“An SME needs orders. It cannot survive on proof-of-concept projects and experiments alone.” This observation, made by the head of an innovative SME interviewed as part of our research, sums up one of the major challenges facing small businesses: a good idea does not automatically turn a profit.

A technology may work, attract interest and secure funding for research and development, yet still prove difficult to bring to market. Job creation and business growth do not automatically follow from technological innovation.

At a time when reindustrialization and technological sovereignty are becoming increasingly prominent in public debate, this issue deserves particular attention.

SMEs are essential to the economy, but their growth remains uncertain

As the European Union seeks to strengthen its strategic autonomy and technological sovereignty, one figure is worth remembering: 99.8%¹ of businesses operating in Europe are small and medium-sized enterprises (SMEs).

Often described as the “backbone of the European economy” (1), SMEs are naturally a major focus of public economic policies. Yet the tangible results of these efforts can sometimes be difficult to see.

While the technological excellence of SMEs, their agility and their ability to bring new solutions to the market are well documented (Zighan and Dwaikat, 2023; Ferreira et al., 2024), their capacity to grow and thrive over time is far less certain.

SMEs face what researchers call the “liabilities of smallness and newness”: the disadvantages and vulnerabilities that come with being small and relatively young. They often have fewer resources, less in-house expertise and less established legitimacy than larger, longer-standing businesses (Choi et al., 2022; Amoa-Gyartens & Dhilawayo, 2024).

The structure of the French business landscape illustrates just how difficult it can be to move from one stage of growth to another. In 2023, France had approximately 174,600 SMEs, excluding microenterprises, but only 7,442 intermediate-sized enterprises (ETIs, according to the French classification) (2). Of course, not every SME is destined to become a mid-sized company. But this gap highlights how challenging it can be to scale up and build a business that remains viable over time.

The prototype works… now what?

For an innovative SME, turning a technology into a commercially viable product or service is a particularly delicate stage. It even has a name: the Valley of Death (Ellwood et al., 2022).

The term describes the difficulties businesses encounter between technological research and development and the commercialization of their innovations. These challenges may be financial, technological, managerial or commercial, and can also stem from public policies (Meijer et al., 2019).

Take an SME developing an industrial sensor. The tests are successful and potential customers show interest. But the company now needs to manufacture the product at scale, guarantee its quality, obtain the necessary certifications, organize deliveries and, above all, secure actual orders. Meanwhile, it still has employees and suppliers to pay. Simply surviving this stage becomes a challenge in itself.

Despite extensive research and the existence of numerous support schemes, we still do not fully understand why so many SMEs struggle to cross this Valley of Death (Ellwood et al., 2022).

This raises a fundamental question: why do some SMEs manage to make it through while others remain stuck?

Working with large corporations without losing independence

One of the ideas behind my doctoral research, completed in 2024, was that part of the answer might lie in the relationships innovative SMEs develop with large companies as they grow. Working with major industrial groups, even when they may also be competitors, can play an important role in SME’s development. Such partnerships can open up new markets and provide access to resources that would otherwise be extremely difficult for a small business to mobilise on its own (Zanardi, 2024; Zanardi et al., 2025).

But coopetition between large corporations and SMEs, in other words, cooperation between businesses that also compete with one another, reveals just how ambivalent these relationships can be. They create opportunities, but they can also expose SMEs to risks of dependency or the appropriation of their knowledge.

This does not mean that such collaborations are necessarily harmful to SMEs. But the conditions under which they take place deserve careful consideration. How is the value created together shared between the SME and the large corporation? What rights does each party retain over its own knowledge and the results developed jointly? Is the SME still free to work with other customers? Business leaders need the means to address these questions. Better access to expert advice and mediation mechanisms throughout the partnership could help them do so.

Ultimately, this research brings us to the central question that SME leaders themselves face: what entrepreneurial strategies, inter-organizational relationships and ecosystem conditions enable innovative SMEs to cross the Valley of Death and achieve sustainable growth?

Manufacturing in France: with what equipment and resources?

Let’s return to our SME developing an industrial sensor.

When the time comes to move from a prototype to mass production, very practical difficulties begin to pile up, particularly when it comes to securing the necessary equipment and human resources.

French public authorities are trying to address these challenges. The Première usine (“First Factory”) scheme, part of the France 2030 investment plan, aims to support the creation of initial production facilities, including demonstration and pilot sites, as well as the development of shared production facilities. Its overall results will be worth examining.

Meanwhile, resource-sharing arrangements are also emerging directly within business ecosystems. Toulouse White Biotechnology (TWB), a public-private consortium operating under the supervision of INRAE, INSA Toulouse and CNRS, seeks to support the ecological transition by building bridges between academic research and industry. One way it does this is by providing access to facilities and equipment. For example, PILI, a start-up specializing in bio-based, more environmentally friendly dyes, was able to collaborate with TWB to establish itself on its site and gain access to the demonstrator’s facilities, equipment and expertise.