Background information

Innovation contracts is a programme available for Norwegian small and medium-sized companies (SMEs) developing new products or services in collaboration with (foreign) companies representing the market, referred to as 'pilot companies'. The grant is available to Norwegian companies having the skills and knowledge to develop the products or services the foreign companies need but that are not available in the market.

Innovation contracts are linked to Innovation Norway and Norwegian Innovation Clusters

Content of measure

An innovation contract is a binding agreement between two or more companies to cooperate in the development of a new state-of-the-art product, process or service. The customer must be a market leader, professionally acknowledged and with a broad market access. The parties themselves define the contents in such a way that they get the maximum benefit from the support scheme. The objective of innovation contracts is to stimulate innovation and value creation by reducing risk and the programme may cover up to 45% of the development costs incurred by the Norwegian companies.

An innovation contract can only be granted to projects of an exceptional level of innovation and value creation, clearly defined market potential and high additionality. It enables SMEs with high growth potential to penetrate international markets with new and innovative solutions. The scheme provides grants to research and development projects where a SME supplier teams up with a demanding, larger and preferably international customer. A typical IRD projects runs for 1-3 years.

The grant given is equal to those laid down in the EEA (European Economic Area) framework. The collaborating customer's efforts in the project in terms of workload and funding should be at least 20% of total eligible project costs.

Funding can consist as a combination of grants and loans to cover:

• personnel costs;
• expenses to equipment and buildings, counselling;
• administration expenses;
• and similar investments.

Use of measure

Annually, around NOK 300 million (€28.82 million as of 31 August 2020) is spent on innovation contracts. An external evaluation (published in 2014) of 10 years of the scheme, then called IRD, shows that over 80% of the projects were technologically successful. It also found that over 44% of the IRD projects had developed a new product or service that had penetrated the targeted markets. The projects involve an international customer in more than 25% of the cases.

An evaluation of the IRD programme by the Oxford Research Institute in 2012 showed that the programme was successful with positve results for both supplier and customer companies. The evaluation also pointed to possible improvement in administrative implementation.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	Employer National funds Other

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Unknown	Unknown
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Unknown

Sources

• 01 February 2014: Midttun et al (2014), Verdiskapning i lange innovasjonsprosesser: En studie av Innovasjon Norfges IFU-OFU prosjekter. (www.innovasjonnorge.no)
• 01 January 2017: Example of a template for an innovation contract (word) (www.innovasjonnorge.no)
• 01 January 2019: Innovation contracts Fact Sheet (www.innovasjonnorge.no)
• 07 October 2022: European Commission Enterprise and Industry. Small Business Act-Database of Good Practices. (ec.europa.eu)