Europe Produces World-Class Research. Why Doesn't It Produce More Global Companies?

Europe's competitiveness debate increasingly revolves around a paradox. Despite possessing many of the world's leading universities and research institutions, the continent continues to struggle to convert scientific excellence into globally significant companies at the scale policymakers believe should be possible.

Europe has spent decades building one of the world's most sophisticated research ecosystems. Its universities rank among the strongest globally. Its researchers contribute to breakthroughs across fields as diverse as biotechnology, advanced manufacturing, photonics, climate technologies and artificial intelligence. Public investment in research remains substantial by international standards, while European institutions continue to attract scientific talent from around the world.

Yet as discussions surrounding competitiveness have intensified, attention has increasingly shifted away from research inputs and toward research outcomes.

This shift was visible in the debate that followed Mario Draghi's report on the future of European competitiveness. While the report addressed a wide range of structural challenges facing the European economy, one theme stood out in particular: Europe's longstanding difficulty in transforming its scientific and technological capabilities into sustained economic leadership. Europe was not lacking ideas, talent, or research excellence. Rather, it was struggling to translate those assets into productivity growth and globally competitive firms.

The same concern now sits at the centre of the European Commission's plans for a European Innovation Act. In outlining the rationale for the initiative, the Commission has been unusually direct. Europe generates a significant volume of high-quality research and innovation, yet only a limited share ultimately becomes successful products, services and companies. Bridging that gap, according to the Commission, will require stronger commercialization mechanisms, improved exploitation of intellectual property, closer cooperation between academia and industry, and better pathways for innovative solutions to reach the market. [1]

At first glance, the diagnosis appears counterintuitive. For decades, European innovation policy largely focused on increasing research capacity. The underlying assumption was relatively straightforward: stronger research systems would naturally lead to stronger innovation outcomes. While there is considerable truth in that logic, recent evidence suggests the relationship is far more complex than previously assumed.

One of the most interesting examples comes from the Redstone University Index, which examined the entrepreneurial performance of more than 900 higher education institutions and research organisations across Europe. Instead of measuring publications or citations, the study focused on startup creation. Its findings revealed substantial differences between institutions operating with broadly similar resources. Universities with comparable budgets often generated dramatically different levels of entrepreneurial activity, indicating that scientific excellence alone cannot fully explain commercialization outcomes. [2], [3]

Sources

1. DigitalEurope. (2025, October 3). A European Innovation Act to boost commercialisation and enable growth. https://cdn.digitaleurope.org/uploads/2025/10/DIGITALEUROPE-European-Innovation-Act-to-boost-commercialisation-and-enable-growth-03102025.pdf
2. European Commission, Directorate-General for Research and Innovation. (2025, December 4). Commission concludes public consultation on the European Innovation Act. https://research-and-innovation.ec.europa.eu/news/all-research-and-innovation-news/commission-concludes-public-consultation-european-innovation-act-2025-12-04_en
3. European Commission, Directorate-General for Research and Innovation. (n.d.). European Innovation Act. Retrieved August 7, 2026, from https://research-and-innovation.ec.europa.eu/strategy/support-policy-making/shaping-eu-research-and-innovation-policy/european-innovation-act_en