The coronavirus pandemic has led to abrupt changes, forcing companies to adapt their established work processes and develop new solutions. Against this background, ZEW Mannheim and the Stifterverband jointly organised an online workshop on the impact of the current crisis on the German innovation system, which took place on 28 January 2021. This event, which was supported by the Federal Ministry of Education and Research (BMBF), provided an opportunity for around 200 representatives from businesses, research and policymaking to engage in intensive exchange.

 Panelists in panel discussion.
Discussion in the third ZEW/Stiferverband workshop’s panel session: What remains at the end?

In the first two panel sessions of the workshop, experts presented recent findings on the influence of the coronavirus pandemic on the German innovation system from the perspective of academia and business practice. In the first panel session, the participants gave an overview of the recent developments in the various sectors of the economy, highlighting similarities with former economic crises. The second panel session focused on the role of corporate culture for the success of companies in times of crises. In the third and last panel session, four renowned experts from the field of innovation policy presented their conclusions regarding the long-term impact caused by the pandemic and proposed policy options for economic decision-makers in order to stimulate Germany’s capacity to innovate and prepare for future crises. All panels were co-moderated by ZEW economist Dr. Josefine Diekhof.

In the first panel, which was moderated by the President of RWI – Leibniz Institute for Economic Research in Essen Professor Christoph Schmidt, three panellists shed light on the impact of the pandemic on the German economy and its similarities with other crises.

Research and development (R&D) activities remain stable

Dr. Christian Rammer, project coordinator of the Mannheimer Innovation Panel (MIP) at ZEW, provided insight into how the current coronavirus pandemic has impacted R&D activities in Germany. According to Christian Rammer, the current crisis has hit consumer-related and less R&D-intensive industries particularly hard, whereas the economic crisis of 2009 put export-oriented and R&D-intensive sectors under considerable pressure. These results obtained from the most recent ZEW Innovation Survey among German firms also show that companies in Germany did not plan to undertake any major changes to their innovation activities in 2020. Hence, the German innovation system has so far proven to be relatively resilient to the crisis.

More robots, less trade

Professor Dalia Marin from the Technical University of Munich shed light on the impact of the pandemic, particularly from the perspective of international trade. She showed that the uncertainty caused by crises leads to the decline of global value chains as well as to an increased use of robots in domestic markets. It is, however, unclear how this development will impact long-term productivity. Automating existing jobs with low productivity potential using robots does not boost productivity. Instead, it is necessary to use the technological progress in order to create new jobs with high productivity potential.

Growing shortage of qualified workers

In her presentation, Alexandra Spitz-Oener, professor at the Humboldt University of Berlin, placed particular focus on the development of skills shortage. In light of the current dynamics, she expects this issue to become more acute in the future, as the need for skilled workers has been increasing exponentially due to the boost in digitalisation and automation triggered by the crisis. Additionally, there is a growing shortage of skilled workers as a result of the pandemic’s impact on the education system.

The second panel moderated by Dr. Gero Stenke, head of the research institute Wissenschaftsstatistik GmbH associated with the Stifterverband, featured presentations held by four panellists, who focused on the role of the corporate culture as a factor for success in times of crises.

Exploiting opportunities during crises

Carolin Häussler, professor at the University of Passau and member of the Commission of Experts for Research and Innovation (EFI), opened the second session by providing insight into the differences in the performance of companies between different industries as well as within the individual industries. One of the reasons for these differences is the fact that some companies that are willing to take risks can identify the opportunities that open up during a crisis. They use the momentum of the crisis to step out of their routines, experiment and tap into new markets. At the same time, however, firms also need time, especially for radical innovations, which is why the innovation launched during the pandemic are likely to be of an incremental nature.

More self-responsibility and trust amongst each other

Dr. Katharina Hochfeld, head of Corporate Culture and Transformation at the Fraunhofer Institute for Industrial Engineering (IAO), addressed the matter of virtual cooperation through the use of videotelephony, emails and other virtual collaborative tools. Effective use of this type of cooperation requires greater personal responsibility and trust amongst each other. Virtual collaborative forms also help, for example, to break down existing structures and distribute roles within established work processes in new and improved ways. However, increased virtual cooperation does also weaken informal exchanges between employees and consequently their scope of creativity. The question therefore remains how such informal exchanges could also be integrated into the ‘virtual world’.

Cultural values to strengthen innovative capacity in the crisis

Dr. Daniela Blaschke, responsible for political strategies and communication at Volkswagen, showcased the fundamental importance of corporate culture for the innovation capacity of companies by using the network ‘Future Heads’ as an example. This network connects intrinsically motivated employees from all areas of the corporation to contribute towards the transformation of the corporation by developing future scenarios. Strengths are particularly found in the cultural values of the network, as well as the importance of thinking ahead, integrity, trust, and knowledge transfer. She illustrated the particular relevance of such a network in times of crisis. In doing so, a company can rely on the innovative capacity it has built up and spare scarce financial resources without losing too much of its innovativeness.

Improved digital infrastructure and childcare

Johannes Schmitt from the Stifterverband conclusively presented initial findings from the project ‘Indicators for Innovation Systems’ on the meaning of corporate culture as a counterbalancing element of crisis effects. Results from qualitative guideline-based interviews in six companies showed that employee networking, their motivation and personal responsibility had to be promoted to mitigate negative effects of the coronavirus pandemic. Moreover, there is unanimous demand for an improvement in digital infrastructure and adequate childcare provision. Especially given the current situation, these policy measures have high priority from a business perspective.

The third panel session focused on the long-term effects of the coronavirus pandemic and the current political opportunities for action. Moderated by ZEW economist Professor Bettina Peters, four innovation policy experts took part in the discussion: Matthias Graf von Kielmansegg, head of the BMBF Directorate-General ‘Strategies and Policy Issues’, Katharina Hölzle, professor at the University of Potsdam and EFI member, Jakob Edler, executive director of the Fraunhofer Institute for Systems and Innovation Research (ISI) and professor at the University of Manchester, and Christoph Grimpe, professor at the Copenhagen Business School and editor of the journal ‘Industry and Innovation’.

Digitalisation for crisis management

The panel started with an inventory of the changes in the German innovation system caused by the pandemic. The surveyed audience called out digitalisation as being by far the most frequent enduring change. Graf von Kielmansegg and Christoph Grimpe were both critical of this outcome. Both referred to the matter that it is not yet certain whether the current boost in digitalisation is a short-term reaction to the temporary crisis management or a permanent change to work and organisational processes. Christoph Grimpe stressed that digital media, while facilitating communication across geographical distance, can also exacerbate coordination processes in larger teams at the same time. This would require a painstaking change in management processes. For example, assessments made by employees would have to be more strongly oriented towards target agreements if virtual communication were to be permanently increased. With regard to the topic of digitalisation, Jakob Edler pointed out current figures for the manufacturing industry, gathered by the Fraunhofer ISI. These figures show that until now there have been increased investments in digitalisation during the pandemic. However, this investment has come predominantly from companies who were already highly digitalised.

More digital and scientific-oriented education

Katharina Hölzle called attention to the topics of digital and scientific-oriented education in the discussion and argued the case for a change in the education system. She posed the question what skills young and elderly people require nowadays and discussed an expansion to basic education. The current situation particularly shows that basic scientific and digital skills need to be taught more thoroughly. Further skills such as personal responsibility, entrepreneurial thinking, creativity, and collaboration are not being promoted enough at the moment. Graf von Kielmansegg focused explicitly on the difference between lifelong learning and ensuring general education. He views the government as being primarily responsible for general education and says that the current structure of the education system is ‘adequate’. However, he also stressed that the curriculum – teaching content – should be adjusted. He did not rule out further potential support for private companies with regard to lifelong learning. Regardless of the exact implementation, he stressed the great importance of the right measures and the appropriate type of support.

Crisis preparation and flexibility as success factors

The third topic was the crisis resilience of the German innovation system. Jakob Edler und Matthias Graf von Kielmansegg pointed out the conflicting goals between an efficient use of resources and maintaining production capacity. On the one hand, building up its capacity in selected areas should be necessary to ensure Germany’s crisis resilience. On the other hand, efficiency gains in the international division of labour are lost as a result. A particular challenge in building up capacity is the high level of uncertainty in the current crisis. Christoph Grimpe pointed out in particular limitations in current planning tools and the resulting limits of government action. As a result, the ability to react flexibly and quickly in crisis situations is particularly important. Both Katharina Hölzle and Jakob Edler summarised by highlighting the fact that innovation policy has shown good performance thus far. From a political perspective, Matthias Graf stressed the importance of close cooperation between businesses, policymakers and researchers to ensure high flexibility. Moreover, reacting to unknown situations should be practiced, communication channels and data linkages should be prepared, and instruments for flexible legislation should be established.

The workshop ‘Innovationsfähigkeit in Zeiten der Krise: Erfolgsfaktor Unternehmenskultur’ was organised as part of  the project ‘Indicators for Innovation Systems’ funded by BMBF.