New Graduates Encourage Innovation

When small businesses hire university graduates, innovation rises.

SMALL AND MEDIUM-SIZED businesses (SMEs) are more likely to embrace innovation if they employ recent college graduates, according to research from Lancaster University Management School (LUMS) in the U.K. However, these firms are unlikely to hire graduates because they are uncertain how to recruit them; therefore, universities should help SMEs tap this talent pool.

“Governments around Europe want to encourage innovation within SMEs to help them deal with the megatrends of globalization, demographic change, and the rise of robotics and artificial intelligence,” says Carolyn Downs of the LUMS department of marketing. “Our research shows that the more graduates an SME employs, the greater the chances of developing a culture of innovation within that company.”

Downs suggests that, as a way to create relationships between SMEs and students, universities invite SMEs to participate in live projects or offer student placements, internships, and apprenticeships. SMEs could also develop stronger connections with universities by partnering with them on knowledge transfers.

Downs points out that it is essential for universities to support SMEs because these firms represent 99 percent of all EU businesses and have created 85 percent of new jobs in the last five years. Graduates also can help smaller businesses tackle issues such as global warming.

LUMS researchers were working with the SMEthod Project, a Poland-based organization that supports SMEs in the U.K., Spain, Finland, and Cyprus. The project will help funders identify businesses with innovation potential and better target funding to areas where it is most effective. The research was funded by Horizon2020, a research and innovation program in the EU.