 
2014, 18.7% of patent publications and 
around 40% of trademarks registered in 
Europe were related to the CCIs.160 The 
number of patents in these sectors have 
been growing during the last years.161 

Lack of cooperation between researchers and research and 
industry. There is a lack of coordination of R&D efforts, 
sharing of methods, results, and best practices.162 Additionally, 
most of the research is produced in national languages, which 
leads to repetition, as researchers are often unaware of similar 
projects.163 

Europe is the second CCI market in the 
world (26% of estimated employment and 
31% of estimated revenues).164 4% of EU 
GDP and 7.5% of EU employment are 
created in CCIs.165 

High market concentration. Three European countries – 
Germany, United Kingdom, and France – are the absolute 
leaders in CCIs compared to other European countries, 
generating around 50% of turnover and added value.166  

EU is especially strong in the advertising 
sector (50.4% of global revenues, 52.6% 
of global employment). Additionally, 
39.6% of the global workforce in 
architecture is working in Europe.167 
EU is also strong in the sector of fashion 
(EU export in fashion goods accounts for 
12.3%)168 

Insufficient skills provision. Cultural and creative studies in 
European universities are mostly focused on the “creative part” 
and their graduates are not always ready to enter the modern 
labour market as they lack cross-sectoral (entrepreneurial, 
digital, financial management) skills.169 With regards to HE 
institutions, the EU is trailing behind the USA in 
Communication & Media studies (while EU universities are 
performing better in more traditional disciplines such as Art & 
Design or Performing arts).170 

Europe's creativity is recognized 
worldwide 

European 
industries  are  challenged  by  digitization  and 
globalization  and  their  powerful  impact  on  the  way  artists 
produce and distribute their works and relate to their audiences. 
The  collapse  of  DVD  markets,  new  consumer  expectations  and 
the  continued  power  of  US  studios    together  with  the  rise  of 
global  digital  giants  like  Amazon,  Itunes,  Google  and  Netflix 
have impacted the traditional value chain.  

160  Austrian  Institute  for  SME  Research  and  VVA  Europe  (2016).  Boosting  the  competitiveness  of  cultural  and  creative  industries  for 
growth and jobs. Final report, p. 78. 
161 Ibid. 
162 Gustafsson C. and Lazzaro E. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. Culture, 
Cultural Heritage and Creative Industries, p.12. 
163 Interviews. 
164 EY (2015). Cultural times. The first global map of cultural and creative industries. Study on behalf of the International Confederation of 
Societies of Authors and Composers (CISAC). 
165  Austrian  Institute  for  SME  Research  and  VVA  Europe  (2016).  Boosting  the  competitiveness  of  cultural  and  creative  industries  for 
growth and jobs. Final report, p. 62. Gustafsson C. and Lazzaro E. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic 
Areas. Expert analysis. Culture, Cultural Heritage and Creative Industries, p.1. 
166 De Voldere, I., Durinck E., Mertens, K., Cardon, C., Maenhout, T., Warmerdam, S., Versteegh, M., Canton, E. (2013). Survey on access 
to  finance  for  cultural  and  creative  sectors.  Evaluate  the  financial  gap  of  different  cultural  and  creative  sectors  to  support  the  impact 
assessment of the creative Europe programme. Study prepared for the European Commission, p. 59. 
167  Austrian  Institute  for  SME  Research  and  VVA  Europe  (2016).  Boosting  the  competitiveness  of  cultural  and  creative  industries  for 
growth and jobs. Final report, p. 43. 
168 VVA Europe (2016). Boosting the competitiveness of cultural and creative industries for growth and jobs. Final report, p 67, p. 71 
169 Ibid. p. 56, interviews. 
170 TopUniversities 2017 ranking. 

139 

 
 
 
 
                                                           
Financial sustainability of a KIC 

The analysis suggests that the characteristics of the theme do not imply any significant risks in 
terms of financial sustainability of the future KIC. In particular: 

  Membership fees could generate an income stream if the KIC managed to attract larger 
CCI  companies  with  long  time  horizons.  As  pointed  out  by  the  OECD,  cultural 
productions  occur  in  networks  of  firms  where  larger  corporate  entities  coexist  with 
numerous small and specialised firms where the output content and design are constantly 
changing.  90-95%  of  CCIs  organisations  in  Europe  are  in  fact  micro-enterprises  (fewer 
than 10 employees) and freelancers.171 

  Income from the provision of services. This stream could be significant, if some of the 
most  pressing  challenges  are  alleviated:  access  to  finance,  integration  into  global  value 
chains, etc. 

  Capitalisation  on  return  on  investment/equity  of  incubated  start-ups  could  be 
challenging.  CCIs  are  characterised  by  a  large  number  of  start-ups  and  continuous 
renewal,  but  scaling  up  and  growth  of  companies  could  be  an  issue.  However,  recent 
examples  of  highly  successful  and  fast  growth  start-ups,  for  example  in  the  Virtual 
Reality,  animation  or  video  gaming  industry  have  demonstrated  the  dynamism  of  the 
sector, its major potential and the possibly fast return on investment.     

  Income from education and training. The interaction between STEM and art and design 
is  driving  substantive  innovation  and  creativity.  There  is  therefore  a  need  to  encourage 
education providers to equip students in arts and creativity, business and technology with 
the knowledge and competences needed to work across cultural and creative sectors and 
disciplines. This new trend could open opportunities for business model on education.   

Potential to address bottlenecks for innovation 

The existing KIC model is well designed to address the innovation bottlenecks faced by the 
CCIs that include emerging sub-sectors as well as very mature ones that undergo a profound 
digital transformation: 

  Lack of entrepreneurship and related skills; 
  Lack of platforms for scaling-up of innovations, difficult access to international value 

added chains; 
Insufficient integration of creative clusters and hubs;  

 
  Disconnection between education, research, and businesses; 

There are two additional bottlenecks that a future KIC could successfully address:  

First,  a  KIC  in  CCIs  could  tackle  structural  obstacles  related  to  the  access  of  private 
finance  by  taking  into  account  the  positive  experience  of  the  EU  Cultural  and  Creative 
Sectors  Guarantee  Facility,  as  well  as  the  examples  of  EU  countries  where  investment  in 
knowledge assets is higher than in tangible ones.172 

171 Gustafsson C. and Lazzaro E. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. Culture, 
Cultural Heritage and Creative Industries, p.6. 
172 https://www.nesta.org.uk/report/uk-investment-in-intangible-assets/  

140 

 
 
 
 
 
 
                                                           
Second, a KIC in CCIs could address growth challenges and market access by working in a 
different  and  innovative  way,  with  skills  development  at  the  core  and  relying  on  a  larger 
geographical scale which will allow focusing on complementarities of skills and CCI products 
and services. 

A  specific  challenge  posed  by  digitisation  is  the  power  of  big  platforms  which  facilitate 
access to multiple markets, but at the same time exploit their power by keeping a significant 
share  of  generated  revenue.  Attempts  by  alternative  platforms173  so  far  have  not  been  very 
successful, because of the competitive advantages of incumbents and strong network effects. 
In  only  one  area,  music  streaming,  the  leader  is  a  European  company,  Spotify,  which 
demonstrates  the  capacity  for  European  champions  to  take  and  keep  leadership  on  global 
content  markets.    The  EU's  Digital  Single  Market  Strategy174  is  addressing  some  of  these 
challenges,  in  particular  as  concerns  the  so-called  “value  gap”,  the  fair  remuneration  of 
authors and creators, and fairness and transparency in the platforms-to-business transactions. 
The  market  for  cultural  digital  services  is  therefore  in  evolution,  and  a  re-balancing  of  the 
power relations can be expected in the near future.  

Suitability of themes vis-à-vis impact indicators 

Overall,  the  impact  indicators  are  relevant  for  a  future  KIC  in  the  CCI  area.  The  financial 
sustainability indicator is also very relevant given the challenges such a KIC might face. The 
definition of appropriate societal impact indicators should also take into account the breadth 
of challenges that the CCIs could address. The possibility of a CCI KIC to create co-location 
centres across Europe would allow a better link with regional initiatives along the Research 
and Innovation Strategies for Smart Specialisation (RIS3) across Europe. Overall, this theme 
appears  to  be  particularly  well  suited  for  an  EIT-KIC  model  intervention.  The  degree  of 
maturity of this theme against all criteria envisaged suggests that a KIC on CCI could already 
be launched at the very beginning of the new programme.   

Security and Resilience 

In recent  years security threats  have become more varied and more international,  as well as 
increasingly  cross-border  and  cross-sectorial  in  nature.  The  EU  and  its  Member  States  face 
new  and  complex  security  threats  which  mainly  originate  from  instability  in  the  EU's 
immediate neighbourhood175 and also reflect the rapid technological and social and economic 
developments in the world. Therefore, the freedom and security of European citizens require 
anticipation,  prevention,  and  protection  from  threats  as  well  as  resilience,  i.e.  ability  to 
withstand stress and rapidly recover from disruptions.  

This thematic area covers the following specific issues which all require innovative solutions 
to address the challenges:176 

  Identification  of  threats  to  citizens,  goods,  and  organisations.  Threats  can  arise  from 
systemic  technological  malfunction  or  targeted  malicious  activities  (e.g.  terrorist  acts). 
Hence, there is a need for innovation in tools and systems to monitor and identify signals 
of threats from large quantities of data.  

173 Consider Dailymotion, which is an alternative to YouTube developed in France. 
174 https://ec.europa.eu/digital-single-market/en/policies/shaping-digital-single-market  
175 Communication on the European Agenda on Security, COM (2015) 185 final 
176 Jacquotte O. P., Castor M. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. Security 
and Resilience, pp. 3-7. 

141 

 
 
 
 
 
 
                                                           
  Risk  and  crisis  management,  the  resilience  of  systems.  Open  and  interconnected 
technological  and  social  systems  face  risks  of  diverse  origins:  environment,  technology, 
human,  etc.  Threats  can  easily  spill  over  across  borders  and  sectors  and  therefore  have 
large  amplitude  of  impact.  Innovations  are  needed  for  developing  resilience-capable 
systems, improving risk and crisis management.  

  Protection  of infrastructures and soft targets. Modern societies  are heavily  reliant  on 
infrastructures  contributing  and  ensuring  the  well-being  of  citizens.  Some  of  them  (e.g. 
water distribution and sanitation, energy creation) are vital to the very life of people and 
therefore  their  disruption  could  have  extreme  consequences.  Hence,  there  is  a  need  for 
innovations  for  protecting  infrastructures,  improving  resilience  to  disruptions,  and 
localisation of negative impacts.  

  Information  security.  Hacking,  illegal  electronic  surveillance,  espionage,  the  spread  of 
misinformation  can  undermine  economic  and  democratic  structures.  To  address  these 
challenges innovation in cyber security as well as prevention of the spread of deliberately 
fake information is therefore needed. 

  Human  understanding  and  control  of  highly  automated  systems  /  Artificial 
Intelligence  (AI).  Humans  increasingly  rely  on  AI  to  control  critical  societal  systems, 
although  the  algorithms  of  decision  making  are  not  entirely  clear.  Therefore,  there  is  a 
need for innovation and applications that could control and protect AI systems and robotic 
solutions from ill-intentioned attacks.  

  The  basic  resilience  of  society.  Societies’  capabilities  of  managing  disruptions  in  the 
basic societal functions (e.g., water, food, and electricity) are often limited to a few days. 
Furthermore,  there  is  a  need  to  prepare  for  mitigation  of  latent  and  increasing 
environmental stress (e.g. water crisis in Cape Town), as well as emerging stressors (e.g. 
thunderstorm asthma in Birmingham and Melbourne). Innovative solutions are required to 
improve  the  capability  to  manage  disruptions  and  increasing  stress  in  basic  societal 
functions  like  water,  food,  and  electricity.  Furthermore,  there  is  a  need  for  technologies 
and services making it cheaper and easier for citizens to be prepared for disruptions. 

  System usability. There is a range of existing systems that could be applied to improve 
the security and resilience of societies. Nevertheless, they have become overly complex to 
manage  and  use  for  non-specialists.  Innovations  would  therefore  help  improve  user-
interfaces and bring the technologies closer to ordinary users. 

Alignment with Horizon Europe, including the Global Challenges and Competitiveness pillar  

The  Security  and  Resilience  theme  corresponds  to  the  clusters  of  activities  of  the  Global 
Challenges and Industrial Competitiveness Pillar as outlined in the Commission proposal for 
establishing  Horizon  Europe  programme.  A  KIC  established  within  the  Security  and 
Resilience theme could therefore contribute to four areas of intervention under the Inclusive 
and Secure Society cluster: Democracy, Disaster-Resilient Societies, Protection and Security, 
and Cybersecurity. Potential work of a KIC on cybersecurity, control of automated systems, 
and protection of infrastructures could also contribute to the activities carried out within the 
Digital and Industry cluster. 

142 

 
 
 
 
 
 
 
 
 
Cluster 

Inclusive and secure 
society 

Areas of 
intervention 

Democracy 

Disaster-Resilient 
Societies 

Protection and 
Security 

Relevant broad lines of activities 

KIC within the theme can address lines of activities aiming 
at addressing populism, extremism, radicalisation, terrorism 
and including and engaging disaffected and marginalised 
citizens, as well as enhancing the role of multi-cultural 
citizenship and identities in relation to democratic 
citizenship and political engagement. 

KIC within the theme can address all lines of activities 

KIC within the theme can address all lines of activities 

Cybersecurity 

KIC within the theme can address all lines of activities 

Digital and 
Industry 

Key Digital 
Technologies 

KIC within the theme can address most lines of activities, in 
particular, those related to systems and computing 
technologies security.   

Artificial 
Intelligence and 
Robotics 

KIC within the theme can provide horizontal inputs to most 
lines of activity 

Next Generation 
Internet 

KIC within the theme can provide horizontal inputs to most 
lines of activity 

Advanced 
Computing and 
Big Data 

Space 

KIC within the theme can provide horizontal inputs to most 
lines of activity 

KIC within the theme can provide horizontal inputs to the 
line of activity aiming at developing secure satellite 
communications for EU governmental actors. 

Economic and research capacities of the sector 

The  European  research,  Higher  Education  Institutions,  and  enterprises  are  among  the  major 
players in the field. Nevertheless, Europe faces fierce competition in this field from the USA 
and increasingly from China. Furthermore, development of innovations related to security and 
resilience  would  require  the  established  players  to  diversify  from  defence-related  activities. 
The Table below provides an overview of European strengths and weaknesses in the field of 
Security and Resilience. 

143 

 
 
 
 
 
 
Strengths 

Weaknesses 

European industrial, research, and HE base is 
trailing behind that of the USA. Recently China 
has also made significant progress in the field180. 

Strong industrial, research, and HE base. The 
EU security industry has approx. EUR 200 bn. 
annual turnover and around 5 million 
employees (including the defence sector)177. In 
2015, the EU ranked second (behind the USA) 
in the global security industry, with a global 
market share of 30%178. The EU MSs comprise 
5 out of 10 leading countries with the highest 
average H-index in research fields associated 
with the theme179. 

Europe has a strong competitive advantage in 
advanced engineering and manufacturing. 
Europe has also made significant progress in 
building up capacities in information security 
field (security analytics, threat intelligence, 
mobile and cloud security)181.  

European businesses and research organisations 
working in the field are more focused on defence 
and aerospace rather than on security and 
resilience.182  
The USA and China are leading global efforts in 
security-related AI and big data systems183.  

New players are emerging, e.g. Baltics (Estonia 
in particular) are rapidly building up capacities 
related to information security184. 

High concentration: most of the R&D spending, 
research centres, and innovative enterprises are 
concentrated in a handful of countries (the UK185, 
Germany, France, Italy, Sweden, and the 
Netherlands)186. 

Financial sustainability of potential KIC 

The  economic  landscape  of  the  theme  does  not  suggest  major  risks  for  the  financial 
sustainability  of  a  future  KIC.  There  is  a  significant  number  of  large  innovative  enterprises 
that  could  be  interested  in  joining  the  KIC  and  contributing  to  its  financial  sustainability 
through  membership  fees.  The  field  is  ripe  for  fast  growing  innovative  start-ups.  Hence,  a 
future KIC can expect income stream from return on investment/equity of incubated start-ups. 
A  future  KIC  could  also  expect  some  income  from  education  and  provision  of  services, 
although this is likely to depend on the quality and uniqueness of the services offered.  

for 

EU 

(2015). 

Security 

Together 

and  Defence. 

European  Growth, 

177 European Commission (2017). Security research and innovation – Boosting effectiveness of the Security Union. Booklet, p. 5.  
178  AmCham 
http://www.amchameu.eu/sites/default/files/publications/files/security_and_defence_brochure_2016_0.pdf  
179 Scimago Journal & Country Rank, 2016. The following research subarea were used to estimate the average H-index of countries in the 
Security  and  Resilience:  (i)  Aerospace  engineering,  (ii)  Communication,  (iii)  Computer  networks  and  communications,  (iv)  Control  and 
systems  engineering,  (v)  Information  systems  and  management,  (vi)  Modelling  and  simulation,  (vii)  Political  science  and  international 
relations, (viii) Safety research, (ix) Safety, Risk, reliability and quality. 
180 AmCham EU (2015), Scimago Journal & Country Rank, 2016 and interviews.  
181 Interviews, AmCham EU (2015) and Optimity advisors (2016). 
182 Interviews. 
183 Interviews. 
184 Interviews. 
185 Brexit will further reduce European capacities in this theme. 
186 Interviews and previous studies: Jacquotte O. P., Castor M. (2017). AmCham EU (2015). European Parliament (2016). The future of EU 
defence research.  

7.  Retrieved 

p. 

at 

144 

 
 
 
 
 
                                                           
Potential to address bottlenecks for innovation 

There  is  a  large  number  of  bottlenecks  for  innovation  in  the  field  that  a  future  KIC  could 
potentially address. These include: 

  Heavy  path-dependency  and  rigid  innovation  agendas.  Public  funding  in  the 
Member States (MS), as well as research and industrial base, are strongly concentrated 
in  traditional  defence  sectors.  Work  is  typically  structured  around  long-term  R&D 
programmes.  As  the  new  security  challenges  have  emerged,  attention  has  shifted 
towards  new  areas  of  work,  such  as  cyber-security,  monitoring,  and  prevention  of 
threats  (predominantly  terrorism),  etc.  However,  the  interviewees  suggested  that  the 
established industrial players treat innovations for mitigating the newly emerging risks 
as  potential  niches,  rather  than  core  future  markets.  Public  authorities,  firms,  and 
societies  at  large  tend  to  downplay  the  likelihood  of  rare  high-impact  events.  As  a 
result,  the  markets  for  non-defence  security  and  resilience  innovations  are  rather 
shallow (unless high-impact events occur, which leads to a surge in demand).  

  Fragmentation of efforts. There are strong economic arguments for closer European 
cooperation.  First,  MS  face  similar  challenges,  but  due  to  a  low  likelihood  of  high-
impact  crises  individually  each  country  tends  to  underinvest  in  early  identification, 
management,  and  mitigation  of  risks.  Second,  the  performance  of  innovations  based 
on  AI  and  big  data  significantly  improves  with  larger  quantities  of  data,  which  is 
difficult to obtain for low-likelihood events. Hence, the more regions and countries use 
such innovations, the better they could become. However, the economic arguments are 
not always compatible with the political determination of governments to develop own 
systems that constitute part of national security.  

  Neglect  of  social  innovations.  There  is  a  widespread  perception  that  technological 
innovations are necessary to address challenges related to security and resilience. The 
interviewed  experts  argued  that  while  technology  definitely  has  an  important  role  to 
play, a significant share of the challenges require social innovations, which have been 
largely neglected to date. This also explains why the uptake of available technologies 
has  been  rather  weak.  Examples  of  social  innovations  include:  strengthening  media 
literacy to fight the spread of misinformation, prevention of radicalisation, etc. 

  Lack  of  the  necessary  skills.  This  is  particularly  relevant  for  information  security, 
human  understanding  and  control  of  highly  automated  systems  and  Artificial 
Intelligence, and system usability sub-challenges. For example, Europe is expected to 
face a shortage of 350,000 experts in cyber security by 2022.187  

The work of a future KIC could be constrained by several legal and technical obstacles. 

 

Innovations for early identification of threats can face difficult questions regarding the 
balance  between  security  and  respect  for  human  rights.  Hence,  application  of 
innovations  (e.g.  face  recognition)  that  rely  on  personal  data  can  be  subject  to 
regulatory uncertainty in Europe, while countries with looser regulatory regimes (e.g. 
China) enjoy a competitive advantage in developing such technologies (sometimes at 
the expense of the respect for human rights). 

  There  is  a  lack  of  ‘soft’  infrastructure  (commonly  agreed  terminology,  frameworks), 
which  inhibit  cross-national  cooperation  in  developing  innovations  in  the  fields  of 

187 Global Information Security Workforce Study 2017. 

145 

 
                                                           
security  and  resilience.188  While  a  future  KIC  could  contribute  to  the  alleviation  of 
these bottlenecks, they span beyond the direct control of Innovation Communities.  

  The sectors covered by the theme are very diverse, from information and cybersecurity 
to resilience of critical infrastructure. Attempts to cover most of the sectors by a future 
KIC could result in spreading its resources thinly and in the need to develop a coherent 
overall strategy exploiting the synergies between its members. Therefore, a refinement 
or  possibly  a  narrower  scope  of  the  theme  could  be  considered  to  ensure  greater 
coherence of economic activities. 

Suitability of themes vis-à-vis impact indicators 

A future KIC in the field of  Security and Resilience could adopt a number of strategies. On 
the one hand, the KIC could aim to transform the mature industries (e.g. defence and security 
industry, operators of ‘hard’ and ‘soft’ infrastructures, ICT) by attracting established players 
and facilitating diversification of their activities to new areas of security and resilience. On the 
other  hand,  the  KIC  could  aim  to  develop  market-creating  innovations  by  facilitating  the 
emergence of new players. Either strategy (or their combination) is likely to contribute to the 
attainment  of  the  proposed  economic  medium/long  term  indicators.  As  with  many  of  the 
KICs, 
indicators  will  require  careful 
consideration.  It  is  a  particular  challenge  here  given  the  intrinsic  difficulties  in  measuring 
levels of security and resilience.  

the  definition  of  appropriate  societal 

impact 

Water, Marine, and Maritime 

The  overuse  and  mismanagement  of  natural  resources  in  the  last  century  has  placed  a  great 
pressure  on  freshwater  ecosystems.189  At  the  same  time,  new  technologies  and  the  need  to 
decarbonise  the  economy  are  leading  to  increasing  use  of  marine  resources.  A  major 
challenge in this field is to create a sustainable, circular, and blue economy that is based on 
sufficient  quantities  of  water  as  well  as  on  healthy  and  functioning  freshwater  and  marine 
ecosystems with a view to tackle the following points: 

  Water  scarcity,  drought,  and floods.  Continued  climate  change  and  over-extraction  of 
fresh  water  are  causing  a  rise  in  severity  and  frequency  of  water  scarcity  and  droughts. 
Simultaneously, increasing scale of economic activities in coastal areas, floodplains, and 
deltas,  and  the  reduction  of  the  natural  water  retention  contribute  to  the  increase  in  the 
likelihood and adverse impacts of floods. Therefore, innovative methods and technologies 
are  needed  to  gather,  predict,  and  disseminate  information  about  waterbodies’  safety, 
potential threats, and mitigation of risks. 

188  Lange  D.,  Honfi  D.,  Petersen  L.,  Rod  B.,  Pursiainen  C.  (2017).  Application  of  Resilience  Concepts  to  Critical  Infrastructure  in  the 
IMPROVER Project, in EC, Proceedings of the 1st International Workshop on Resilience, p. 39. 
189 Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. 
Water, marine and maritime, p. 2. 

146 

 
 
 
 
 
 
                                                           
  Marine and freshwater ecosystem degradation. Waterborne pollution (especially from 
agriculture)  and  human  activities  damage  to  coastal  and  marine  ecosystems.  Waste 
reduction,  improvement  in  water  treatment  and  less  environmentally  damaging  offshore 
activity  are  needed  as  well  as  better  ways  of  monitoring  the  marine  environment.  The 
environmental status of 80% of the species and habitats assessed under the EU’s Marine 
Strategy Framework Directive is ‘unknown’. 

in 

  Decarbonisation.  All  scenarios  presented 

the  Commission’s  Clean  Planet 
Communication190  on  achieving  a  zero  carbon  economy  by  2050  include  an  enormous 
growth  in  offshore  wind  energy  –  between  10  and  50  times  the  present  capacity. 
Unprecedented expansion of other activities is also forecast. Installations for energy from 
tide  and  waves  will  shift  from  demonstration  to  production.  Aquaculture,  particularly 
shellfish  and  algae,  for  food  and  feed  will  move  further  offshore  and  expand  at  least 
tenfold  to  compensate  for  land  lost  from  food  production  for  biofuels.  An  ecosystem  of 
service  providers  for  developing,  manufacturing,  installing,  cabling,  supplying  and 
maintaining these facilities as well as checking their impact on ecosystems will need to be 
developed. 

  Circular and blue economies include two large segments:   

o  Water  management  on  land.  A  relatively  small  amount  of  wastewater  is  currently 
reused  in  Europe.  At  the  same  time,  other  countries  in  the  world  are  increasingly 
facing  water  shortages.  Therefore,  there  is  a  need  for  innovations  to  ensure 
sustainability  of  freshwater  ecosystems.  The 
include  new 
technologies  for  water  extraction,  reuse,  and  treatment  as  well  as  social  innovations 
(e.g. pricing models) that could alter the behaviour of consumers.  

innovations  could 

o  Blue  (marine)  economy  includes  a  range  of  traditional  (e.g.  shipping,  tourism)  and 
newly emerging sectors (e.g. blue biotech). There is a need for a range of innovations 
to  set  the  traditional  sectors  along  a  sustainable  growth  path  as  well  as  to  kick-start 
economic activities of sectors that are in the early stages of development but that have 
large market opportunities. 

Alignment with Horizon Europe, including the Global Challenges and Competitiveness pillar  

The scope of the theme corresponds well with the Food and Natural Resources cluster of the 
Global  Challenges  and  Industrial  Competitiveness  Pillar  as  outlined  in  the  Commission 
proposal for establishing Horizon Europe programme.  In particular, a future KIC within this 
theme could significantly contribute to the following areas of interventions: Seas and Oceans, 
Circular Systems, Environmental Observation, and Biodiversity and Natural Capital. It would 
also contribute to the climate, energy and mobility cluster.   

190 https://ec.europa.eu/clima/policies/strategies/2050_en 

147 

 
 
 
 
 
 
 
 
 
                                                           
Cluster 

Climate, 
energy and 
mobility 

Food and 
natural 
resources 

Areas of 
intervention 

Energy systems 
and grids 

Clean transport 
and mobility 

Relevant broad lines of activities 

KIC can develop an ecosystem of service providers with special 
knowledge of challenging offshore conditions that can contribute to 
expansion of offshore energy that will consolidate European 
leadership and will be essential for meeting carbon emission targets. 

Environmental 
Observation 

KIC within the theme can provide horizontal inputs to most lines of 
activity 

Biodiversity and 
Natural Capital 

KIC within the theme can provide horizontal inputs to most lines of 
activity 

Food systems 

Aquaculture, both freshwater and marine, will play an increasing role 
in food and feed systems as agricultural land shifts to biofuel 
production. 

Sea and Oceans 

KIC within the theme can address all lines of activities 

Circular Systems 

Circular use of water resources, including reduction of water demand, 
prevention of losses, water reuse, recycling and valorisation of 
wastewater and governance models for smart water allocation, 
addressing sources of pollution and tackling other pressures on water 
resources 

Economic and research capacities of the sector 

The  Water,  Marine,  and  Maritime  theme  has  a  relatively  strong  knowledge  base  as  well  as 
high market potential. The sectors of the highest significance in Europe are the following: 

  Marine supplies. It has a production value in the EU of around EUR 52.5 bn per year. 
The largest two players in this sector in the EU are Germany (EUR 12.8 bn.) and Italy 
(EUR 8.7 bn).191 Production of marine supplies includes shipbuilding, boatbuilding, 
and repair. Shipbuilding in Europe has an annual turnover of around EUR 13 bn and 
a workforce of 500 thousand.192 Italy has the biggest boatbuilding industry in Europe 
with a share of approx. 28%.193 

  Coastal tourism. Tourism alone makes up nearly 40% of the Blue Economy’s value 
added  and  55%  of  all  the  people  employed  in  the  European  Blue  Economy.194  In 
addition,  according 
the  World  Economic  Forum  Travel  and  Tourism 
competitiveness  index  (2017)195,  half  of  the  countries  in  the  top  ten  are  from  the 
EU196. 

to 

  Maritime transport. The share of maritime seaborne trade is estimated to account for 
around  60-70%  of  all  international  trade.197  EU  maritime  transport  sector  has  an 
annual turnover of around EUR 20 bn. and a workforce of 350.000198 

191 BALance (2014). Competitive position and future opportunities of the European marine supplies industry, Final Report, p. 31. 
192 European Commission (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8. 
193 BALance (2014). Competitive position and future opportunities of the European marine supplies industry, Final Report, p. 33. 
194  European  Union  (2017).  Blue  Economy 
/publication/030d66f1-5564-11e7-a5ca-01aa75ed71a1/language-en  
195 World Economic Forum (2017). The Travel & Tourisms Competitiveness Report 2017. 
196 Spain, France, Germany, United Kingdom, and Italy.  
197 Union for the Mediterranean (2017). Blue economy in the Mediterranean. Report, p. 39. 

the  EU.  Retrieved  from  https://publications.europa.eu/en/publication-detail/-

in 

148 

 
 
 
 
 
                                                           
  Fisheries and aquaculture. Fisheries have an annual turnover of around EUR 20 bn 
and  a  workforce  of  500.000.199  In  2015,  it  has  produced  around  6.4  m  tons  of  live 
weight  equivalent.200  The  volume  of  EU  aquaculture  production  in  2015  equated  to 
one-fifth  of  total  EU  fisheries  production  and  accounted  for  around  EUR  4.1  bn.201 
The  largest  EU  players  in  the  field  are  Spain  (23.3%  of  all  volume),  the  United 
Kingdom  (16.8%),  and  France  (13%).  Conversion  of  land  for  biofuel  to  meet  EU’s 
decarbonisation strategy will require increasing food production offshore. Aquaculture 
can  produce  protein  for  food  or  feed  with  a  lower  carbon  footprint  than  terrestrial 
equivalents. 

  Marine  energy.  European  companies  are  among  the  leaders  in  developing  ocean 
energy technologies. Around half of the world’s tidal energy developers and 60% of 
wave  energy  developers  are  located  in  the  EU.  The  highest  share  of  tidal  and  wave 
energy developers on the global scale are owned by the United Kingdom (19% of tidal 
and 18% of wave energy developers).202  

  Offshore  oil  and  gas.  It  is  the  biggest  sector  in  marine  energy  and  raw  materials 
industry.  The  size  of  offshore  oil  and  gas  industry  in  2012  was  EUR  107-133  bn,  it 
employed 25-50.000 people.203 

  Blue biotechnology. The sector accounts for 2-5% of the marine economy and could 
have  an  annual  turnover  of  between  EUR  302  and  EUR  754  m.  The  competitive 
advantage  of  the  EU  lies  in  its  R&D  activities,  access  to  marine  resources,  and 
development of infrastructure to support these activities.204 

  Water  supply  and  wastewater  treatment  sector  is  increasingly  innovative.  2018 
Global Cleantech 100 Report205 presents the top companies in technologies, services, 
and  business  models  reducing  the  strains  on  the  hydrological  cycle  and  ensuring 
reliable access to clean water. Three out of the top 5 companies are of European origin 
(Organica Water in Hungary, OxyMem in Ireland, and Voltea in the Netherlands). 

(2017). 

Fishery 

Eurostat 

statistics. 

198 European Commission (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8. 
199 European Commission (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8. 
200 
explained/index.php/Fishery_statistics#Total_production  
201 Eurostat (2017). Aquaculture statistics. Retrieved from http://ec.europa.eu/eurostat/statistics-explained/index.php/Aquaculture_statistics  
202  Magagna  D.,  Shortall  R.,  Telsnig  T.,  Uihlein  A.,  Vasquez  Hernandez  C.  (2017).  Supply  chain  of  renewable  energy  technologies  in 
Europe. An analysis for wind, geothermal and ocean energy. Report for Joint Research Centre. 
203 Ecorys (2012). Blue Growth. Scenarios and drivers for Sustainable Growth from the Oceans, Seas and Coasts. Third interim report, p. 
98. 
204 Remotti L. and Damvakeraki T. (2015). Ocean Research in Horizon 2020: The Blue Growth Potential. Study for the ITRE Committee, p. 
14. 
205 Cleantech Group (2018). Global’18 Cleantech 100. A Barometer of the Changing Face of Global Cleantech Innovation. Report. 

http://ec.europa.eu/eurostat/statistics-

Retrieved 

from 

149 

 
 
 
 
 
 
 
 
                                                                                                                                                                                     
The Table below discusses other strengths and weaknesses in the thematic area in Europe. 

Strengths 

Weaknesses 

Strong research base. In the field of water scarcity, 
droughts, and floods Europe has the second largest 
number of patents (behind only 
Japan).206Furthermore, European researchers have 
produced more research papers on water science 
and technology in the past fifteen years than 
researchers from any other country.207  

Lack of focus in Higher Education. The academic 
programmes tend to be rather broad, whereas the sub-
sectors require quite specific knowledge and skills. 
Additionally, curricula in areas such as engineering, 
urban design, architecture, and similar do not 
sufficiently cover issues related to ecology, marine 
engineering, and management of water.208  

High market potential. The EU is one of the 
leaders, alongside China and USA, in marine 
economy. Counting all activities that depend on the 
sea, the EU blue economy employs around 5.4 
million and has an annual gross value of EUR 500 
bn.209 Maritime industries in the EU represent 
around 5% of EUs gross domestic product.210 

Different industries often rely on the same water 
bodies.211 This presents a challenge as there is a need 
to accommodate the conflicting needs of sectors. For 
example, the potential of harvesting marine 
biotechnologies relies on the quality of water, which 
may be negatively affected by shipping and industrial 
aquaculture.  

Lack of cooperation. Less than 20% of R&D 
organisations in water sciences have an effective 
cooperation with industries or enterprises.215 

Newly emerging innovative sectors. The divides 
between researchers and enterprises are less 
prevalent in emerging sectors, such as 
biotechnologies, aquaculture and marine energy 
production.212 The marine biotechnologies sector is 
dominated by enterprises that build their business 
models on innovations and are strongly rooted in 
research.213 The energy sector also develops a large 
number of innovations aimed at improvements in 
the efficiency of wave, tidal and wind turbines.214  

206 Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. 
Water, marine and maritime, p. 11. 
207 Ibid. 
208 Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. 
Water, marine and maritime, p. 10. 
209 European Commission (2012), Blue Growth opportunities for marine and maritime sustainable growth. COM (2012) 494 final, p. 2.  
210 EC (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8. 
211 OECD (2016). The Ocean Economy in 2030, p. 20. 
212 BALance (2014). Competitive position and future opportunities of the European marine supplies industry. Final report, p. 119. 
213 Interviews. 
214 BALance (2014). Competitive position and future opportunities of the European marine supplies industry. Final report, pp. 114-115. 
215 Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis. 
Water, marine and maritime, p. 13. 

150 

 
 
 
 
                                                           
Financial sustainability of a KIC 

The analysis suggests that the characteristics of the theme, the structure of value-added chains 
and  strategies  of  the  key  players  do  not  imply  any  significant  risks  in  terms  of  financial 
sustainability of the future KIC. It will largely depend on the strategy and business plan of the 
KIC.  

Potential to address bottlenecks for innovation 

The  key  bottlenecks  to  innovation  include  lack  of  engineering  and  entrepreneurship  skills, 
fragmentation  of  efforts  and  disconnect  between  education,  research,  and  innovation 
activities216  as  well  as  an  under-developed  knowledge  base  (e.g.,  up  to  50%  of  the  seafloor 
does  not  have  high-resolution  topographic  maps217).  A  KIC  would  be  an  appropriate 
instrument in addressing these bottlenecks.  

However,  due  to  a  very  broad  definition  of  the  theme,  a  future  KIC  would  face  multiple 
challenges.  

1)  The  sectors  covered  by  the  theme  are  very  diverse,  from  very  mature  (e.g.  fisheries  and 
shipbuilding) to the newly emerging ones (e.g. blue biotech), and attempts to cover most of 
the sectors could impede formulation of a coherent KIC strategy. However, a KIC could help 
transfer lessons learned in traditional industries such as oil and gas to the emerging ones.   

2)  Most  of  the  sectors  rely  on  relatively  distinct  value-added  chains  and  knowledge  bases, 
although  there  are  some  opportunities  for  synergies  (e.g.  shipbuilding  knowledge  could  be 
used in offshore oil and gas sector). Hence, there is a risk that a KIC will develop only loosely 
connected networks.  

3)  Due  to  geographical,  economic,  policy,  and  other  reasons,  the  scientific  and  economic 
competence-base  is  very  unequally  distributed  among  the  EU  MS  (see  Table  below).  For 
instance  Mediterranean  countries  lag  the  northern  countries  in  renewable  energy  because  of 
oceanographic  conditions  such  as  a  narrow  continental  shelf.  But  innovation  already  in  the 
pipeline can overcome these challenges.  

All of the above implies that: 

 

If a future KIC aimed at covering most of the sectors, its resources would be spread 
widely,  but  thinly,  it  would  struggle  to  develop  a  coherent  strategy  and  exploit  the 
synergies between its members.  

  The  development  of  a  coherent  strategy  and  priority  work  fields  could  take  a 
significant  amount of time and resources. The existing KICs that were set-up within 
very broadly defined areas, such as EIT Climate-KIC or EIT Digital, have spent over 
five years and used multiple iterations to flesh out their strategy in tackling the socio-
economic  challenge  at  hand.  Experience  already  gained  under  EU  research 
programmes, the integrated maritime policy and the water framework directive could 
participate in shortening these timescales.   

216 ECORYS (2012). Blue Growth Scenarios for Sustainable Growth from the Oceans, Seas and Coasts. Final report. 
217 DG MARE (2014). Innovation in the Blue Economy: realising the potential of our seas and oceans for jobs and growth. COM(2014) 254 
final/2. 

151 

 
 
 
                                                           
Narrower  scope  of  the  theme  would  therefore  facilitate  management  of  the  above  risks. 
Refinement  of  the  theme  could  be  considered  in  terms  of  ensuring  greater  coherence  of 
economic activities (e.g. blue economy). A recent study218 suggested that the largest potential 
for European R&D to deliver innovation and jobs rests in the following blue economy sectors: 
aquaculture, marine tourism, coastal protection, blue biotechnology, ocean energy, and seabed 
mining.  However,  marine  aquaculture  is  damaged  if  water  quality  in  outflow  from  rivers  is 
poor so bringing the two communities together would provide real added value. The priority 
should  remain  at  ensuring  that  industry  has  the  skills,  technology  and  entrepreneurship 
necessary  to  exploit  the  potential  of  the  sea  for  meeting  the  challenges  of  a  low  carbon 
economy  whilst  ensuring  that  this  expansion  does  not  compromise  the  natural  capital  for 
future generations.   

Maturity of sectors covered by Water, Marine and Maritime theme 

Sectors 

Leading European countries* 

Mature industries 

Coastal tourism, passenger ferry services, cruise tourism, 
yachting and similar 

Inland waterway transport 

Deep-sea and short-sea shipping 

Shipbuilding and ship repair 

Fisheries 

Offshore oil and gas 

Water supply, treatment and other water management on 
land 

Growing industries 

Aquaculture 

Coastal protection 

Industries at pre-development stage 

Blue biotech 

Blue energy (incl. offshore wind and ocean renewable 
energy) 

Most Member States 

Most Member States 

BE, EL, DE, DK, UK, NO, IT, FR, NL 

DE, DK, IT, NL, RO 

DK, ES, FR, NL, UK 

DK, IT, NL, UK, NO 

Most Member States 

EL, ES, IT, FR, NO, UK 

BE, NL 

DE, NO, FR, UK 

DK, ES, FR, IE, PT, SE, UK 

Seabed mining 

DE, FR, UK 

Source:  compilation  based  on  Remotti  L.  and  Damvakeraki  T.  (2015).  Ocean  Research  in  Horizon  2020:  The 
Blue Growth Potential; ECORYS (2012) Blue Growth Scenarios for Sustainable Growth from the Oceans, Seas 
and Coasts, Final report; Deloitte (2017) EU Shipping Competitiveness Study and interviews. Note: * the list is 
by no means complete.  

218 Remotti L. and Damvakeraki T. (2015). Ocean Research in Horizon 2020: The Blue Growth Potential. Study for the ITRE Committee. 

152 

 
 
 
 
                                                           
Suitability of themes vis-à-vis impact indicators 

Overall,  the  medium/long-term  outcome  indicators  are  relevant  for  a  future  KIC.  However, 
the  targets/expected  values  of  the  indicators  depend  on  the  strategy  of  a  future  KIC  (if  the 
scope of the theme is left unchanged). On the one hand, a KIC could focus on improving the 
quality of ecosystems (e.g. Plastic-free oceans as proposed in the Mazzucato report219). In this 
case, most of the economic impacts (job creation, revenue growth, etc.) on the blue economy 
would  be  indirect,  attained  over  a  longer  period  of  time,  and  spread  along  a  wide  range  of 
sectors  (e.g.  tourism,  fisheries,  blue  biotech).  On  the  other  hand,  a  KIC  could  focus  on  the 
development  of the most promising fields  of the  blue economy. This  should result in  larger 
short-term  economic  impacts.  However,  the  two  issues  are  linked  and  considering  them 
together would avoid unintended consequences.   

Inclusion, Integration, and Migration 

The  European  society  is  facing  major  demographic  changes  –  rising  life  expectancy, 
migration,  reducing  family  sizes,  and  others.  Furthermore,  social  and  economic  trends  pose 
challenges  for  social  cohesion  and  inclusion.    The  two  major  interlinked  issues  within  the 
theme are: 

  Demographic change and the ageing population has wide ranging implications for the 
labour market, sustainability of social insurance systems as well as increased demand for 
care, healthcare, and related services. This creates the need for technological innovations 
in areas such as healthcare, home care, and housing, innovative solutions for the inclusion 
of  vulnerable  elderly  groups,  and  organisational  changes  in  healthcare,  education,  and 
social security. 

  Social inclusion and active citizenship as drivers for economic growth.  The share of 
people at the risk of poverty or social exclusion in the EU MS ranges from 14% to 41.3% 
in 2015.220 Poverty and exclusion hinder the development of talents, reduces participation 
in the labour market and civic engagement as well as undercuts one’s self-esteem and self-
sufficiency. Two groups are particularly vulnerable in Europe: 

o  Youth  not  enrolled  in  education,  employment  or  training  (NEETs).  Educational 
chances  of  children  still  strongly  depend  on  the  socio-economic  status  and  parents’ 
linguistic  background.  Disadvantaged  children  may  face  lower  employment  and 
earning  potential,  which  not  only  makes  them  vulnerable  but  also  limits  social 
cohesion  and  economic  growth.  Thus,  there  is  a  need  for  social  innovations  in 
reaching out to NEETs, fostering their human capital and entrepreneurial skills.  

o  Migrants: immigrants, refugees, and asylum-seekers. Migrants still face challenges in 
accessing employment, education, institutions, goods, and services, which limits their 
participation  in  society.  The  inclusion  of  migrants  can  strengthen  the  innovation 
potential  of  the  EU  and  help  address  issues  such  as  labour  market  shortages.  For 
enhanced  inclusion,  there  is  a  need  for  the  development  of  social  innovations  and 
social enterprise models, innovative solutions to simplify administration and banking 
processes. 

219  Mazzucato  M.  (2018).  Mission-Oriented  Research  &  Innovation  in  the  European  Union.  A  problem  –  solving  approach  to  fuel 
innovation – led growth. 
220  LaGro,  Yosifova  (2017).  Input  to  EIT’s  Strategic  Innovation  Agenda.  Future  EIT  Thematic  Areas.  Expert  Analysis.  Inclusion  and 
integration, p. 5. 

153 

 
 
 
 
                                                           
Alignment with Horizon Europe, including the Global Challenges and Competitiveness pillar  

The scope of the theme corresponds well with the Inclusive and Secure Society cluster of the 
Global  Challenges  and  Industrial  Competitiveness  Pillar  as  outlined  in  the  Commission 
proposal for establishing Horizon Europe programme. A KIC established within the Inclusion, 
Integration,  and  Migration  theme  could  directly  contribute  to  two  areas  of  intervention: 
Democracy and Social and Economic Transformations.  

Areas of 
intervention 

Democracy 

Cluster 

Inclusive 
and 
Secure 
Society 

Social and 
Economic 
Transformations 

Relevant broad lines of activities 

Deliberative  and  participatory  democracy  and  active  and  inclusive 
citizenship, including the digital dimension 

The  impact  of  economic  and  social  inequalities  on  political 
reversing 
participation  and  democracies,  demonstrating  how 
inequalities  and  combatting  all  forms  of  discrimination  including 
gender, can sustain democracy 

Social  sustainability  beyond  GDP  only  indicators  especially  new 
economic and business models and new financial technologies 

Tax  and  benefits  systems  together  with  social  security  and  social 
investment  policies  with  a  view  to  reversing  inequalities  and 
addressing  the  negative  impacts  of  technology,  demographics  and 
diversity 

Human mobility in the global and local contexts for better migration 
governance,  integration  of  migrants  including  refugees;  respect  of 
international  commitments  and  human  rights;  greater,  improved 
access  to  quality  education,  training,  support  services,  active  and 
inclusive citizenship especially for the vulnerable; 

Economic and research capacities of the sector 

The EU has a broad but patchy research and higher education base in the areas of Inclusion, 
Integration and Migration. It covers most of the issues within the theme but there is a need for 
a more concerted effort in order to innovate and address challenges in the field. EU Member 
States  spend  large  shares  of  their  GDP  on  social  protection  and  health.  There  is  also 
increasing awareness of the new market opportunities and social value that can be tapped in 
the area. The Table below provides an overview of the European strengths and weaknesses in 
the field of Inclusion, Integration and Migration. 

154 

 
 
 
 
 
 
 
 
 
Strengths 

Weaknesses 

There is significant potential in the European 
social economy, which accounts for approx. 2 
million enterprises (10% of all European 
businesses) and employs over 11m paid 
members (or 6% of the employed).221 

The untapped potential of social 
entrepreneurship. Neither the European funding 
system nor the legal framework is well-suited to 
support social entrepreneurship.222 Due to 
complicated bureaucratic processes, social 
enterprises find it difficult to access funding 
schemes, to support their further development and 
ultimately achieve sustainability.223  

Strong research base. The EU MSs comprise 6 
out of 10 leading countries with the highest 
average H-index in research fields associated 
with the theme.224 

The number of European HE institutions 
ranked as excellent is considerably lower than 
the rest of the world. Only three to four European 
universities were in the top 20 disciplines related to 
the thematic area.225 

MS have allocated significant funding to 
address the challenges. In 2016 the EU spent 
19.1% of its GDP on social protection and 
7.1% on health226.  

A large share of providers of social services 
relies on public funding, which is highly volatile 
in times of economic or social crises. This 
undercuts the development of viable long-term 
business models. 

Financial sustainability of a KIC 

There are three groups of players in the thematic area: national and regional authorities, social 
enterprises  and  NGOs,  and  for-profit  enterprises.  The  first  two  groups  are  not  likely  to 
significantly contribute to the financial sustainability of the future KIC through membership 
fees or payments for services. Over the past decade, they have faced a combination of fiscal 
austerity and an increased demand for services due to the migration crisis, residual effects of 
the  financial  crisis,  etc.  For-profit  enterprises  typically  provide  services  and  products  at  the 
higher end of the market, e.g. care and support for the disabled or elderly who can afford the 
services. Hence, while some of the enterprises could contribute to the financial sustainability 
of the KIC, their interests might not be well-aligned with the social mission of the KIC.  

221 Grigore A. (2013). Social economy entities: a worldwide overview, Review of Applied Socio-Economic Research, 6(2). 
222 BEPA (2010). Empowering people, driving change. Social Innovation in the European Union, p. 102. 
223  LaGro,  Yosifova  (2017).  Input  to  EIT’s  Strategic  Innovation  Agenda.  Future  EIT  Thematic  Areas.  Expert  Analysis.  Inclusion  and 
integration, p. 8. 
224 Scimago Journal & Country Rank, 2016. The following research subarea were used to estimate the average H-index of countries in the 
inclusion, integration,  and  migration thematic  area:  (i)  Aging,  (ii)  Communication,  (iii) Cultural  studies,  (iv)  Demography,  (v)  Education, 
(vi) E-learning, (vii) Geography, planning and development, (viii) Geriatrics and gerontology, (ix) Gerontology, (x) Industrial relations, (xi) 
Occupational therapy, (xii) Organisational behaviour and human resource management, (xiii) Public administration, (xiv) Social psychology, 
and (xv) Social work.  
225 Disciplines considered: Education & Training, Social Policy & Administration, Sociology (3 EU universities in the top 20), Psychology 
(4 EU universities in the top 20). 
226  Eurostat 
(28 
http://ec.europa.eu/eurostat/statistics-explained/index.php/Government_expenditure_by_function_–_COFOG 

for  European  Union 

countries).  Retrieved 

(2018).  Government 

expenditure 

function 

by 

at 

155 

 
 
 
 
 
 
                                                           
The  future  KIC  could  contribute  to  the  creation  and  growth  of  social  enterprises  that  are 
renowned for the development of social innovations.227 However, it is not likely that return on 
investment/equity of incubated start-ups will constitute a significant stream of KIC’s income. 
First,  social  enterprises  are  focused  on  generating  a  return  for  society  rather  than  return  on 
investment.228 Hence, profits (if any) are usually reinvested in scaling up the services.  

Second, to generate a significant return on investment, social enterprises need stable streams 
of income. Most social enterprises adopt a ‘hybrid’ business model, i.e. derive their revenues 
from  a  combination  of  the  market  (sale  of  goods  and  services)  and  non-market  (subsidies, 
grants,  donations,  etc.)  sources.  Research  shows  that  public  sector  funding  dominates  the 
revenue streams of social enterprises. For example, around 45% of social enterprises in Italy 
mainly  rely  on  public  funding.  In  the  UK,  52%  of  social  enterprises  derive  some  and  23% 
derive  all  their  income  from  the  public  sector.229  Hence,  financial  stability,  growth,  and 
ultimately return on investment will to a large extent depend on the level of public funding.  

Careers  in  the  field  do  not  offer  high  financial  rewards.  This  could  negatively  impact  the 
capacities  and/or  willingness  of  prospective  students  to  pay  tuition  fees  for  EIT  labelled 
courses. As a result, it is not likely that the future KIC could generate significant income from 
its education services.  

Overall,  there  are  significant  risks  that  the  future  KIC  will  not  generate  sufficient  income 
through traditional sources of revenue (membership  fees, the sale of services, and return on 
investment  and  tuition  fees).  Unless  the  KIC  develops  alternative  income  streams,  it  is  not 
likely to be financially sustainable.  

Potential to address bottlenecks for innovation 

There is high demand for innovations in the field. However, the interviews and desk research 
suggest  that  there  are  three  long-standing  challenges  to  the  development  and  take-up  of 
innovations in the field.  

1) Constraints in scaling-up of innovations. Traditional businesses predominantly focus on 
relatively standardised products and services that can be easily traded across markets. Hence, 
scaling typically involves the growth of business and expansion to new markets. However, the 
actors within social economy typically focus on the provision of services that are difficult to 
transfer,  because  they  are  generally  labour  intensive,  personalised  and  relational.230  As  a 
result,  social-innovations  face  challenges  when  ‘travelling’  across  social  enterprises,  policy 
domains and regions / countries.231  

2)  Limited  access  to  private  finance.  While  traditional  enterprises  aim  to  maximise 
shareholder value, the actors in the field of inclusion and integration prioritise social value or 
seek  to  strike  a  balance  between  the  two.  As  a  result,  the  start-ups  and  scale-ups  are  less 
attractive  to  the  established  providers  of  debt  and  equity  capital.  Furthermore,  national 
regulation  can  also  impose  additional  barriers.  For  example,  social  enterprises  in  the  Czech 
Republic  are  prohibited  from  using  own  assets  as  collaterals  to  guarantee  loans,  while  in 
Romania bank rules place not-for-profit social enterprises among the riskiest borrowers.232  

227 DG GROWTH. Social enterprises [website]. Retrieved at: http://ec.europa.eu/growth/sectors/social-economy/enterprises_en 
228 OECD/European Union (2013). Policy Brief on Social Entrepreneurship. 
229 European Commission (2015). A map of social enterprises and their eco-systems in Europe. Synthesis report, pp. 36-37.  
230 European Union/OECD (2016) Policy Brief on Scaling the Impact of Social Enterprises.   
231 Benton, Glennie (2016). Digital Humanitarianism: How Tech Entrepreneurs Are Supporting Refugee Integration, p. 21. 
232 European Commission (2015). A map of social enterprises and their eco-systems in Europe. Synthesis report. 

156 

 
 
                                                           
3) Constraints in distributing profits. Social enterprises (particularly, if they are registered 
as  non-profits)  also  face  obstacles  in  distributing  profits,  which  inhibits  access  to  equity 
finance233.  

To  alleviate  the  challenges,  a  number  of  alternative  funding  instruments  have  emerged  (see 
below),  although  their  scale  and  impact  remains  limited.234  Hence,  national/regional 
authorities  and  the  Commission  stepped-in  to  support  the  development  of  an  ecosystem  of 
finance  for  social  enterprises.  The  EU  Programme  for  Employment  and  Social  Innovation 
(EaSI)  provides  loan  guarantees  for  social  enterprises  as  well  as  supports  development  of 
social finance markets in Europe. Furthermore, the European Fund for Strategic Investment’s 
(EFSI) equity instrument supports social enterprises through pilot equity investments.  

Alternative funding sources for social enterprises 

Source 

Explanation 

Examples 

Solidarity finance 

Use of traditional financial instruments (e.g. 
pension funds, savings, credit) to advance the 
public good.  

Finansol (France, 200  000 
subscribers in 2005) 

Venture philanthropy  Application of the venture capital model into a 

social investment strategy to include blended 
returns (i.e. financial revenues and social 
benefits). 

(Venture Experiment Programme 
by the Rockefeller Foundation 

Institutional investors 

Institutional investors such as pension or mutual 
funds, insurance companies, or traditional banks 
can target investments in social enterprises either 
directly or through dedicated funds.  

Pension and insurance funds, 

Donor-advised funds (DAFs): 
Pioneered by Fidelity’s Non-
profit Charitable Gift Fund 

Individual investors 

Highly motivated high net worth individuals or 
“citizen investors” invest in social enterprises 
either directly or through dedicated funds.  

Angel investors, High Net Worth 
Investors 

Crowdfunding 

Web platforms connecting entrepreneurs with 
multiple “citizen investors” 

Kiva; Just giving 

Source: OECD/European Union (2013) Policy Brief on Social Entrepreneurship 

233 Ibid. 
234 Ibid. 

157 

 
 
 
 
                                                           
The  third  group  of  bottlenecks  concerns  access  to  the  market.  In  a  number  of  cases,  pure 
markets  for  inclusion  and  integration  services  do  not  exist,  because  the  end-users  (e.g. 
unemployed  youth,  migrants,  etc.)  do  not  have  the  means  to  pay  for  the  services.  Hence, 
service  providers  rely  on  funding  from  charities  and  regional/national  authorities.  When 
markets do exist, social enterprises typically offer products and services at higher price levels 
in  comparison  to  for-profit  enterprises. The price differences  arise due to the need to  divest 
some  of  the  revenues  for  social  purposes  or  due  to  the  adopted  production  processes  (e.g. 
social  enterprises  employ  lower  productivity  workers,  such  as  the  disabled).235  Hence,  such 
enterprises strongly rely on socially active consumers and tailored public procurement rules to 
compete with other providers.  

Given  the  overwhelming  constraints  and  challenges,  there  would  be  significant  risks  for  a 
future  KIC  in  terms  of  financial  sustainability  and  potential  overlaps  with  other  public 
interventions that aim to address similar societal challenges. A range of national/regional and 
EU-level instruments have already attempted to address existing challenges in the field with 
some success and ensuring synergies by a future KIC would be therefore important.  

Suitability of theme vis-à-vis impact indicators 

Overall,  most  of  the  medium/long-term  outcome  indicators  are  relevant  for  a  future  KIC. 
However, the characteristics of the theme could have implications on the definition of targets. 
These are discussed in the table below.  

Indicators 

Comment 

Jobs created / safeguarded in organisations 
directly benefiting from KIC support.  

Revenue growth achieved in organisations 
directly benefiting from KIC support 

The indicator is relevant, but it does not capture the 
additional social value of employing disadvantaged 
groups, which is a widespread practice of enterprises 
working in the field. It may be worth considering 
distributional weights as a means of contextualising 
this indicator for this particular theme. 

To an extent, this will depend on the level of public 
funding to inclusion and integration and / or the 
extent to which the organisations supported by a KIC 
crowd-out the incumbents. 

Cost savings achieved by organisations 
directly benefiting from KIC support 

Highly relevant indicator 

% of business that have benefited from KIC 
support and engaged in different forms of 
innovation activities in the last two years 

Highly relevant indicator 

Reduction in skills mismatches 

Highly relevant indicator 

Financial sustainability coefficient 

Highly relevant indicator, but there are significant 
risks to the financial sustainability of a KIC in this 
area 

Net promoter score on overall satisfaction 
with EIT / KIC 

Highly relevant indicator 

235 OECD/European Union (2013) Policy Brief on Social Entrepreneurship. 

158 

 
                                                           
Contribution to alleviating societal challenge 

Social impact indicators are highly relevant, but 
there are significant challenges in demonstrating the 
contribution of concrete initiatives or enterprises236.  

10.12. 

Annex 10:  Model-based Analysis on co-funding model for KICs 

Model-based 
for 
the 
the  revision  of  the  EIT  Regulation  carried  out  by  the  Commission's  Research  Joint 
Centre 

Commission 

proposal 

analysis 

of 

Non-technical summary 

This  Annex  describes  a  model-based  analysis  assessing  impacts  of  co-funding  modalities 
under  the  four  policy  scenarios  considered  in  the  EIT  Impact  Assessment.  The  analysis 
consists  of  two  parts:  a  theoretical  model-based  analysis  and  an  empirical  model-based 
analysis.  Both  approaches  provide  illustrative  examples  of  selected  likely  key  impacts 
triggered  by  EIT-supported  investments  on  an  additional  investment  leveraged  by  the  EIT 
contribution,  without  aiming  to  cover  the  entire  spectrum  of  potential  impacts  on  the  EU 
economy,  society  and  environment.  Two  channels  of  the  policy  adjustment  are  considered: 
the co-funding rate and the risk premium component of the cost of capital. 

The  results  from  the  theoretical  analysis  suggest  that  both  the  co-funding  rate  and  the  risk 
premium matter importantly for the EIT-support on leveraging an additional investment. The 
higher is the policy ability to reduce financial, technology or market uptake risks, the larger is 
the  potential  of  the  EIT  investment  support  to  leverage  an  additional  investment  in  KIC-
supported  projects/sectors.  Results  for  the  co-funding  rate  are  more  nuanced,  as  higher  co-
funding rate per se implies higher investment leverage per investor but also fewer investors. A 
second important result is that the two policy intervention channels – the co-funding rate and 
the risk premium component of the cost of capital – interact mutually. This implies that, for 
example, a decrease in the number of investors due to higher co-funding rate could be offset 
by lowering the risk premium component of the cost of capital. 

The results from the empirical simulation analysis confirm that those EIT policy options with 
the highest capacity to reduce the risk premium component of the cost of capital and impose 
the  highest  private  investment  co-funding  rate  are  leveraging  the  highest  amounts  of  an 
additional investment in KIC-supported projects/sectors. Among the four analysed scenarios, 
these are scenarios S2A and S2B with the highest cumulative leverage effects over the entire 
2021-2035  year period.  In contrast,  scenario S1A performs  considerably  weaker in  terms  of 
leveraging  an  additional  (private)  investment.  In  terms  of  the  EIT  financial  sustainability, 
these simulation results suggest that the EIT policy scenarios S2A and S2B are considerably 
more financially sustainable than the EIT policy scenarios S1A and S1B when a time horizon 
of two entire programming periods is considered. 

236 OECD/European Union (2013). Policy Brief on Social Entrepreneurship. 

159 

 
 
 
                                                           
1 Introduction 

The European Institute of Innovation and Technology (EIT) has been set up in response to the 
need  to  address  major  societal  challenges  by  improving  the  innovation  performance  of  the 
EU. Among major challenges to the innovation performance is the need for an increased R&D 
investment  in  the  EU.  The  overall  mission  of  the  EIT  is  to  contribute  to  a  sustainable 
economic growth and competitiveness of Europe by reinforcing the innovation capacity of the 
Member States and the Union. 

In order to  address  these challenges  and achieve  innovation  objectives, the EIT provides an 
investment  support  in  selected  policy  areas  with  the  greatest  benefits  for  society:  Climate, 
Digital,  Innovative  Energy,  Health,  Raw  Materials,  Urban  Mobility  and  Added  Value 
Manufacturing.  The  bottom-up  approach  of  the  EIT  activities  aims  primarily  at  creating 
knowledge  and  innovation  and  encouraging  greater  R&D  investment  in  these  policy  areas. 
These  are  essential  to  address  the  knowledge  and  innovation  gap  in  Europe,  thereby 
supporting the Union's strategic objectives and policy priorities, including a long-term growth 
and competitiveness but also wider societal impacts. 

The  objective  of  the  EIT  impact  assessment  is  to  provide  an  evidence  base  for  two 
Commission  proposals:  (i)  the  Commission  proposal  for  an  amendment  of  the  EIT 
Regulation,  which  is  its  founding  legal  base;  and  (ii)  the  Commission  proposal  for  a  new 
Strategic  Innovation  Agenda  (SIA)  for  the  EIT  for  the  period  2021  –  2027  setting  out  its 
strategic  priorities  and  objectives  during  the  Horizon  Europe  programming  period.  This 
Annex  provides  a  scientific  support  by  enlarging  the  evidence  base  of  potential  impacts  of 
alternative EIT funding scenarios.237 

To study the impact of EIT investment-support measures on private investments, we develop 
a  stylised  investment  model.  Using  this  model,  we  undertake  a  conceptual  and  simulation 
analysis by looking at the impact of the co-funding rate and policy-induced changes in the risk 
premium  component  of  the  cost  of  capital.  Both  in  the  theoretical  model  and  simulation 
analysis we analyse two scenarios with two subs-scenarios: with and without the enforcement 
of the private co-funding of the investment support and with and without reduction in the risk 
premium component of the cost of capital. They help us to identify and understand potential 
implications of alternative EIT funding scenarios. 

The  results  from  the  theoretical  analysis  suggest  that  both  the  co-funding  rate  and  the  risk 
premium  component  of  the  cost  of  capital  matter  importantly  for  the  EIT-support  on 
leveraging  an  additional  investment.  The  higher  is  the  policy  ability  to  reduce  financial, 
technology or market uptake risks, the larger is the potential of the EIT investment support to 
leverage  an  additional  investment  in  KIC-supported  projects/sectors.  Results  for  the  co-
funding  rate  are  more  nuanced,  as  higher  co-funding  rate  per  se  implies  higher  investment 
leverage per investor but also fewer investors. A second important result is that the two policy 
intervention  channels  –  the  co-funding  rate  and  the  risk  premium  component  of  the  cost  of 
capital  –  interact  mutually.  This  implies  that,  for  example,  a  decrease  in  the  number  of 

237  A  complete  description  of  the  analysis  presented  in  this  Annex  with  all  the  assumptions  and  sensitivity  analysis  is  provided  in  JRC 
reports Kancs, D. (2019) "Economic Impacts of the European Institute of Innovation and Technology Investment Strategies: A Model-based 
Assessment",  JRC  Working  Papers  JRC115573,  Joint  Research  Centre,  European  Commission;  Ivanova,  O.,  Kancs  D.,  and  Thissen,  M. 
(2019):  Regional  Macroeconomic  Impacts  of  EIT  Investments  in  the  EU,  JRC  Working  Papers,  Joint  Research  Centre,  European 
Commission. 

160 

 
                                                           
investors  due  to  higher  co-funding  rate  could  be  offset  by  lowering  the  risk  premium 
component of the cost of capital. 

The results from the empirical simulation analysis confirm that those EIT policy options with 
the highest capacity to reduce the risk premium component of the cost of capital and impose 
the  highest  private  investment  co-funding  rate  are  leveraging  the  highest  amounts  of  an 
additional investment in KIC-supported projects/sectors. Among the four analysed scenarios, 
these are scenarios S2A and S2B with the highest cumulative leverage effects over the entire 
2021-2035  year period.  In contrast,  scenario S1A performs  considerably  weaker in  terms  of 
leveraging  an  additional  (private)  investment.  In  terms  of  the  EIT  financial  sustainability, 
these simulation results suggest that the EIT policy scenarios S2A and S2B are considerably 
more financially sustainable than the EIT policy scenarios S1A and S1B when a time horizon 
of two entire programming periods is considered. 

2 The EIT investment support 

Policy impacts  on economy, society and  environment in  general  and  – due to  various  inter-
sectoral,  inter-regional  and  inter-temporal  linkages  and  interdependencies  –  EIT  investment 
support  effects  in  particular  are  diverse  and  complex.  Because  of  their  prominent  role  in 
improving  the  innovative  performance  of  the  Member  States  and  the  Union,  two  types  of 
effects  of  EIT-supported  investments  are  of  particular  interest  in  the  context  of  EIT 
investment support policies: (i) impacts on the EU economy in general (demand effects (e.g. 
hiring of workers, machinery), structural effects (e.g. productivity and human capital growth), 
and  macroeconomic  effects  (e.g.  on  GDP  and  employment));  and  (ii)  impacts  on  the 
additional  investment  leverage  in  particular  (existing  KIC  partner  investment,  new 
investors).238  Increase  in  the  private  investment  will  trigger  further  impacts  on  economy 
(demand, structural, macro-economic, etc.). The main emphasis of the analysis detailed in this 
Annex  is  on  impacts  on  the  leverage  of  an  additional  investment,  as  these  effects  very 
considerably  among  the  three  considered  EIT  funding  scenarios.  As  noted  above,  there  are 
many more economic impacts, as well as societal and environmental effects which, however, 
are not considered in the present analysis. 

2.1 Impacts on economy 

Economic  impacts  of  EIT  investment  support  policies  are  not  only  multi-faceted  and  non-
linear, many  of them are unobservable and hence cannot  be identified by  simply looking at 
data.  For  example,  when  the  EIT  Digital  invests  in  a  broadband  network,  direct  observable 
activities  include  the  amount  of  workers'  time  required  to  lay  network  cables  underground, 
machinery and materials such as the fibre optic cables. The length of cabling kilometres can 
be  observed,  the  workers'  time  can  be  measured  –  in  Figure  1  they  are  referred  to  as  the 
demand effect on the economy. 

The  constructed  broadband  network  connects  homes  and  businesses  enabling  faster 
communication services. Eventually, these effects can be observed and measured directly too. 

238  For  the  sake  of  the  notational  simplicity,  in  the  context  of  this  impact  assessment  we  refer  to  all  non-EIT  investment  as  a  private 
investment. 

161 

 
 
 
                                                           
It is less straightforward, however, to measure how the new services may help to create new 
businesses  or  disrupt  existing  ones,  how  productivity  may  be  increasing,  fostering  the 
changing  nature  of  work,  etc.  In  Figure  1  they  are  referred  to  as  the  structural  effect  on 
economy.  These  structural  effects  are  confounded  by  other  simultaneous  developments  and 
policies, making it extremely challenging to establish a causal link to EIT investments. Given 
that  it  would  be  impossible  or  prohibitively  expensive  to  measure  them  on  a  case-by-case 
basis,  a  model-based  scenario  analysis  is  being  used  that  allows  to  simulate  the  potential 
development  of  the  economy  with  and  without  the  EIT  digital  interventions  and 
compare/quantify the difference between alternative policy scenarios. 

Another  example,  the  EIT  InnoEnergy  supports  the  supply  of  energy  produced  in  a 
sustainable  and  affordable  manner.  The  elaboration  of  such  new  innovative  energy 
technologies is  human capital  and physical  capital  intensive, creating an  immediate demand 
for these factors (highly skilled workers and machinery) in the economy. Again, in Figure 1 
they  are  referred  to  as  the  demand  effect  on  the  economy.  These  demand  effects  can  be 
observed  and  their  use  and  the  associated  costs  can  be  accounted  for  relatively 
straightforwardly. 

In the medium- to long-run, the newly innovated sustainable and renewable energy production 
technologies also reduce the EU economy's dependence on the imported energy, increase the 
efficiency of the energy production and consumption, as well as create new energy supplying 
businesses  in  the  EU.  In  Figure  1  they  are  referred  to  as  the  structural  effect  on  economy. 
These structural effects in the EU economy are associated with a much larger uncertainty – as 
innovation  is  an  inherently  uncertain  process  –  their  causality  and  size  are  much  more 
challenging  to  establish.  Therefore,  a  model-based  scenario  analysis  is  required,  as  already 
noted above. 

Figure 1. Mechanics of the EIT investment support impact on economy 

Source: JRC illustration 

162 

 
 
 
 
Demand side effects (direct, indirect and induced effects) together with structural effects (e.g. 
productivity,  cost-advantage  and  competitiveness  effects)  result  in  total  macro-economic 
effects on the economy, such as GDP and employment. In Figure 1 they are referred to as the 
total effect on economy. Although, many production, consumption, trade, GDP, employment, 
etc.  can  be  observed  and  measured,  due  to  simultaneous  developments  and  confounding 
factors, it is rather challenging to establish causality between EIT-supported investments and 
growth  of  these  indicators.  For  such  purposes,  a  model-based  scenario  analysis  needs  to  be 
undertaken  that  allows  to  simulate  the  potential  development  of  the  economy  with  and 
without  EIT  interventions  and  quantify/compare  differences  in  production,  consumption, 
trade, GDP, employment, etc. between alternative policy scenarios. 

For a holistic and comprehensive understanding of net effects of EIT-supported investments, 
in  addition  to  the  impact  on  economy,  also  inputs  and  their  costs  need  to  be  accounted  for. 
Indeed, the EIT investment budget – similarly to the entire EU budget – has certain sources of 
revenues that can be traced back to  taxes paid  by  households and business in  each Member 
State and region. Part of the required EIT funding comes from extra household savings, part 
of  it  comes  from  borrowing  abroad,  yet  another  part  is  derived  from  relocating  existing 
savings that may have been invested differently. A similar line of argument applies also to the 
measurement  and  tracking  of  inputs  needed  to  finance  these  investments.  In  the  context  of 
funding and financing, advantages of using an economic model are that funding can be linked 
to sources and all inputs and their costs can be thoroughly accounted for. 

Finally,  there  are  also  spill-overs  to  other  regions  and  sectors,  even  those  not  directly 
benefiting from EIT-supported investments. For example, through inter-sectoral input-output 
linkages,  through  cross-border  trade  of  goods  and  services,  knowledge  spill-overs  and  a 
spatial diffusion of technology, also not directly supported regions/sectors benefit from EIT-
supported  investments  in  the  medium-  to  long-run.  On  the  other  hand,  policy-induced 
crowding-in  and  pro-competitive  effects  on  input  and  output  markets  may  increase 
competition and eventually crowd out less competitive companies in some regions/sectors.239 
In Figure 1 they are referred to as the indirect economic effects. To be able to consider the full 
range of such effects  ̶  both positive and negative  ̶  and to form a more comprehensive view 
of the total net economic impact, a model-based analysis is required. 

2.2 Leverage of an additional investment 

Among  various  impacts  on  economy,  EIT-supported  investments  affect  the  investment 
decisions  of  private  investors  in  the  KIC-supported  projects/sectors  –  Climate,  Digital, 
Innovative Energy, Health, Raw Materials, Urban Mobility and Added Value Manufacturing. 
Higher  private  investments  may  result  from  both  existing  KIC  beneficiaries  (incumbent 
companies)  as  well  as  new  partners  investing  in  KIC-supported  projects/sectors  (new 
investors). 

EIT-supported investments constitute only part of the total investment in economy, the major 
part  of  investment  being  provided  by  private  and  public  investors.240  The  extent  to  which 

239  Michalek,  J.,  P.  Ciaian  and  D.  Kancs,  2016.  "Investment  Crowding  Out:  Firm-Level  Evidence  from  Northern  Germany,"  Regional 
Studies, 50(9), 1579-1594. 
240 In the context of this impact assessment we refer to all non-EIT investment as a private investment. 

163 

 
 
                                                           
existing  KIC  beneficiaries  engage  in  KIC  project/sector  investments  can  be  affected  by  co-
funding rates that are laid down in the EIT legislative framework. For example, in the case of 
a 50% co-funding rate, the investment provided by KIC beneficiaries have to at least match 
the investment amount made available by the EIT via KIC (the investment amount provided 
by  private  investors  can  be  higher  though).  In  Figure  2  this  is  referred  to  as  the  incumbent 
company investment. 

Second,  financial  instruments,  such  as  the  EIT-supported  investments,  offer  the  potential  to 
help cushioning financial, technology and market uptake risks. Among others, EIT-supported 
investments  reduce  the  cost  of  capital  and  contribute  to  an  improved  risk-reward  profile  of 
KIC investment projects. All other things being equal, lower KIC-project-related risks imply 
lower  risk  premium  which,  because  of  lower  capital  costs,  makes  investment  in  KIC-
supported  projects/sectors  more  attractive  (compared  to  other  investment  alternatives).  As  a 
result,  more  private  investors  are  willing  to  invest  into  KIC-supported  projects/sectors.  In 
Figure 2 these are referred to as new investors. 

Figure 2. Mechanics of the EIT investment support impact on private investments 

Source: JRC illustration 

The two effects together – increase in the incumbent company investment (intensive margin) 
and  increase  in  the  number  of  investors  (extensive  margin)  –  determine  the  total  leverage 
effect  on  an  additional  investment.  Note  that  the  two  adjustment  channels  of  the  EIT 
investment  support  –  the  co-funding  rate  and  the  risk  premium  component  of  the  cost  of 
capital – may work in the opposite direction for incumbent and new investors, depending on 
how  exactly  the  EIT  investment  support  is  implemented.  For  example,  whereas  higher  co-
funding rate implies higher additional investment leverage from incumbent investors, it may 
also imply fewer (particularly risk averse) new investors. As we will see in the next section, 
this  decrease  can  be  offset  through  a  policy  intervention,  for  example,  by  lowering  the  risk 
premium component of the cost of capital. 

164 

 
 
 
 
 
3 Model-based analysis of the EIT impact on the leverage of an additional investment 

One of the main objectives of the EIT is to improve the innovation performance in the EU. 
Improving the innovation performance requires higher R&D investment, an important part of 
which  should  come  from  private  sources.  In  this  section,  we  develop  a  stylised  investment 
model  and  analyse  the  impact  of  EIT  investment-support  measures  on  the  leverage  of  an 
additional investment.  The ability leverage an additional investment is  of particular interest, 
because the alternative EIT funding scenarios suggest important differences in the KIC ability 
to leverage an additional investment. 

In order to study the impact of EIT investment-support measures on the leverage an additional 
investment,  we  develop  a  simple  investment  model.  Using  this  model,  we  undertake  a 
conceptual and simulation analysis by looking at the impact of different co-funding rates and 
policy-induced  changes  in  the  risk  premium  component  of  the  cost  of  capital.  Both  in  the 
theoretical model and simulation analysis we analyse two scenarios with two subs-scenarios: 
with  and  without  the  enforcement  of  the  private  co-funding  of  the  investment  support  and 
with and without reduction in the risk premium component of the cost of capital. They help us 
to  identify  and  understand  potential  implications  of  differences  in  co-funding  rates  between 
EIT funding scenarios and the role of financial, technology or market uptake risks. 

3.1 Theoretical model-based analysis 

3.1.1 The model 

The model has four types of agents that are active on the capital market: a representative firm 
(private  investor),  loan  suppliers  (banks),  capital  suppliers  (e.g.  machinery/technology 
suppliers)  and  government  (policy  framework).  Banks  provide  loans  to  firm.  The  firm  uses 
loan to buy capital goods from capital suppliers. The firm uses the services of capital goods to 
produce final products. The government may intervene in the capital market via an investment 
support. 

The  representative  firm's  output  in  a  given  KIC  sector  is  assumed  to  be  a  function  of  the 
capital  amount,  𝐾.  The  production  function  is  represented  by  𝑓(𝐾)  with  𝑓𝑘 > 0  and  𝑓𝑘𝑘 <
0.241  Capital,  𝐾,  is  a  stock  variable,  which  supplies  services  used  by  the  firm  during  the 
production  process.  For  simplicity,  we  assume  that  the  entire  investment  capital,  𝐾,  is 
financed from a bank loan, 𝐿, at a fixed interest rate, 𝑖. The capital good's price is equal to the 
discounted net present value of future rents. The firm's profit function is given by: 

Π = 𝑝𝑓(𝐾) − 𝑘𝐾 

Where 𝑘 is the rental price of capital, 𝑘 = 𝑅(𝑖 + 𝛿), 𝑝 is the price of the final product,242 𝑅 is 
the  unit  price  of  the  capital  good,  and  𝛿  is  the  capital  depreciation  rate.  The  firm's  capital 
rental unit costs include interest payments, 𝑖𝑅, and depreciation costs, 𝛿𝑅.243 

241 𝑓𝑘 and 𝑓𝑘𝑘 are first and second derivatives of the production function with respect to capital, respectively. 
242 For the sake of simplicity, we assume that the analysed regional economy is small and open, which implies that the output price is fixed. 
243 For example, if 𝛿 = 0 then the capital good is non-depreciable, such as land.  

165 

 
 
 
 
                                                           
The firm's equilibrium conditions are given by: 

𝑝𝑓𝑘 = (1 + 𝜙)𝑘 = (1 + 𝜙)𝑅(𝑖 + 𝛿) 

𝐾 = 𝑆 

𝐿 = 𝑅𝐾 

Where 𝑆 is the capital supply function. Equation (2) represents the firm's marginal condition 
for capital derived from the profit maximisation problem. It represents the firm's decision on 
the optimal quantity of the capital use by taking into consideration marginal benefits, 𝑝𝑓𝑘, and 
marginal  costs,  (1 + 𝜙)𝑘,  adjusted  by  the  risk  premium  component  of  the  cost  of  capital 
factor,  𝜙.  The  capital  equilibrium  condition  (2)  yields  a  standard  capitalisation  formula 
𝑅 = 𝑝𝑓𝑘/(1 + 𝜙)(𝑖 + 𝛿),  which  implies  that  the  capital  good's  price  is  equal  to  the  net 
present  value  of 
the  degree  of 
imperfections/uncertainties  (defined  as  the  ratio  between  the  marginal  profit  and  the  rental 
price of capital), it is inversely related to the risk premium. If 𝜙 > 0, then the firm's marginal 
value product of capital exceeds the marginal cost of capital, 𝑘. The risk premium component 
of the cost of capital constrain the capital use and hence the firm profitability; everything else 
equal,  by  increasing  investment,  the  firm  could  increase  its  profit.  If  𝜙 = 0,  then  the  firm's 
equilibrium  condition  (2)  is  equal  with  the  competitive/perfect  capital  market  result,  where 
𝑝𝑓𝑘 = 𝑘,  implying  that  all  profitable  opportunities  of  the  capital  use  are  exploited,  if  this 
equilibrium holds.  

rents.  Parameter  𝜙  measures 

future  capital 

Equation (3) represents the equilibrium market clearing condition for the capital good, where 
the capital good's supply, 𝑆, equals the firm's demand for capital, 𝐾. To simplify the analysis, 
we  assume  a  perfectly  elastic  capital  supply,  implying  that  the  rental  price  of  capital,  𝑘,  is 
fixed.244 

The total firm loan demand, 𝐿, is determined by the capital good's price, 𝑅, and the quantity 
of  capital  invested  by  firm,  𝐾,  𝐿 = 𝑅𝐾  in  equation  (4).  Implicitly,  we  assume  that  capital 
costs are exclusively financed through bank loans. The total firm's interest costs on the loan 
equal 𝑖𝑅𝐾,245 as the firm uses loans to purchase capital goods from capital suppliers. In return, 
it pays interest costs to the bank on the borrowed loan.  

The capital market is illustrated in Figure 5. Condition (2) determines the firm's demand for 
capital services and in Figure 5 is shown by curve 𝐷𝑝𝑐 without the risk premium component 
of the cost of capital (𝜙 = 0), and by curve 𝐷𝑖𝑐 with the risk premium component of the cost 
of capital (𝜙 > 0). The vertical difference between 𝐷𝑝𝑐 and 𝐷𝑖𝑐 represents the risk premium, 
[𝜙/(1 + 𝜙)𝑝𝑓𝑘].  The  horizontal  curve, 𝑆,  represents  the  supply  of  capital  services.  The 
intersection between demand and supply yields the equilibrium capital rental price and capital 
∗ ), without and with policy-induced reductions in the risk premium 
use, (𝑘∗, 𝐾𝑝𝑐
component  of  the  cost  of  capital,  respectively.  The  investment  is  smaller  with  than  without 
policy-induced reductions in the risk premium component of the cost of capital, 𝐾𝑖𝑐

∗ ) and (𝑘∗, 𝐾𝑖𝑐

∗ < 𝐾𝑝𝑐
∗ . 

244  This  is  consistent  with  the  short-run  modelling  of  the  capital  market,  where  firms  adjust  capital  quantities  as  a  response  to  a  policy 
change. Other effects, such as changes in prices and/or quantities of other inputs will take place in the medium to long-run. Usually, in the 
firm  investment  literature  variable  inputs  are  assumed  to  change  in  the  short-run,  whereas  capital  is  assumed  to  change  in  the  long-run. 
Because our objective is to analyse the effect of investment support, changes in the firm capital is a short-run effect of policy changes. In the 
long-run, adjustment of other inputs and/or prices follow as a reaction to policy-induced capital change. 
245 This assumption is not strictly needed in the model to obtain these results. The interest rate, i, represents income to capital owners. If one 
would consider a firm-owned capital, then the interest rate, i, would represent the opportunity cost of capital. 

166 

 
                                                           
3.1.2 EIT investment support 

Let 𝛼  denote the investment co-funding rate of the EIT investment support. The co-funding 
rate,  𝛼,  measures  the  share  of  the  EIT-supported  investment  (purchase  costs  of  EIT  capital 
investments). In line with EIT co-funding rules, the maximum quantity of capital eligible for 
support is limited at 𝐾𝑚𝑎𝑥.246 
In  order  to  ensure  a  long-term  financial  sustainability,  the  EIT  investment  support  aims  to 
increase  the  quantity  or/and  the  quality  of  the  private  investment  in  the  KIC-targeted 
project/sector,  i.e.  to  create  an  additionality  effect  to  the  EIT  investment.  In  the  underlying 
model this implies to increase the firm's stock of capital relative to the capital stock used by 
firms  at  the prevailing market  prices of capital  before the EIT investment  support. With the 
investment support, the firm's profit function (1) changes to: 

subject to the investment support constraint  𝐾𝑠 ≤ 𝐾𝑚𝑎𝑥 

Π = 𝑝𝑓(𝐾𝑛𝑜 + 𝐾𝑠) − 𝑘𝐾𝑛𝑜 − [𝑘 − 𝛼𝑖𝑅]𝐾𝑠 

where  𝐾𝑛𝑜 is the part of capital that does not benefit from the EIT investment support, and 
 𝐾𝑠  is  the  part  of  capital  that  benefits  from  the  investment  support,  consistent  with  the 
implementation regulation of the EIT investment support. 

The  value  of  the  EIT  investment  support  per  unit  of  capital  is  equal  to  the  capital  price 
multiplied  by  the  co-funding  rate,  𝛼𝑅.  The  firm's  loan  demand  decreases  by  an  equivalent 
amount resulting in lower loan interest costs. More precisely, the investment support reduces 
loan  interest  costs  per  unit  of  the  supported  capital  by  𝛼𝑖𝑅,  i.e.  𝑖𝑅 − 𝛼𝑖𝑅 = (𝑅 − 𝛼𝑅)𝑖 =
(1 − 𝛼)𝑖𝑅.  This  way,  the  EIT  investment  support  reduces  the  user  cost  of  capital  in  the 
model. 

The  implementation  details  of  the  investment  support  have  important  implications  for  the 
firm's investment behaviour, particularly in terms of how it affects the user cost of capital and 
hence the marginal capital profitability. Depending on whether the investment support affects 
the capital profitability at the margin or not, the firm's equilibrium capital marginal condition 
(2) changes as follows:247 

Firm's equilibrium conditions, when the investment support affects the capital profitability at 
the margin: 

𝜕Π
𝜕𝐾𝑛𝑜

= 𝑝𝑓𝑘(𝐾𝑛𝑜) − (1 + 𝜙)𝑘 = 0 
= 𝑝𝑓𝑘(𝐾𝑛𝑜 + 𝐾𝑠) − (1 + 𝜙)(𝑘 − 𝛼𝑖𝑅) − 𝜆 = 0 

Firm's  equilibrium  conditions,  when  the  investment  support  does  not  affect  the  capital 
profitability at the margin: 

= 𝑝𝑓𝑘(𝐾𝑠) − (1 + 𝜙)(𝑘 − 𝛼𝑖𝑅) − 𝜆 = 0 

𝜕Π
𝜕𝐾𝑠

𝜕Π
𝜕𝐾𝑠

246 This is a more realistic assumption, because the actual budget for the EIT is limited and is subject to competition, implying that not all 
capital  benefits  from  the  support.  We  assume   𝐾𝑚𝑎𝑥  sufficiently  low;  less  than  the  equilibrium  quantity  of  investment  in  the  absence  of 
support (see below).  
247  We  consider  the  case  when  the  investment  support  affects  only  the  firm's  interest  costs.  In  general,  this  is  consistent  with  the 
implementation of the firm-level investment support. The investment support facilitates the purchase of capital. The depreciation costs (𝛿𝑅) 
are not eligible for the investment support. 

167 

 
 
                                                           
𝜕Π
𝜕𝐾𝑛𝑜

= 𝑝𝑓𝑘(𝐾𝑠 + 𝐾𝑛𝑜) − (1 + 𝜙)𝑘 = 0 

where 𝜆 is the shadow price of the eligibility constraint,  𝐾𝑠 ≤ 𝐾𝑚𝑎𝑥. The profit equation (5) 
implies that the profitability of capital is higher for the supported capital,  𝐾𝑠, (by  𝛼𝑖𝑅) than 
for  the  non-supported  capital,  𝐾𝑛𝑜.  However,  the  investment  support  improves  the  capital 
profitability  at  the  margin  only  in  equations  (7)-(8)  but  not  in  equations  (9)-(10).  This 
difference is due to the enforcement/non-enforcement of the private investment co-funding or 
due  to  policy-induced  changes  in  the  risk  premium  component  of  the  cost  of  capital  (see 
further).  We  illustrate  this  in  Figure  6  for  the  capital  demand  without  a  policy-induced 
reduction of the risk premium component of the cost of capital, 𝛿𝐷𝑝𝑐.248 
First, consider equations (7)-(8), which describe an EIT policy scenario when the investment 
co-funding  is  enforced.  The  firm's  capital  equilibrium  without  the  investment  support  is 
∗ , the investment support has 
(𝑘∗, 𝐾𝑝𝑐
∗ ). Up to the equilibrium investment without support 𝐾𝑝𝑐
∗   does  not  benefit  from  the 
no  effect  on  the  marginal  capital  profitability.  Capital  𝐾𝑝𝑐
∗ ),  and  the  capital  demand  is  given  by  curve  𝐷𝑝𝑐  (this 
investment  support  (i.e.  𝐾𝑛𝑜 = 𝐾𝑝𝑐
∗ , the investment support increases 
follows from equation (7)). For investment higher than 𝐾𝑝𝑐
the capital profitability at the margin (by 𝛼𝑖𝑅∗) for the quantity of capital up to 𝐾𝑚𝑎𝑥, which 
∗ = 𝐾𝑚𝑎𝑥 (this follows from equation (8)).249 
represents the supported capital, 𝐾𝑠 = 𝐾𝑝𝑐𝑠
This implies a discontinuous firm's capital demand. Starting on the left-hand side in Figure 6, 
the capital demand is given by curve 𝐷𝑝𝑐, 𝐷𝑝𝑐𝑠, 𝐷𝑝𝑐. By assumption, when the investment co-
funding is enforced, equations (7)-(8) always hold. This is because the investment co-funding 
makes  only  additional  capital  eligible  for  the  support.  In  the  presence  of  the  risk  premium 
component  of  the  cost  of  capital,  equations  (7)-(8)  will  hold  both  with  and  without  the 
investment co-funding enforced (see further). 

∗ − 𝐾𝑝𝑐

Next, consider equations (9)-(10), which describe an EIT policy scenario when the investment 
co-funding  is  not  enforced.  Up  to  investment  𝐾𝑝𝑐1,  the  investment  support  increases  the 
profitability  of  capital  at  the  margin  (by  𝛼𝑖𝑅∗)  up  to  the  maximum  quantity  𝐾𝑚𝑎𝑥 =
(𝐾𝑠 = 𝐾𝑝𝑐1 = 𝐾𝑚𝑎𝑥)  and  the  capital  demand  is  given  by  curve  , 𝐷𝑝𝑐𝑠1  (this  follows  from 
equation (9)). Beyond capital 𝐾𝑝𝑐1, the investment support does not affect the firms' marginal 
profitability,  implying  that  the  capital  demand  is  unchanged  at  𝐷𝑝𝑐  (this  follows  from 
equation (10)). As above, this implies a discontinuous firm's capital demand. Starting on the 
left-hand side in  Figure 6, the capital  demand is given by  curve  𝐷𝑝𝑐𝑠1, 𝐷𝑝𝑐. Note that at  the 
margin, the firm's capital profitability is not affected by the investment support, investment is 
∗ . Such situation may  occur when the investment  co-funding is  not  enforced  and there 
at  𝐾𝑝𝑐
are no policy-induced changes in the risk premium component of the cost of capital, as shown 
next. 

3.1.3 Scenario 1: No enforcement of the private investment co-funding 

In  this  section,  we  analyse  the  impact  of  the  EIT  investment  support  on  the  leverage  of  an 
additional investment without the enforcement of the private investment co-funding. From the 
four  scenarios,  the  EIT  policy  scenarios  S1A  and  S1B  have  a  zero  private  investment  co-

248 Similar can be shown for the imperfectly competitive demand, 𝐷𝑖𝑐. 
249 Note that in the case shown in Figure 6, the eligibility constraint 𝐾𝑠 ≤ 𝐾𝑚𝑎𝑥 is binding, 𝜆 > 0. This does not hold in general though. For 
a sufficiently high maximum eligibility threshold, firm may prefer to not exploit the investment support possibility in full. 

168 

 
 
                                                           
funding rate in the first 15 and 10 years, respectively. Hence, they correspond to the situation 
analysed in this section. 

Baseline  BL:  First,  consider  a  baseline  scenario  without  policy-induced  changes  in  the  risk 
premium  component  of  the  cost  of  capital,  implying  that  the  investment  support  does  not 
affect the capital profitability at the margin. This scenario serves as baseline against which to 
compare  other  possible  capital  market  outcomes  triggered  by  policy.  In  Figure  5,  the 
∗ .  As  above,  the  maximum 
equilibrium  investment  without  the  investment  support  is  𝐾𝑝𝑐
∗ .250 In this case, the equilibrium capital with 
eligibility threshold is 𝐾𝑚𝑎𝑥, where 𝐾𝑚𝑎𝑥 < 𝐾𝑖𝑐
∗ , the entire support (area FG) benefits firm and 
and without the EIT investment support is 𝐾𝑝𝑐
the investment support does not create distortions on the capital market. In equilibrium, firm 
invests 𝐾𝑝𝑐1 and receives the investment support up to the maximum, 𝐾𝑝𝑐1 = 𝐾𝑚𝑎𝑥, and gains 
the  full  value  of  the  support,  area  H  (=area  FG).  However,  firm  can  consider  expanding 
∗  and firm's 
investments by  𝐾𝑚𝑎𝑥. In this case, the equilibrium investment would shift to  𝐾𝑝𝑐
gains  would  equal  to  area  G.  Given  that  area  H  is  larger  than  area  G,  due  to  a  decreasing 
∗ .251 This 
capital  productivity, it does not  pay-off to  increase capital  beyond  𝐾𝑝𝑐
implies that without a policy-induced reduction of the risk premium component of the cost of 
capital,  private  investments  are  crowded  out  by  subsidised  investments;  private  investments 
would be undertaken also in absence of an investment support, suggesting no leverage of an 
additional investment. 

∗ , if 𝐾𝑠 < 𝐾𝑝𝑐

Scenario  S1:  Next,  consider  a  scenario  with  policy-induced  changes  in  the  risk  premium 
component  of  the  cost  of  capital,  implying  that  the  investment  support  affects  the  capital 
∗ ), firm gains from 
profitability at the margin. Because of the capital increase by  𝐾𝑚𝑎𝑥 (to 𝐾𝑖𝑐
the investment support are equal to area ABC, which is more than firm gains (area H) obtained 
∗  (Figure 5). Hence, in a scenario with policy-induced 
if the capital use is kept unchanged at 𝐾𝑖𝑐
changes in the risk premium component of the cost of capital, for firm it is optimal to increase 
investment  by  𝐾𝑚𝑎𝑥  whereas  the  equilibrium  capital  without  the  enforcement  of  the 
investment co-funding is at 𝐾𝑖𝑐𝑠

∗ .252 

∗  also implies that 𝐾𝑚𝑎𝑥 < 𝐾𝑝𝑐
∗ . 

250 Note that 𝐾𝑚𝑎𝑥 < 𝐾𝑖𝑐
251  The  intuition  behind  this  result  is  that  without  changes  in  the  risk  premium  component  of  the  cost  of  capital  firms  can  exploit  all 
∗ ) does 
profitable investment opportunities even without the investment support.  Providing an investment support to firms (such that 𝐾𝑠 < 𝐾𝑝𝑐
not alter investment opportunities available to firms. An optimal firm's behaviour is to use the same quantity of capital with and without the 
investment support.  
252 Note that this does not hold in general, only for cases when the mark-up is sufficiently large, as shown in Figure 5. 

169 

 
 
 
 
                                                           
3.1.4 Scenario 2: Enforcement of the private investment co-funding 

In  this  section,  we  analyse  the  impact  of  the  EIT  investment  support  on  the  leverage  of  an 
additional  investment  under  the  enforcement  of  the  private  investment  co-funding.  EIT 
funding  conditionalities  imply  that  policy  makers  enforce  private  investors  to  increase  their 
investment by the quantity of the supported investment relative to the equilibrium investment 
at  the  prevailing  market  price  of  capital.  From  the  four  analysed  scenarios,  the  EIT  policy 
scenarios S2A and S2B have the highest private investment co-funding rates and hence most 
closely corresponds to the scenario analysed in this section. 

∗   and  𝐾𝑖𝑐

∗ )  and  (𝑘∗, 𝐾𝑖𝑐

The equilibrium conditions of the rental price and capital use without the investment support 
∗ )  without  and  with  policy-induced  changes  in  the  risk  premium 
are  (𝑘∗, 𝐾𝑝𝑐
component  of  the  cost  of  capital,  respectively.  Under  the  enforcement  of  the  private 
∗   is  not  eligible  for  the  investment  support,  only 
investment  co-funding,  capital  𝐾𝑝𝑐
capital  beyond  these  levels  can  be  granted  an  investment  support  (Figure  5).  With  the 
enforcement  of  the  private  investment  co-funding,  the  EIT  investment  support  shifts  the 
∗   with  policy-induced  changes  in  the  risk  premium 
equilibrium  investment  from  𝐾𝑖𝑐
component of the cost of capital, and from 𝐾𝑝𝑐
 without policy-induced changes in the 
risk premium component of the cost of capital. In both cases, the quantity of capital increases 
by the eligibility threshold, 𝐾𝑚𝑎𝑥. Note that only part of capital, 𝐾𝑚𝑎𝑥, benefits from the EIT 
investment  support.  Although,  the  uptake  of  the  EIT  investment  support  is  voluntary,  firms 
have incentives to make use of the investment support, because the policy support reduces the 
user costs of the EIT-supported capital. Indeed, there are important differences on the private 
investment leverage with or without policy-induced changes in the risk premium component 
of the cost of capital, as shown next. 

∗   to  𝐾𝑖𝑐𝑠

∗  to 𝐾𝑝𝑐𝑠

∗

Baseline  BL:  First,  consider  a  scenario  without  policy-induced  changes  in  the  risk  premium 
component  of  the  cost  of  capital,  implying  that  the  investment  support  does  not  affect  the 
capital profitability at the margin. This scenario serves as baseline against which to compare 
other  equilibrium  investments  triggered  by  alternative  policy  scenarios.  In  absence  of  a 
policy-induced reduction of the risk premium component of the cost of capital, the additional 
investment 𝐾𝑚𝑎𝑥 generates productivity gains equal to area GH, which is less than the rental 
cost  of  capital  (area  FGH),  implying  a  net  welfare  loss  equal  to  area  F.  Area  F  is  a 
deadweight loss resulting from a misallocation of capital recourses. Firm benefits part of the 
investment  support,  which  is  equal  to  area  G  (equal  to  productivity  gain,  area  GH,  plus  the 
policy support, area FG, minus the rental costs of capital, area FGH). Hence, without policy-
induced changes in the risk premium component of the cost of capital, an investment policy 
which supports the private investment may be welfare decreasing. 

Scenario  S2:  Next,  consider  a  scenario  with  policy-induced  changes  in  the  risk  premium 
component  of  the  cost  of  capital,  implying  that  the  investment  support  affects  the  capital 
profitability  at  the  margin.  In  presence  of  policy-induced  changes  in  the  risk  premium 
component of the cost of capital, the additional investment 𝐾𝑚𝑎𝑥 generates productivity gains 
equal to area ABCE in Figure 5. Policy costs are equal to area BC, implying a net welfare gain 
equal to area A (equal to the productivity gain, area ABCE, minus the rental costs of capital, 
area BCE).253 Firm gains are equal to area ABC,  given by the net productivity gain (area  A) 

253 Note that this is not a general result. If the mark-up is not sufficiently large, then the net effect of the investment support could actually 
lead to a welfare loss. 

170 

 
                                                           
and the gain from the support (area BC).254 Hence, by reducing the risk premium component 
of  the  cost  of  capital,  an  investment  support  policy  with  the  enforcement  of  the  private 
investment co-funding may generate welfare gains. 

3.2 Model-based scenario analysis 

In  this  section,  we  empirically  analyse  four  policy  scenarios  for  a  targeted  EU  level 
intervention on the basis of the Horizon Europe proposal for an EIT budget of 3 Billion EUR. 
The  planning  of  future  EIT  expenditures,  they  will  be  aligned  with  the  Strategic  Planning 
process  with  regard  to  the  European  Partnerships  and  the  Global  Challenges  and  Industrial 
Competitiveness pillar of Horizon Europe, while respecting the specificities of the EIT and its 
funding  framework.  All  four  EIT  scenarios  focus  on  promoting  and  supporting  sustainable 
innovation  ecosystems  across  Europe,  as  envisaged  in  the  Open  Innovation  pillar  of  the 
Horizon  Europe  proposal  and  in  synergy  with  the  Global  Challenges  and  Industrial 
Competitiveness pillar of the Horizon Europe proposal. 

In order to illustrate how the EIT investment support may affect the leverage of an additional 
investment, we simulate and discuss in detail results for two NUTS2 regions – Noord-Brabant 
(NL41)  in  the  Netherlands  and  Helsinki-Uusimaa  (FI1B1)  in  Finland.255  These  two  regions 
are  selected,  because  the  economies  of  these  two  EU  regions  benefiting  from  the  EIT-
supported investment are fundamentally different. Second, also the EIT investment support is 
rather  different  in  these  two  regions,  both  in  terms  of  its  magnitude  and  structure  (KIC 
investment areas). 

In  2016,  the  EIT-supported  investments  in  Noord-Brabant  in  the  Netherlands  amounted  to 
2.87  percent  of  the  total  regional  gross  expenditure  on  R&D  (GERD),  which  was  3012.39 
million Euro in NL41.256 The share of the EIT-supported investment was even higher, when 
considering  the  largest  beneficiary  sectors  of  the  EIT  support.  For  example,  in  the  energy 
sector  the  share  of  the  EIT-supported  investment  (EIT  InnoEnergy)  was  as  high  as  34.91 
percent  in  the  gross  sectoral  expenditure  on  R&D  in  NL41.  The  EIT-supported  investment 
share was considerably lower in ICT industries (EIT Digital), it amounted to 7.35 percent in 
the sectoral gross expenditure on R&D in NL41. These innovation data are used for the policy 
scenario construction (see step 3). 

In order to undertake a model-based scenario analysis, first, regional accounts data from the 
Eurostat (Regional economic accounts - ESA 2010 (reg_eco10)) are used to parameterise and 
solve the model for the base year (2016). By correctly calibrating the model, we are able to 
exactly  reproduce  the  base  year  economy  as  observed  in  the  Eurostat  data.  At  this  step,  no 
policy support is implemented in the model yet. 

In a second step, the model is used to construct and simulate the baseline scenario until the 
year  2035.  Simulating  the  baseline  scenario  is  needed,  as  the  baseline  development  of 

254  In  a  general  equilibrium  model,  tax  distortions  and  other  inter-sectoral  and  inter-regional  spillovers  are  accounted  for  to  obtain  total 
welfare effects of the investment support. 
255 Note that for a comprehensive and holistic capture of all regional and sectoral impacts of EIT-supported investments, all regional and 
sectoral economies (including those not receiving the EIT support) should be analysed in the model simultaneously; the presented analysis of 
few selected regions is for an illustrative purpose only. 
256  Eurostat: 
http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=rd_e_gerdreg  

(GERD)  by  sectors  of  performance  and  NUTS  2 

Intramural  R&D  expenditure 

[rd_e_gerdreg]. 

regions 

171 

 
 
                                                           
economy  without  the  policy  support  cannot  be  observed.  The  key  baseline  scenario 
assumptions are summarised in Tables 1 and 2 (row Baseline BL). There is no EIT supported 
investment  implemented  in  the  baseline  scenario;  baseline  indicators,  such  as,  an  additional 
investment  leverage  will  be  used  as  benchmark  against  which  to  compare  policy  scenario 
outcomes. 

In  a  third  step,  impacts  of  the  four  alternative  EIT  policy  scenarios  are  encoded  in  form  of 
model scenarios. The policy scenario construction requires four types of data to approximate 
the true private investment effect of the EIT investment support: (i) private co-funding rates 
for each EIT policy scenario; (ii) the average of the pre- and post-risk premium (before and 
after  EIT-supported  investments)  under  the  four  alternative  EIT  policy  scenarios;  (iii)  the 
percentage increase in the capital stock induced by reduction in the risk premium; and (iv) the 
capital-output ratio. 

Table  1:  Scenario  differences  in  Noord-Brabant:  EIT-supported  investment  and  the 
private investment co-funding rate, percent 

The private investment co-funding rates under each policy scenario are derived directly from 
the  four  alternative  EIT  funding  scenarios  and  are  summarised  in  Table  1.  For  the  sake  of 
comparability  and  to  facilitate  the  link  between  the  theoretical  and  empirical  analysis,  we 
denote the analysed scenarios in the same way in both theoretical and simulation sub-sections: 
Scenario S1 and Scenario S2.257 As Table 1 suggests, there are import differences both in co-
funding  rates  between  the  four  EIT  policy  scenarios  as  well  as  in  the  co-funding  rate 
development  over  time  (2021-2035).  On  average,  throughout  the  entire  15  year  period,  the 
highest co-funding rate is in the EIT policy scenario S2B; the lowest in scenario S1A. By the 
end of the analysed period (2035), the highest private co-funding rate is envisaged in the EIT 
policy scenario S1B (90%), followed by S2A (80%). 

The size of reduction in the risk premium that would come with EIT-supported investments is 
more difficult  to  pinpoint,  as there are many  con-funding  factors and  econometric estimates 
are not available for EIT investments yet. Using EIB-supported investments and their impact 
on  the  risk  premium  as  an  example,258  together  with  base  year  EIT  investment  data  for  the 
Noord-Brabant  region  and  the  proposed  EIT  budget  distribution  under  the  four  policy 
scenarios,  we  estimate  that  EIT-supported  investments  would  imply  a  reduction  in  the  risk 
premium of 32.97 – 43.88% (i.e. the real interest rate would drop by 1.56 – 2.08 percentage 
points)  for  EIT-supported  investment  projects  in  the  Noord-Brabant  region  in  the 
Netherlands.259 The likely development of the risk premium in KIC-supported projects/sectors 

257 Scenario S1 encompasses two EIT policy sub-scenarios (S1A and S1B); Scenario S2 encompasses two EIT policy sub-scenarios (S2A 
and S2B). 
258 Di Comite, F., D. Kancs and P. Lecca (2016) 'Regional macroeconomic Impacts of EIB Investments in the EU', JRC Report, European 
Commission, DG Joint Research Centre. 
259  Given  the uncertainty  associated  with  reduction  in the  risk premium  that  would  come  with EIT-supported  investments,  we  undertake 
extensive sensitivity analysis with up to 10% lower and 10% higher reductions in the risk premium. 

172 

Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00S1AScenario 1A0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00S1BScenario 1B0.000.000.000.000.000.000.000.000.000.0020.0040.0060.0080.0090.00S2AScenario 2A0.000.000.000.0020.0020.0020.0030.0030.0030.0030.0050.0060.0070.0080.00S2BScenario 2B0.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.00 
 
 
                                                           
under the four EIT policy scenarios is summarised in Table 2. Among others, differences in 
the risk premium reduction across scenarios as reported in Table 2 are due to differences in 
the EIT investment support implementation. 

Table 2: Scenario differences in Noord-Brabant: EIT-supported investment and the risk 
premium of KIC-supported projects/sectors, percentage points 

The other two types of the required information for the scenario construction – the percentage 
increase in the capital stock induced by reduction in the risk premium and the capital-output 
ratio – are computed within the model based on regional economic accounts data. 

With the calibrated model and encoded policy scenarios at hand, in a fourth step we undertake 
a  model-based  scenario  analysis  to  assess  how  different  EIT  funding  scenarios  (the  key 
differences  being  stipulated  in  the  four  alternative  policy  scenarios)  might  affect  the 
behaviour  of  private  investors.  We  model  an  exogenous  but  highly  persistent  temporary 
reduction in the risk premium. To examine the model dynamics when the economy is affected 
by  a  reduction  in  the  risk  premium,  EIT-supported  investments  enter  the  model  through 
lowering  the  user  cost  of  capital.  Hence,  a  reduction  in  the  risk  premium  of  investment  in 
KIC-supported projects/sectors triggered by EIT-supported investments would lower the rate 
of  return  required  by  investors  to  undertake  new  investment.    Decrease  in  the  interest  rate 
implies  higher  desired  capital  stock  level  and  thus  has  a  positive  impact  on  the  private 
investment. In other words, as shown in section 3.1, lower the risk premium component of the 
cost of capital imply lower risk for investors, increasing the willingness  of private investors 
(particularly of risk averse investors) to invest in the KIC-supported projects/sectors (Climate, 
Digital,  Innovative  Energy,  Health,  Raw  Materials,  Urban  Mobility  and  Added  Value 
Manufacturing).  In  terms  of  the  EIT  financial  sustainability  this  implies  that,  in  order  to 
achieve the same climate, digitalisation, energy, heath etc. EIT objectives, lower amounts of 
the EIT-supported investment may be required in the medium-to long-run.260  

260 Ceteris paribus and assuming that productivity gains from a public and private investment in the same EIT policy area would be equal. 

173 

Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline5.005.005.005.005.005.005.005.005.005.005.005.005.005.005.00S1AScenario 1A3.683.683.683.673.633.613.573.543.513.523.483.483.473.463.44S1BScenario 1B3.663.663.663.613.593.553.553.563.513.483.383.273.083.022.92S2AScenario 2A3.653.653.653.653.603.593.553.533.453.383.283.183.053.002.93S2BScenario 2B3.653.653.653.583.543.473.453.403.393.353.343.293.243.203.18 
 
 
 
                                                           
The  simulated  private  investment  amounts  that  eventually  would  be  attracted  by  the  EIT-
supported investment for each of the four EIT policy scenarios are reported in Table 3.  

Table 3: Model-based simulation results: the private investment leverage in the Noord-
Brabant region, million EUR 

According  to  our  simulation  results,  the  EIT-supported  investment  in  the  Noord-Brabant 
(NL41) region would attract the highest amount of the private investment under scenario S2B 
in  the  short-run:  around  271  million  Euro  in  2023-2024  (see  row  S2B  Table  3).  In  the 
medium- to long-run, however, the EIT-supported investment in Noord-Brabant would attract 
comparably  high  annual  amounts  of  the  private  investment  under  three  scenarios  S1B,  S2A 
and S2B, each of them leveraging 216-221 million Euro in 2035, which suggests convergence 
in the leverage impact. These results are not surprising, as funding levels are similar and also 
co-funding rates converge across these three scenarios in the medium- to long-run (see Table 
1 above). In contrast, scenario S1A performs considerably weaker in terms of leveraging an 
additional  (private)  investment  (see  row  S1A  Table  3).  These  simulation  results  are  also 
consistent  with  the  theoretical  analysis  presented  in  section  3.1,  according  to  which  – 
everything  else  equal  –  Scenario  S2  is  more  effective  in  terms  of  attracting  the  private 
investment than Scenario S1. 

As regards cumulative leverage effects over the entire 2021-2035 year period, scenarios S2A 
and S2B seem to be more effective in attractive an additional (private) investment. In terms of 
the EIT financial sustainability, these cumulative results suggest that the EIT policy scenarios 
S2A and S2B are considerably more financially sustainable than the EIT policy scenarios S1A 
and S1B when a time horizon of two entire programming periods is considered.  

Table  4  decomposes  the  simulation  results  reported  in  Table  3  into  intensive  and  extensive 
margins  of  the  private  investment  growth.  More  investors  investing  in  the  EIT  KIC  areas 
implies  that  the  variety  of  investment  ideas/projects  and  capital  input  use  will  be  larger. 
Variety gains in turn can be quantified as welfare gains, as consumers (both households and 
firms) generally value the variety choice.261 Hence, an increase in the number of investors (as 
opposite  to  an  increasing  investment  size  of  existing  investors)  can  serve  as  an  additional 
source of welfare gains triggered by the EIT investment support. 

Table  4:  Model-based  simulation  results:  the  new  investors  share  in  the  total  private 
investment in the Noord-Brabant region, percent 

261 Kancs D. and P. Persyn (2019) 'Welfare Gains from the Variety Growth', JRC Technical Report JRC114590, European Commission, DG 
Joint Research Centre. 

174 

Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline000000000000000S1AScenario 1A174.62176.17178.80179.20180.79182.38183.17183.96184.76186.43191.37198.78206.98213.54216.83S1BScenario 1B194.04195.59198.21198.61200.20201.79202.58203.38204.17212.54230.87258.35286.64309.94321.59S2AScenario 2A202.61207.97211.55213.54221.49229.44233.41237.38241.36243.03254.33271.27292.19308.30316.36S2BScenario 2B254.91258.85271.01271.41273.00274.59275.38276.18276.97278.65283.58290.99299.19305.76309.04Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00S1AScenario 1A56.0656.1756.3356.3656.4856.6156.6556.6956.7356.8657.1157.4357.6857.8357.90S1BScenario 1B56.9657.0757.2257.2657.3857.5157.5557.1455.8552.8148.2942.5436.3332.0429.87S2AScenario 2A56.7155.9255.6054.8452.9150.7649.0847.8446.6145.1842.9740.3036.8234.3032.92S2BScenario 2B43.5042.7641.7040.6239.6439.7639.8039.8439.8840.0140.2640.5940.8440.9941.05 
 
 
                                                           
According to the model-based simulation results reported in Table 4, the new investors' share 
in  the  private  investment  is  the  highest  under  the  EIT  policy  scenario  S1A,  it  increases 
slightly from around 56% in the short-run to almost 58% in the medium- to long-run. Hence, 
the EIT policy scenario S1A turns out to be the most attractive for new investors, because of 
less  strict  co-funding  rules  and  because  of  the  reduced  risk  premium.    However,  as  noted 
above, the total private investment would be attracted considerably less under this EIT policy 
scenario  (see  Table  3).  The  new  investors  share  in  the  private  investment  in  the  Noord-
Brabant region is considerably lower under EIT policy scenarios S1B, S2A and S2B as, under 
these  scenarios,  incumbent  firms  have  to  invest  more  in  KIC-supported  project/sectors  to 
become eligible to  benefit from  the EIT investment  support, which is  due to  stricter private 
investment  co-funding  requirements.  In  other  words,  higher  co-funding  rate  implies  higher 
investment leverage per investor though also fewer investors. 

In absolute terms (measured in million Euro), however, Table 4 does not imply that the new 
investors' investment under EIT policy scenarios S1B, S2A and S2B is lower than under the 
EIT policy scenario S1A. Note also that, according to the model-based simulations, in all four 
EIT-policy  scenarios  the  new  investors  share  in  the  private  investment  is  larger  than  zero. 
This result is driven by both incumbent as well as new investor increase in investments due to 
the reduced risk premium (lower user cost of capital). Depending on the scenario-specific co-
funding  rate,  existing  investors  adjust  their  investments  to  a  larger  or  smaller  extent,  which 
provides one mechanisms affecting the new investors share in the private investment. 

It has to be noted that these results are sensitive with respect to the EIT investment support 
implementation details. If, in contrast, the investment additionality condition will be imposed 
equally  to  all  new  and  incumbent  investors  and  only  for  an  additional  investment,  then  this 
will  primarily  benefit  incumbent  investors.  In  contrast,  if  the  investment  additionality 
condition  will  be  imposed  equally  to  all  –  new  and  incumbent  investors  –  only  for 
new/additional private investment, then this will benefit primarily incumbent investors.262 To 
better understand the mechanics behind these channels of the private investment adjustment, 
the next section offers a model-based analysis. 

Finally, when continuing simulations for the very long-run post-EIT-investment period until 
2050  (not  reported),  we  can  observe  that  the  reduction  in  the  risk  premium  leads  to  higher 
investment,  as  the  regional  economy  adjusts  to  higher  aggregate  capital  intensity.  Once  the 
adjustment  to  higher  capital  intensity  in  the  simulated  Noord-Brabant  region  is  completed, 
investment falls back to the previous level. Thus, a reduction in the risk premium only has a 
short- to medium-term effect on the private investment (after the EIT investment support has 
been phased out) with the adjustment period depending on adjustment rigidities. Nevertheless, 
the  policy-induced  structural  effects,  e.g.  an  increased  productivity,  human  capital,  energy 
efficiency, lower CO2 emissions, etc., remain in the Noord-Brabant region also in the long-
run. 

The second simulation  example illustrates how EIT investments  may  affect  the economy of 
the  Helsinki-Uusimaa  (FI1B1)  NUTS2  region  in  Finland.  In  2016,  the  EIT-supported 
investments  in  the  Helsinki-Uusimaa  region  amounted  to  0.40  percent  of  the  total  regional 

262 Brandsma A., P. Ciaian and D. Kancs, 2013. "The Role of Additionality in the EU Cohesion Policies," JRC Working Papers JRC81893, 
Joint Research Centre. 

175 

 
                                                           
gross expenditure on R&D (GERD), which was 2897.70 million Euro in FI1B1.263  As for the 
above  analysed  Noord-Brabant  (NL41)  in  the  Netherlands,  the  share  of  the  EIT-supported 
investment  was  considerably  higher, when considering the largest  beneficiary sectors of the 
EIT-support.  In 2016, the two most intensively  KIC-supported policy  areas in  the Helsinki-
Uusimaa region were Digital and Raw Materials. 

In order to undertake a model-based scenario analysis, we follow the steps outlined above for 
the Noord-Brabant region in the Netherlands. First, regional accounts data from the Eurostat 
(Regional  economic  accounts  -  ESA  2010  (reg_eco10))  are  used  to  solve  the  model  for  the 
base  year  (2016).  By  correctly  calibrating  the  model,  we  are  able  to  exactly  reproduce  the 
base  year  economy  as  observed  in  the  Eurostat  data.  At  this  step,  no  policy  scenarios  are 
implemented in the model yet. 

In a second step, the model is used to construct and simulate the baseline scenario until the 
year  2035.  Simulating  the  baseline  scenario  is  needed,  as  the  baseline  development  of 
economy  without  the  policy  support  cannot  be  observed.  The  key  baseline  scenario 
assumptions are summarised in Tables 5 and 6 (row Baseline BL). There is no EIT supported 
investment  implemented  in  the  baseline  scenario;  baseline  indicators,  such  as  the  private 
investment, will be used as benchmark against which to compare policy scenario outcomes. 

Table  5:  Scenario  differences  in  Helsinki-Uusimaa:  EIT-supported  investment  and  the 
private investment co-funding rate, percent 

In  a  third  step,  impacts  of  the  four  alternative  EIT  policy  scenarios  are  encoded  in  form  of 
model  scenarios.  The  private  investment  co-funding  rates  under  each  policy  scenario  are 
derived directly from the four alternative EIT funding scenarios and are summarised in Table 
5. For the sake of comparability and to facilitate the link between the theoretical and empirical 
analysis, we denote the analysed scenario in the same way in both theoretical and simulation 
sub-sections:  Scenario  S1  and  Scenario  S2.264  As  Table  5  suggests,  there  are  both  import 
differences  in  co-funding  rates  between  the  four  EIT  policy  scenarios  as  well  as  in  the  co-
funding rate development over time (2021-2035). On average, the highest co-funding rate is 
in the EIT policy scenario S2B; the lowest in scenario S1A. The size of reduction in the risk 
premium  that  would  come  with  EIT-supported  investments  is  more  difficult  to  pinpoint,  as 
there  are  many  con-funding  factors  and  econometric  estimates  are  not  available  for  EIT 
investments yet. Using EIB-supported investments and their impact on the risk premium as an 
example,265 together with base year EIT investment data for the Noord-Brabant region and the 
proposed  EIT  budget  distribution  under  the  four  policy  scenarios,  we  estimate  that  EIT-
supported investments would imply a reduction in the risk premium of 10.63  – 25.17% (i.e. 

Intramural  R&D  expenditure 

(GERD)  by  sectors  of  performance  and  NUTS  2 

263  Eurostat: 
http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=rd_e_gerdreg  
264 Scenario S1 encompasses two EIT policy sub-scenarios (S1A and S1B); Scenario S2 encompasses two EIT policy sub-scenarios (S2A 
and S2B). 
265 Di Comite, F., D. Kancs and P. Lecca (2016) 'Regional Macroeconomic Impacts of EIB Investments in the EU', JRC Technical Report, 
European Commission, DG Joint Research Centre. 

[rd_e_gerdreg]. 

regions 

176 

Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00S1AScenario 1A0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00S1BScenario 1B0.000.000.000.000.000.000.000.000.000.0020.0040.0060.0080.0090.00S2AScenario 2A0.000.000.000.0020.0020.0020.0030.0030.0030.0030.0050.0060.0070.0080.00S2BScenario 2B0.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.0050.00 
 
                                                           
the  real  interest  rate  would  drop  by  0.50  –  1.07  percentage  points)  for  EIT-supported 
investment projects in the Helsinki-Uusimaa region in Finland.266 The likely development of 
the  risk  premium  in  KIC-supported  projects/sectors  under  the  four  EIT  policy  scenarios  are 
summarised  in  Table  6.  Among  others,  differences  in  the  risk  premium  reduction  across 
scenarios  as  reported  in  Table  6  are  due  to  differences  in  the  EIT  investment  support 
implementation. The other two types of the required information for the scenario construction 
– the percentage increase in  the capital  stock induced by reduction in  the risk premium  and 
the  capital-output  ratio  –  are  computed  within  the  model,  based  on  Regional  economic 
accounts data. In a fourth step, we use the calibrated model and encoded policy scenarios to 
undertake a model-based scenario  analysis to  assess  how different  EIT funding models (the 
key  differences  being  stipulated  in  the  four  alternative  policy  scenarios)  might  affect  the 
behaviour  of  private  investors.  We  model  an  exogenous  but  highly  persistent  temporary 
reduction in the risk premium. To examine the model dynamics when the economy is affected 
by  a  reduction  in  the  risk  premium,  EIT-supported  investments  enter  the  model  through 
lowering  the  user  cost  of  capital.  The  obtained  simulation  results  for  Helsinki-Uusimaa  are 
reported in Tables 7 and 8. 

Table  6:  Scenario  differences  in  Helsinki-Uusimaa:  EIT-supported  investment  and  the 
risk premium of KIC-supported projects/sectors, percentage points 

The simulation results reported in Table 7 suggest that in the short-run, scenario S2B would 
leverage  the  highest  amounts  of  an  additional  private  investment  in  EIT-supported 
projects/sectors in the Helsinki-Uusimaa region in Finland: around 78 Million Euro in 2021, 
79 Million Euro in 2022 and 82 Million Euro in 2023. In the medium- to long-run, however, 
the  EIT-supported  investment  in  Helsinki-Uusimaa  would  attract  comparably  high  annual 
amounts  of  the  private  investment  under  three  scenarios  S1B,  S2A  and  S2B,  each  of  them 
leveraging 93-96 million Euro in  2035, which suggests convergence in  the leverage impact. 
These  results  are  not  surprising,  as  funding  levels  are  similar  and  also  co-funding  rates 
converge  across  these  three  scenarios  in  the  medium-  to  long-run  (see  Table  5  above).  In 
contrast,  scenario  S1A  performs  considerably  weaker  in  terms  of  leveraging  an  additional 
(private) investment (see row S1A Table 7). These simulation results are also consistent with 
the theoretical analysis presented in section 3.1, according to which – everything else equal – 
Scenario S2 is more effective in terms of attracting the private investment than Scenario S1.  

As regards cumulative leverage effects over the entire 2021-2035 year period, scenarios S2A 
and S2B seem to be more effective in attractive an additional (private) investment. In terms of 
the EIT financial sustainability, these cumulative results suggest that the EIT policy scenarios 
S2A and S2B are considerably more financially sustainable than the EIT policy scenarios S1A 
S1B  when  the  horizon  of  two  entire  programming  periods  is  considered.  Finally,  these 
financial sustainability results comparing the four analysed scenarios are consistent with those 
presented above for the Noord-Brabant region. 

266 Given the uncertainty associated with the reduction in the risk premium that would come with the EIT investment support, we undertake 
extensive sensitivity analysis with up to 10% lower and 10% higher reductions in the risk premium. 

177 

Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline5.005.005.005.005.005.005.005.005.005.005.005.005.005.005.00S1AScenario 1A4.904.904.904.864.834.804.764.734.694.664.614.584.544.524.50S1BScenario 1B4.914.914.914.884.854.834.804.774.714.624.494.334.144.043.93S2AScenario 2A4.904.904.904.864.814.754.694.634.584.494.404.284.144.063.99S2BScenario 2B4.864.864.864.804.754.704.654.604.554.504.454.404.354.334.30 
 
                                                           
Table  7:  Model-based  simulation  results:  the  private  investment  leverage  in  the 
Helsinki-Uusimaa region, million EUR 

Although, qualitatively these results for the Helsinki-Uusimaa region are comparable to those 
for the Noord-Brabant region presented above, the order of magnitude is considerably lower 
though,  which  can  be  seen  by  comparing  Tables  3  and  7.  The  lower  impact  on  the  private 
investment  in  the  Helsinki-Uusimaa  region  as  compared  to  the  Noord-Brabant  region  is 
mainly  due  to  considerably  lower  EIT-supported  investments.  These  simulation  results  are 
also  consistent  with  the  theoretical  analysis  presented  in  section  3.1,  according  to  which  – 
everything  else  equal  –  Scenario  S2  is  more  effective  in  terms  of  attracting  the  private 
investment than Scenario S1. 

Table  8  decomposes  the  simulation  results  reported  in  Table  7  into  intensive  and  extensive 
margins  of  the  private  investment  growth.  The  simulation  results  reported  in  Table  8  are 
comparable to those reported for the Noord-Brabant region in the Netherlands both in terms 
of the rank order and in terms of magnitude. 

Table  8:  Model-based  simulation  results:  the  new  investors  share  in  the  total  private 
investment in the Helsinki-Uusimaa region, percent 

Again,  it  has  to  be  noted  that  these  results  are  sensitive  with  respect  to  the  EIT  investment 
support implementation details. If incumbent investors will first be required to increase their 
co-funding  of  already  existing  EIT  support  before  they  can  benefit  from  a  further  EIT 
investment  support,  then  this  will  primarily  benefit  and  hence  attract  new  (risk  averse) 
investors. If, in contrast, the investment additionality condition will be imposed equally to all 
new and incumbent investors and only for an additional investment, then this will primarily 
benefit incumbent investors. To better understand the mechanics behind these channels of the 
private investment adjustment, the next section offers a model-based analysis. 

178 

Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00S1AScenario 1A53.0853.7054.7554.9155.5456.1856.5056.8257.1357.7859.7062.5965.7968.3569.64S1BScenario 1B60.5561.1762.2262.3863.0163.6563.9764.2864.6066.5371.0377.7884.8590.6393.53S2AScenario 2A64.2765.6566.8967.3769.2871.1972.1473.0974.0574.6977.8982.6888.4392.9095.13S2BScenario 2B78.0479.1382.0982.2582.8983.5283.8484.1684.4885.1287.0489.9393.1395.7096.98Year202120222023202420252026202720282029203020312032203320342035CodeScenario123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00S1AScenario 1A56.0756.1956.3456.3856.5156.6456.6856.7256.7656.8957.1557.4857.7357.8857.94S1BScenario 1B57.0057.1157.2757.3057.4357.5657.6157.2055.9152.8548.3042.5236.3132.0229.85S2AScenario 2A56.7655.9655.6454.8852.9350.7649.0847.8546.6145.1942.9940.3436.8634.3532.98S2BScenario 2B43.5242.7841.7240.6439.6639.7939.8339.8739.9140.0440.3040.6340.8841.0341.09 
 
 
 
 
 
4 Sensitivity analysis 

In  the  simulation  analysis  that  we  have  presented  in  section  3.2  above,  we  have  assumed  a 
continuation  of  the  current  distribution  of  budget  between  KIC  activities,  the  EIT-driven 
activities  and  the  EIT  administrative  budget,  i.e.  97%  of  the  budget  would  be  allocated  as 
grants  to  KICs  and  the  rest  divided  between  the  EIT-driven  activities  and  its  administrative 
budget.  Further,  we  did  not  assume  that  any  changes  would  be  made  to  the  EIT  staff 
provisions  and  duration  of  staff  contracts.  With  respect  to  the  three  EIT  policy  options 
discussed in the EIT Impact Assessment, these EIT budget distribution assumptions roughly 
correspond to the EIT Option 1. 

In order to explore how sensitive the simulated EIT leverage effects might be with respect to 
alternative  EIT  budget  distributions,  in  this  section  we  undertake  an  extensive  sensitivity 
analysis, selected results of which are presented below. In the presented sensitivity analysis, 
we investigate the impact of the share of the total funding (3 billion over 2021-2027) that is 
allocated  via  KICs  as  an  investment  support  versus  directly  via  the  EIT  for  improving  the 
business  and  investment  environment  in  regions.  In  particular,  we  reduce  the  KIC  budget 
share  (and  increase  the  EIT  budget  share  accordingly)  by  15%  in  two  steps.  These  two 
resulting sensitivity analysis scenarios are labelled as SA1 and SA2 (see Table 9), EIT budget 
distribution  assumptions  sensitivity  analysis  scenarios  SA1  and  SA2  roughly  correspond  to 
the EIT Option 2 and 3. 

Table 9: The distribution of the EIT budget between KIC activities, EIT own activities 
and the EIT administrative budget, percent 

The  sensitivity  analysis  results  are  presented  in  Figures  3  and  4.  The  two  Figures  plot 
sensitivity  analysis  results  for  the  Noord-Brabant  (NL41)  NUTS2  region  in  the  Netherlands 
and Helsinki-Uusimaa (FI1B1) NUTS2 region in Finland, respectively. The y axis measures 
Million  Euros,  whereas  EIT  investment  costs  (bars)  and  the  additional  private  investment 
leverage (shaded area) are directly comparable. For convenience, they are plotted in the same 
units on the y axis. 

The  sensitivity  analysis  results  for  the  Noord-Brabant  region  suggest  that  the  main 
simulations  results  presented  in  Section  3  are  still  valid  also  under  different  EIT  budget 
distributions.  First,  from  these  results  we  can  learn  that  the  larger  is  the  EIT  budget  share 
allocated  via  KICs  as  an  investment  support  of  companies,  the  larger  tend  to  be  short-  and 

179 

KICs budget share in percent (100 = 3 bilion 2021-2027)Year202120222023202420252026202720282029203020312032203320342035CodeOption123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00SA0KIC±013.3712.9314.1314.2314.1314.5014.3714.3714.3714.3714.3714.3714.3714.3714.37SA1KIC-1511.4011.1712.2312.3312.2012.4712.0012.0012.0012.0012.0012.0012.0012.0012.00SA2KIC-309.679.3710.2310.2710.2310.379.939.939.939.939.939.939.939.939.93Administrative budget share in percent (100 = 3 bilion 2021-2027)Year202120222023202420252026202720282029203020312032203320342035CodeOption123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00SA0AB±00.200.230.230.230.230.230.230.230.230.230.230.230.230.230.23SA1AB±00.330.330.330.330.330.330.330.330.330.330.330.330.330.330.33SA2AB±00.270.400.400.430.470.500.530.530.530.530.530.530.530.530.53EIT activities share in percent (100 = 3 bilion 2021-2027)Year202120222023202420252026202720282029203020312032203320342035CodeOption123456789101112131415BLBaseline0.000.000.000.000.000.000.000.000.000.000.000.000.000.000.00SA0EIT±00.070.070.100.100.130.130.130.130.130.130.130.130.130.130.13SA1EIT+150.631.201.872.202.632.532.832.832.832.832.832.832.832.832.83SA2EIT+301.232.533.704.304.635.275.335.335.335.335.335.335.335.335.33 
 
medium-term leverage effects compared to long-term effects. In contrast, the larger is the EIT 
budget share allocated via the EIT for improving the business and investment environment in 
regions, the larger tend to be medium- and long-term leverage effects compared to short-term 
effects. 

Second, the sensitivity analysis results presented in Figure 3 suggest that there are differences 
in the magnitude of the private investment leverage effect, when the EIT budget allocation is 
changed  from  KICs  as  an  investment  support  versus  directly  in  favour  of  the  EIT  for 
improving  the  business  and  investment  environment  in  regions,  and  these  differences  are 
different  across  the  four  analysed  EIT  policy  scenarios  (S1A,  S1B,  S2A  and  S2B). 
Importantly,  the  main  message  for  policy  remains  the  same  also  under  based  on  sensitivity 
analysis  results:  S2A  and  S2B  are  considerably  more  financially  sustainable  than  the  EIT 
policy scenarios S1A and S1B, particularly in the long-run, which is well visible in the upper 
bounds of shaded areas in Figure 3. 

Figure 3. Sensitivity analysis results for the Noord-Brabant region in Million Euro [y 
axis]: EIT investment costs (bars) and an additional private investment leverage (shaded 
area) 

The  sensitivity  analysis  results  for  the  Helsinki-Uusimaa  (FI1B1)  NUTS2  region  in  Finland 
are reported in Figure 4. Again, we can clearly see that the main simulations results presented 
in Section 3 are still valid also under different EIT budget distributions. for the Noord-Brabant 
region, the main message for policy remains the same also under based on sensitivity analysis 
results:  S2A  and  S2B  are  considerably  more  financially  sustainable  than  the  EIT  policy 
scenarios S1A and S1B, particularly in the long-run, which is well visible in the upper bounds 
of shaded areas in Figure 4. 

180 

01002003004005002020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S1A-NL4101002003004005002020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S1B-NL4101002003004005002020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S2A-NL4101002003004005002020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S2B-NL41 
 
Generally, results from the sensitivity analysis suggest that our simulation results presented in 
Section 3 are robust and stable with  respect  to  the share of the total  funding (3 billion over 
2021-2027) that is allocated via KICs as an investment support versus directly via the EIT for 
improving  the  business  and  investment  environment  in  regions.  As  expected,  there  are 
differences in the magnitude of the private investment leverage effect. Qualitatively, however, 
the  above  presented  simulation  results  for  the  four  analysed  EIT  policy  scenarios  do  not 
change significantly under different EIT budget distributions. 

Figure 4. Sensitivity analysis results for the Helsinki-Uusimaa region in Million Euro [y 
axis]: EIT investment costs (bars) and an additional private investment leverage (shaded 
area) 

5 Conclusions 

In  this  Annex,  we  investigate  the  impact  of  EIT  investment-support  measures  on  private 
investments.  We  develop  and  apply  a  stylised  investment  model  to  undertake  a  conceptual 
and  simulation  analysis  by  looking  at  the  impact  of  the  co-funding  rate  and  policy-induced 
changes in the risk premium component of the cost of capital. Both in the theoretical model 
and simulation  analysis  we analyse two scenarios with  two sub-scenarios:  with  and without 
the  enforcement  of  the  private  co-funding  of  the  investment  support  and  with  and  without 
reduction in the risk premium component of the cost of capital. They help us to identify and 
understand potential implications between alternative EIT funding scenarios. 

The  results  from  the  theoretical  analysis  suggest  that  both  the  co-funding  rate  and  the  risk 
premium  component  of  the  cost  of  capital  matter  importantly  for  the  EIT-support  on 

181 

03060901201502020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S1A-FI1B103060901201502020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S1B-FI1B103060901201502020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S2A-FI1B103060901201502020202520302035Lower/upper boundsCentral valueEIT investment costsScenario S2B-FI1B1 
 
 
leveraging  an  additional  investment.  The  higher  is  the  policy  ability  to  reduce  financial, 
technology or market uptake risks, the larger is the potential of the EIT investment support to 
leverage  an  additional  investment  in  KIC-supported  projects/sectors.  Results  for  the  co-
funding  rate  are  more  nuanced,  as  higher  co-funding  rate  per  se  implies  higher  investment 
leverage per investor but also fewer investors. A second important result is that the two policy 
intervention  channels  –  the  co-funding  rate  and  the  risk  premium  component  of  the  cost  of 
capital  –  interact  mutually.  This  implies  that,  for  example,  a  decrease  in  the  number  of 
investors  due  to  higher  co-funding  rate  could  be  offset  by  lowering  the  risk  premium 
component of the cost of capital. 

The results from the empirical simulation analysis confirm that those EIT policy options with 
the highest capacity to reduce the risk premium component of the cost of capital and impose 
the  highest  private  investment  co-funding  rate  are  leveraging  the  highest  amounts  of  an 
additional investment in KIC-supported projects/sectors. Among the four analysed scenarios, 
these are scenarios S2A and S2B with the highest cumulative leverage effects over the entire 
2021-2035  year period.  In contrast,  scenario S1A performs  considerably  weaker in  terms  of 
leveraging  an  additional  (private)  investment.  In  terms  of  the  EIT  financial  sustainability, 
these simulation results suggest that the EIT policy scenarios S2A and S2B are considerably 
more financially sustainable than the EIT policy scenarios S1A and S1B when a time horizon 
of two entire programming periods is considered. 

Turning  to  limitations  and  caveats  of  our  analysis,  first,  it  has  to  be  noted  that  whereas 
scenario  S1A  can  clearly  be  considered  the  least  effective  both  according  to  both  the 
theoretical and empirical analysis (because a private investment cofounding is not enforced), 
based  on  our  stylised  investment  model,  it  is  not  straightforward  to  distinguish  between 
scenarios S2A and S2B, as long-run results for these two policy scenarios are fairly similar. 
Under  different  sets  of  assumptions  related  to  the  estimated  reductions  in  the  risk  premium 
component  of  the  cost  of  capital  or  in  another  EU  region  with  a  different  structure  of  the 
regional economy, the results may be different, favouring scenario S2A in one case whereas 
S2B in another. 

Second,  it  has  to  be  recognised  that  the  theoretical  model  developed  and  the  simulation 
analysis undertaken are highly stylised, allowing to identify and decompose only key channels 
of the private investment adjustment. There are, however, many more economic, societal and 
environmental effects, which are not considered in the present analysis. Similarly, it has to be 
reminded  that  these  two  regions  have  served  solely  as  examples  to  illustrate  how  EIT 
investments  could  affect  the  EU  economy.  In  order  to  establish  the  full  impact  of  EIT 
investments, a simulation analysis of the entire EU economy should be undertaken.  

Further,  our  results  hint  at  possible  challenges  in  the  EIT  policy  implementation  and 
monitoring  stage,  particularly  regarding  the  enforcement  of  the  investment  co-funding.  The 
reason  is  that  in  most  cases  there  are  no  counterfactual  data  available  to  policy  makers  to 
check the firm investment level with and without the investment support. Policy makers can 
only  observe  the  capital  use  with  the  investment  support.  Firms,  in  contrast,  do  not  have 
incentives  to  reveal  their  true  counterfactual  investment  intentions.  This  may  make  the 
monitoring of the investment additionality costly and hard to realise in praxis. 

182 

 
 
Figure 5. EIT investment support and additionality with a policy-induced reduction in 
the risk premium component of the cost of capital  

k 

k* 

Kmax 

H 

αiR* 

A 

B 

C 

E 

F 

G 

H 

S 

Dpc 

Dic 

Kmax 

Kmax 

Kpc1 

* 
Kic

Kics

* 

* 
Kpc

Kpcs

* 

K 

183 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 6. EIT investment support and additionality without a policy-induced reduction 
in the risk premium component of the cost of capital 

k 

Dpcs1 

Dpc 

αiR* 

k* 

Kmax 

αiR* 

S 

αiR* 

Dpc 

Dpcs 

Kmax 

Kpc1 

* 
Kpc

Kpcs

* 

K 

184 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.13. 

Annex 11:  Overview of KIC co-funding rates in 2014-2017 
In  line  with  EIT’s  objective  of  producing  long  lasting  impact,  the  KICs  are  expected  to 
gradually  become  financially  sustainable  in  the  long-term  as  stipulated  in  Art.  6  of  the  EIT 
Regulation.  

According to the EIT Strategic Innovation Agenda 2014-2020, while KICs are not expected to 
become financially independent from the EIT during its first  years of operation, they should 
gradually reduce its dependency from EIT funding and mobilise other resources, e.g. revenues 
from activities, IP rights, return on investments or venture capital.  

The financial sustainability principle forms an integral part of the KIC’s business model. The 
EIT has developed the principles of financial sustainability that provide the framework for the 
KICs  to  achieve  the  goal  and  that  contain  definitions  related  to  financial  sustainability, 
guidance for development of financial sustainability strategies and principles and measures to 
incentivise KICs sustainability (e.g. (max. EIT contribution over years).  

The  average  KICs  own  contribution  has  increased  from  9%  to  19%  of  their  overall  annual 
budget  between  2014  and  2017.  Figure  1  provides  the  development  of  the  KICs  own  co-
funding rates broken down per individual KICs. Similarly  Figure 2 provides the  changes in 
EIT  contribution  to  the  KICs  overall  budget  over  2014-2017.  Figure  7  provides  for 
comparison of co-funding rates over 2014-2017 (% of EIT vs. KICs contribution).  

Figure  3  and  Figure  4  provides  the  EIT  contribution  rates  for  individual  KICs  in  2014  and 
2017 respectively. 

Figure 5 and Figure 6 provides the KIC own contribution rates for individual KICs in 2014 
and 2017 respectively.  

Figure  1:  Development  of  co-funding  rate  (%  of  KICs  contribution)  in  different  KICs  over 

2014-2017; EIT data  

Development of co-funding rate   
(% of KICs contribution)  

40,0

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0,0

2014

2015

2016

2017

Climate KIC

Innoenergy

Digital

Health

Raw Materials

Food

AVERAGE

Figure 2: Development of co-funding rate (% of EIT contribution)    in different KICs over 
2014-2017; EIT data 

185 

 
 
 
 
 
 
 
Development of co-funding rate 
(% of EIT contribution) 

100,0

95,0

90,0

85,0

80,0

75,0

70,0

65,0

60,0

55,0

50,0

2014

2015

2016

2017

Climate KIC

Innoenergy

Digital

Health

Raw Materials

Food

AVERAGE

Figure 3: Co-funding rate (% of EIT contribution) in different KICs in 2014; EIT data 

Co-funding rate, 2014 
(% of EIT contribution) 

92,5

92,0

91,5

91,0

90,5

90,0

89,5

89,0

88,5

88,0

87,5

Climate KIC

Innoenergy

Digital

AVERAGE

186 

 
 
 
 
 
 
Figure 4: Co-funding rate (% of EIT contribution) in different KICs in 2017; EIT data 

Co-funding rate, 2017 
(% of EIT contribution) 

100,0

90,0

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

Climate KIC

Innoenergy

Digital

Health

Raw Materials

Food

AVERAGE

Figure 5: Co-funding rate (% of KICs contribution) in different KICs in 2014; EIT data 

Co-funding rate, 2014 
(% of KICs contribution) 

12,0

10,0

8,0

6,0

4,0

2,0

0,0

Climate KIC

Innoenergy

Digital

AVERAGE

187 

 
 
 
 
 
 
Figure 6: Co-funding rate (% of KICs contribution) in different KICs in 2017; EIT data 

Co-funding rate, 2017 
(% of KICs contribution) 

30,0

25,0

20,0

15,0

10,0

5,0

0,0

Climate KIC Innoenergy

Digital

Health

Raw
Materials

Food

AVERAGE

188 

 
 
 
 
Figure 7: Comparison of co-funding rates over 2014-2017 (% of EIT vs. KICs contribution) ; 
EIT data 

Co-funding rate in 2014 (%) 

9,3 

90,7 

EIT contribution

KICs own contribution

Co-funding rate in 2015 (%) 

9,6 

90,4 

EIT contribution

KICs own contribution

189 

 
      
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Co-funding rate in 2016 (%) 

19,4 

80,6 

EIT contribution

KICs own contribution

Co-funding rate in 2017 (%) 

18,5 

81,5 

EIT contribution

KICs own contribution

190