Small and medium-sized enterprises (SMEs) make up 99% of EU businesses, yet new research suggests they remain on the margins of mission-oriented innovation (MOI)—initiatives designed to tackle grand challenges such as climate change and sustainability. A study published in the International Journal of Value Chain Management identifies three core barriers: lack of communication, insufficient resource allocation, and domain differences between political and regulatory systems.
“Lacking a clear and communicated definition and contextualization,” one interviewee noted of Uppsala region’s innovation strategy, underscoring the disconnect between policymakers and SMEs. Without better alignment, researchers argue, SMEs will continue to be underrepresented in MOI, weakening the collective ability to meet long-term sustainability missions.
The study highlights poor communication from public actors, but the issue goes beyond weak messaging. SMEs often operate on thin margins and short time horizons, while innovation missions are framed around 2050 goals. That mismatch makes it difficult for SMEs to see immediate relevance.
Public actors, according to the research, fail to translate mission objectives into actionable steps that SMEs can adopt. Interviewees pointed to vague directives and a lack of structure in bringing private actors into regional innovation efforts. For many SMEs, the result is that MOI remains more abstract policy vision than practical opportunity.
SMEs frequently rely on “financial bootstrapping,” stretching limited internal resources rather than securing outside funding. This leaves them with little capacity for large-scale R&D investment. One interviewee in the study noted that “actors who propose missions are lacking resources to facilitate innovations,” pointing to a wider systemic underfunding of collaborative efforts.
Yet this scarcity can also serve as an innovation filter. SMEs are often leaner and more adaptive than large corporations, with faster decision-making and closer ties to customer needs. If resourced appropriately, they could serve as powerful engines of efficiency and speed within MOI. Current policy frameworks, however, rarely leverage that advantage, treating SMEs as junior partners rather than central drivers of innovation.
The third barrier identified in the research—domain differences—reflects the uneven political and financial governance across regions. In Uppsala, interviewees acknowledged strong cooperation in life sciences, but noted that structures enabling cross-sectoral collaboration had not been transferred to climate-focused innovation.
Regional variation in tax bases, governance models, and procurement systems creates “innovation silos” that disproportionately disadvantage SMEs. Large multinationals may have the resources to navigate multiple jurisdictions, but SMEs often lack that capacity, leaving them sidelined in multi-actor collaborations.
As one interviewee put it, “politics often act as a barrier to actual change,” highlighting the limits of fragmented governance when systemic solutions are required.
For sustainability executives, the message is clear: SME exclusion is not just a policy gap—it is a systemic risk. Most corporate Scope 3 emissions depend heavily on SME suppliers, contractors, and innovators. If these companies cannot meaningfully engage in MOI, climate targets and circular economy commitments across entire industries may stall.
The study’s findings align with broader warnings from organizations such as the OECD, which has argued that fragmented governance and unclear mission design undermine systemic transitions. For business leaders, that means relying on public policy alone is insufficient. Corporations may need to take a more active role in building direct partnerships with SMEs, providing resources, and aligning incentives within their supply chains.
The researchers suggest applying frameworks such as ROAR—routes and direction, organization of actors, assessments, and risks and rewards—to better structure SME engagement in MOI. Longitudinal studies, they argue, are needed to test whether such systematic approaches can close the current participation gap.
But the business case is immediate: without SMEs fully engaged, mission-oriented innovation risks becoming mission-adjacent—well-intentioned, but structurally incapable of delivering the scale of change required for net zero.
