Cooperation with Digital Start-ups Enables Established Companies to Innovate

Research

In Germany, one in every three companies in the information economy and one in five in the manufacturing industry is currently collaborating with digital start-ups or has done so in the past. Over 95 per cent of the collaboration partners are located in Germany. Four fifths of all companies reach at least part of the goals they set themselves for the collaboration. These are the findings of a representative study conducted by ZEW Mannheim. On behalf of the Federal Ministry for Economic Affairs and Climate Action, ZEW researchers surveyed more than 1,200 companies from the information economy and manufacturing industry.

“The combination of market experience and financial strength of established companies with the agility and technological know-how of digital start-ups holds a variety of potentials, but also poses some challenges,” says ZEW economist Dr. Daniel Erdsiek, co-author of the study. “Our study examines scale, motives and obstacles of cooperation between established companies and digital start-ups.” As the business survey shows, cooperation takes place first and foremost through information exchange or exists as a customer-supplier relationship. Only slightly less frequently does cooperation take the form of the joint development of new products or services and collaboration on operational processes such as sales or marketing.

Innovation and access to technological knowledge are the main motives

“Companies hope that through collaboration with digital start-ups they can develop new products or services or improve existing ones. In second place, businesses expect access to technological know-how, technology or software,” explains Erdsiek. For companies without previous experience in cooperating with digital start-ups, access to technological know-how is even the most common motivation. The further development of their own business model, new or improved business processes, and access to specialists, customers, markets or sales channels are further reasons for collaboration. A possible acquisition of the start-up is a driving factor for cooperation in only one in ten companies in the information economy or the manufacturing industry.

Often it is more available information that is needed for more cooperation

In most cases companies achieve at least part of their set goals through the cooperation. However, about ten per cent in the information economy and 20 per cent in the manufacturing industry say they have not yet reached any of their set goals through collaboration. Around 60 per cent, and thus most of the cooperating companies from the information economy and manufacturing industry, were nevertheless able to improve their products or services or create something new through cooperation. More than half of the cooperating companies in the information economy were also able to access technological knowledge from the start-ups. The manufacturing industry benefited from the cooperation through new or improved business processes and through access to new sales channels.

However, an array of factors hold back companies from collaborating with digital start-ups. So far, around 60 per cent see no projects as suitable for cooperation – the biggest barrier for established companies. Moreover, around half of businesses are uncertain about the benefit of a cooperation or feel that there is uncertainty in regard to maturity, reliability or survival chances of the collaborating start-up. More than half of the companies that have collaboration experience also consider the identification of suitable start-ups as an obstacle for the development of potential cooperation. “In order to further encourage the innovation potential that cooperation with start-ups can offer, policymakers can improve available information on cooperation possibilities and support companies in their search for a suitable cooperation partner, for example with networking events,” recommends Professor Irene Bertschek, head of the ZEW Research Unit “Digital Economy” and co-author of the study.