Progress Results From Overcoming Obstacles
Meet our Professor of Economics of Innovation Prof. Hanna Hottenrott
Innovation is the topic of the hour. The pandemic has revealed that innovation and quick adaptation to new circumstances is key for a company to sustain in the future. Prof. Hanna Hottenrott has devoted her scientific attention to innovation and will give us her expertise on the impact of innovation in the current crisis and share her advice for young founders and students.
Prof. Hottenrott is one of the relevant scientific voices in Germany when it comes to innovation. As Professor of Economics of Innovation at the TUM School of Management, she is dedicated to research on the conditions that facilitate R&D, innovation and technological change in the economy. While studying Economics at the Ruprecht-Karls-University Heidelberg and completing her Ph.D. in Applied Economics at KU Leuven in Belgium, she focused on the topic of financing innovation in small and medium-sized companies. This topic is also currently of high interest. Times of crisis can boost innovation, which has been observed early on during the pandemic as well. We have witnessed an enormous increase in the development of digital technologies and their usage – especially e-commerce, virtual formats for remote working and virtual entertainment have reached a completely new level. “The current situation has rapidly turned ideas into marketable innovations”, states Prof. Hottenrott. “Many firms were forced to react quickly and consumers were willing to adopt new solutions.” This helped to overcome a resistance to change.
Steady investments needed for more innovation
However, not all sectors benefit from the innovation push. Areas of the economy that have suffered the most, such as arts, local entertainment, restaurants, as well as banking and transportation and related manufacturing, may adjust their investments to their current cashflow situation. “This results in fewer investment in R&D now and potentially lower rates of innovation post-crisis”, explains Prof. Hottenrott. She also believes that social distancing could slow down innovation: “It is still too early to tell whether the current situation has had an adverse impact on the quality of research and development tasks. Personal interaction, on-site experimentation and informal exchange are all important for creativity and innovation.”
Applying for financial support is a key factor for success
During the course of her fellowship at the Research Foundation – Flanders (FWO), Prof. Hottenrott dealt with questions of innovation policy and public R&D funding. Over the years, she has repeatedly conducted research on the effectiveness of innovation policy programs, including those that provide financing for start-ups. “Research shows that public start-up grants or subsidized loans can be highly valuable sources of financing for founders,” states Prof. Hottenrott. This applies especially to companies in a very early stage of their development. “In our research, we find that founders who participated in public start-up support programs were able to develop their businesses better than others who initially had very similar team and business characteristics”, states Prof. Hottenrott. According to her observations, access to public early-stage funding leads to greater innovation success in the long run and ultimately to a higher probability of obtaining follow-up financing, for example from business angels.
Shaping experience at the TUM School of Management
After spending more than two as Junior Professor of Microeconomics at the Düsseldorf Institute for Competition Economics (DICE) (University of Düsseldorf), Prof. Hottenrott joined the TUM School of Management in 2016 as Professor of Economics of Innovation. She appreciates the excellent environment for academic studies as well as the numerous possibilities of building a strong network. To benefit from this environment, she encourages students to actively participate in student associations. “The numerous initiatives provide a great opportunity to actively shape our school and to get to know other students with different backgrounds”, explains Prof. Hottenrott, who believes that working with people from different cultures is one of the most valuable experiences for your career. Her advice for all young people: “Work hard and do not give up, especially when things get tough. Progress results from overcoming obstacles.”
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