The Impact of the Coronavirus Pandemic on the German Innovation System

Everything new – in one day?

Corporate culture and innovative potential in times of the pandemic

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.

What remains at the end?

Resilience from the German innovation system and political opportunities for action

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.