Common use of Competitive Businesses Clause in Contracts

Competitive Businesses. Starting points and characteristics Czech economy is currently at the threshold of transferring to competitiveness based on innovations. The existing innovation performance of businesses is mainly based on new innovations for companies, not for the market49. Impacts of these types of innovations are fundamental for productivity of businesses, however the impact on the labour market is ambivalent. In new innovations for the market, in particular innovations of higher order that represent, essentially, technology-based competitive advantages, the local business sector is still significantly lagging behind.50 A key precondition for a successful transfer to competitiveness based on innovation, which is the precondition for the creation of new, good quality jobs, is the development of business culture, entrepreneurship leading to the foundation of new companies and increasing the innovation and export performance of the endogenous business sector. It is also essential to decrease energy and material intensity. In order to understand the nature of the current problems, challenges and opportunities, it is essential to view the entire Czech business sector from the perspective of evolution. The inclusion of the Czech economy in the world economy after 1989 rested on the following internal factors: favourable price and workforce qualification ratio, strong industrial heritage and relatively technically advanced, good quality infrastructure compared to the countries in Central Europe, and a weak domestic sector that was able to compete in a very limited scope. These conditions were made more attractive thanks to the closeness to developed European markets with a prospect of entering the EU. As a consequence, there was a high influx of direct foreign investment in the Czech Republic and a follow-up strong demand for subsuppliers from the Czech Republic, which was significantly exploited by local companies. Most of them connected directly, or via an intermediary, to foreign companies operating in the Czech Republic and surrounding countries. This development enhanced the economy on the whole, and helped local companies to access managerial and technical know-how, and indirectly to access foreign markets. In addition to the indisputable positive side, the created strong dependency of the performance of the local economy on foreign companies has also its negatives that have been fully shown after the outbreak of serious problems in the world economy after 2008. The volume of production, investment and also employment greatly depends on the decisions made by foreign companies. In particular, SMEs are not able to compensate for the decrease in demand of their main customers. Their ability to find and enter new markets (in terms of territory and products) is limited. For these reasons, the Czech Republic needs to develop SMEs and also big companies as they have much higher capacity to systematically invest into R&D, including the development and use of KET, and to increase the innovation performance of the economy as a whole. Their success retrospectively influences the overall demand for SMEs production and innovations. The improvement of entrepreneurship environment in the Czech Republic (to improve the performance of public administration in entrepreneurship development, targeted development of infrastructure focused on removing problems with transport accessibility, better cooperation of the research sector with companies and improving the match between workforce competencies and business requirements) represents unused potential that can help to increase competitiveness. 49 MIT (2010): National innovation strategy of the Czech Republic 50 Analysis of material priorities and needs of individual areas within the competence of the Ministry of Industry and Trade at which the support from the EU’s Structural Funds should be targeted during the next programming period (2014+). Experience from the 2007-2013 programming period and the state of achievement of objectives Investments in the current programming period focus on the increase in motivation for doing business by offering preferential financing and preferential services for start-ups. The support involves also the provision of soft loans or bank guarantees for bank credits. Further, the establishment, operation and further development of business infrastructure are supported, such as the existing industrial parks, innovation centres, and regeneration of brown fields for business. Last but not least, also the quality consulting services are important that help businesses to make use of all market opportunities. In the programming period 2014–2020, the Czech Republic will have to focus on strengthening the role of innovation in strategic decision-making concerning the economic life of businesses. The current problem of the Czech Republic is the inability to transfer the research results into practice. It is therefore necessary to look for other ways to reduce the deficit and to enable the development of interconnection between the private sector and academia in relation to the research institutions. Requirements for the support of investment projects focusing on improving competitiveness in agriculture, food industry and forestry have been exceeded several times, which shows that there is still need for investment into agricultural and processing. Also, the quality of infrastructure in agriculture and forestry should continue to be increased, especially with regard to the so-far insufficient implementation of comprehensive land consolidation. Regional differences The support of enterprising and innovations depends on the potential and socio-economic standard of different types of regions. In particular, there are differences between metropolitan and non-metropolitan regions, and there are economically troubled regions. There are also significant differences between individual towns and microregions. In individual territorial units there are significant differences between the ability of local players to mobilise internal and external resources and to implement a sophisticated development strategy in accordance with the concept of smart specialisation. With regard to the location of the critical research and educational capacities, the main cities and the adjacent interlinked facilities are the driving force for the development of business and innovations. In particular Prague and Brno, in the recent years it is also Pilsen and Ostrava, despite the fact that the economy of the region of Moravia and Silesia has been affected and faces selective migration, above average rate of unemployment and a low level of entrepreneurship. In these metropolitan areas and other large towns, the absorption capacity is much higher with regard to supporting activities focused on higher order innovations. From the point of view of SMEs share, the capital city of Prague enjoys an above average position as nearly ¾ of total employment is down to SMEs. The regions of South Moravia and Zlín are in similar positions. On the other hand, the worst situation in terms of the SMEs share of total employment is in the region of Moravia and Silesia. As far as the actual support of SMEs is concerned and supporting people to start an enterprise, the need of support and the absorption capacity are more equally distributed among regions, with a need of special attention to the development of entrepreneurship in structurally affected regions. The entrepreneurship in rural areas, in particular in the economically less exposed regions (i.e. Karlovy Vary Region, Vysočina Region, Olomouc Region and the periphery areas of other Regions) suffers from many negative features (for example migration of talented young people, low intensity of entrepreneurship, high unemployment etc.). Tourism represent a specific part of regional economies. The importance of tourism where SMEs dominate is growing locally and in some areas it represents the main pillar of economic performance and employment. Support will include both urban and rural areas and will be focused on:  developing areas as per the Regional Development Strategy 2014-2020.  territories with high unemployment,  economically weak regions according to the Regional Development Strategy of the Czech Republic for 2014-2020. Major identified problems and development needs:

Competitive Businesses. Starting points and characteristics Czech economy is currently at the threshold of transferring to competitiveness based on innovations. The existing innovation performance of businesses is mainly based on new innovations for companies, not for the market49. Impacts of these types of innovations are fundamental for productivity of businesses, however the impact on the labour market is ambivalent. In new innovations for the market, in particular innovations of higher order that represent, essentially, technology-based competitive advantages, the local business 49 MIT (2010): National innovation strategy of the Czech Republic sector is still significantly lagging behind.50 A key precondition for a successful transfer to competitiveness based on innovation, which is the precondition for the creation of new, good quality jobs, is the development of business culture, entrepreneurship leading to the foundation of new companies and increasing the innovation and export performance of the endogenous business sector. It is also essential to decrease energy and material intensity. In order to understand the nature of the current problems, challenges and opportunities, it is essential to view the entire Czech business sector from the perspective of evolution. The inclusion of the Czech economy in the world economy after 1989 rested on the following internal factors: favourable price and workforce qualification ratio, strong industrial heritage and relatively technically advanced, good quality infrastructure compared to the countries in Central Europe, and a weak domestic sector that was able to compete in a very limited scope. These conditions were made more attractive thanks to the closeness to developed European markets with a prospect of entering the EU. As a consequence, there was a high influx of direct foreign investment in the Czech Republic and a follow-up strong demand for subsuppliers from the Czech Republic, which was significantly exploited by local companies. Most of them connected directly, or via an intermediary, to foreign companies operating in the Czech Republic and surrounding countries. This development enhanced the economy on the whole, and helped local companies to access managerial and technical know-how, and indirectly to access foreign markets. In addition to the indisputable positive side, the created strong dependency of the performance of the local economy on foreign companies has also its negatives that have been fully shown after the outbreak of serious problems in the world economy after 2008. The volume of production, investment and also employment greatly depends on the decisions made by foreign companies. In particular, SMEs are not able to compensate for the decrease in demand of their main customers. Their ability to find and enter new markets (in terms of territory and products) is limited. For these reasons, the Czech Republic needs to develop SMEs and also big companies as they have much higher capacity to systematically invest into R&D, including the development and use of KET, and to increase the innovation performance of the economy as a whole. Their success retrospectively influences the overall demand for SMEs production and innovations. The improvement of entrepreneurship environment in the Czech Republic (to improve the performance of public administration in entrepreneurship development, targeted development of infrastructure focused on removing problems with transport accessibility, better cooperation of the research sector with companies and improving the match between workforce competencies and business requirements) represents unused potential that can help to increase competitiveness. 49 MIT (2010): National innovation strategy of the Czech Republic 50 Analysis of material priorities and needs of individual areas within the competence of the Ministry of Industry and Trade at which the support from the EU’s Structural Funds should be targeted during the next programming period (2014+). Experience from the 2007-2013 programming period and the state of achievement of objectives Investments in the current programming period focus on the increase in motivation for doing business by offering preferential financing and preferential services for start-ups. The support involves also the implementation of new financial instruments, such as micro loan funds and venture capital funds, provision of soft loans loans, or bank instruments, i.e. the provision of bank guarantees and credits, and the support for bank creditsinnovative start-ups through the so-called seed- fund. Further, the establishment, operation and further development of business infrastructure 50 Analysis of material priorities and needs of individual areas within the competence of the Ministry of Industry and Trade at which the support from the EU’s Structural Funds should be targeted during the next programming period (2014+). are supported, such as the existing industrial parks, innovation centres, and regeneration of brown fields for business. Last but not least, also the quality consulting services are important that help businesses to make use of all market opportunities. In the programming period 2014–2020, the Czech Republic will have to focus on strengthening the role of innovation in strategic decision-making concerning the economic life of businesses. The current problem of the Czech Republic is the inability to transfer the research results into practice. It is therefore necessary to look for other ways to reduce the deficit and to enable the development of interconnection between the private sector and academia in relation to the research institutions. Requirements for the support of investment projects focusing on improving competitiveness in agriculture, food industry and forestry have been exceeded several times, which shows that there is still need for investment into agricultural and processing. Also, the quality of infrastructure in agriculture and forestry should continue to be increased, especially with regard to the so-far insufficient implementation of comprehensive land consolidation. Regional differences The support of enterprising and innovations depends on the potential and socio-economic standard of different types of regions. In particular, there are differences between metropolitan and non-metropolitan regions, and there are economically troubled regions. There are also significant differences between individual towns and microregions. In individual territorial units there are significant differences between the ability of local players to mobilise internal and external resources and to implement a sophisticated development strategy in accordance with the concept of smart specialisation. With regard to the location of the critical research and educational capacities, the main cities and the adjacent interlinked facilities are the driving force for the development of business and innovations. In particular Prague and Brno, in the recent years it is also Pilsen and Ostrava, despite the fact that the economy of the region of Moravia and Silesia has been affected and faces selective migration, above average rate of unemployment and a low level of entrepreneurship. In these metropolitan areas and other large towns, the absorption capacity is much higher with regard to supporting activities focused on higher order innovations. From the point of view of SMEs share, the capital city of Prague enjoys an above average position as nearly ¾ of total employment is down to SMEs. The regions of South Moravia and Zlín are in similar positions. On the other hand, the worst situation in terms of the SMEs share of total employment is in the region of Moravia and Silesia. As far as the actual support of SMEs is concerned and supporting people to start an enterprise, the need of support and the absorption capacity are more equally distributed among regions, with a need of special attention to the development of entrepreneurship in structurally affected regions. The entrepreneurship in rural areas, in particular in the economically less exposed regions (i.e. Karlovy Vary Region, Vysočina Region, Olomouc Region and the periphery areas of other Regions) suffers from many negative features (for example migration of talented young people, low intensity of entrepreneurship, high unemployment etc.). Tourism represent a specific part of regional economies. The importance of tourism where SMEs dominate is growing locally and in some areas it represents the main pillar of economic performance and employment. Support will include both urban and rural areas and will be focused on:  developing areas as per the Regional Development Strategy 2014-2020.  territories with high unemployment,  economically weak regions according to the Regional Development Strategy of the Czech Republic for 2014-2020. Major identified problems and development needs:

Competitive Businesses. Starting points and characteristics Czech economy is currently at the threshold of transferring to competitiveness based on innovations. The existing innovation performance of businesses is mainly based on new innovations for companies, not for the market49. Impacts of these types of innovations are fundamental for productivity of businesses, however the impact on the labour market is ambivalent. In new innovations for the market, in particular innovations of higher order that represent, essentially, technology-based competitive advantages, the local business 49 MIT (2010): National innovation strategy of the Czech Republic sector is still significantly lagging behind.50 A key precondition for a successful transfer to competitiveness based on innovation, which is the precondition for the creation of new, good quality jobs, is the development of business culture, entrepreneurship leading to the foundation of new companies and increasing the innovation and export performance of the endogenous business sector. It is also essential to decrease energy and material intensity. In order to understand the nature of the current problems, challenges and opportunities, it is essential to view the entire Czech business sector from the perspective of evolution. The inclusion of the Czech economy in the world economy after 1989 rested on the following internal factors: favourable price and workforce qualification ratio, strong industrial heritage and relatively technically advanced, good quality infrastructure compared to the countries in Central Europe, and a weak domestic sector that was able to compete in a very limited scope. These conditions were made more attractive thanks to the closeness to developed European markets with a prospect of entering the EU. As a consequence, there was a high influx of direct foreign investment in the Czech Republic and a follow-up strong demand for subsuppliers from the Czech Republic, which was significantly exploited by local companies. Most of them connected directly, or via an intermediary, to foreign companies operating in the Czech Republic and surrounding countries. This development enhanced the economy on the whole, and helped local companies to access managerial and technical know-how, and indirectly to access foreign markets. In addition to the indisputable positive side, the created strong dependency of the performance of the local economy on foreign companies has also its negatives that have been fully shown after the outbreak of serious problems in the world economy after 2008. The volume of production, investment and also employment greatly depends on the decisions made by foreign companies. In particular, SMEs are not able to compensate for the decrease in demand of their main customers. Their ability to find and enter new markets (in terms of territory and products) is limited. For these reasons, the Czech Republic needs to develop SMEs and also big companies as they have much higher capacity to systematically invest into R&D, including the development and use of KET, and to increase the innovation performance of the economy as a whole. Their success retrospectively influences the overall demand for SMEs production and innovations. The improvement of entrepreneurship environment in the Czech Republic (to improve the performance of public administration in entrepreneurship development, targeted development of infrastructure focused on removing problems with transport accessibility, better cooperation of the research sector with companies and improving the match between workforce competencies and business requirements) represents unused potential that can help to increase competitiveness. 49 MIT (2010): National innovation strategy of the Czech Republic 50 Analysis of material priorities and needs of individual areas within the competence of the Ministry of Industry and Trade at which the support from the EU’s Structural Funds should be targeted during the next programming period (2014+). Experience from the 2007-2013 programming period and the state of achievement of objectives Investments in the current programming period focus on the increase in motivation for doing business by offering preferential financing and preferential services for start-ups. The support involves also the implementation of new financial instruments, such as micro loan funds and venture capital funds, provision of soft loans loans, or bank instruments, i.e. the provision of bank guarantees and credits, and the support for bank creditsinnovative start-ups through the so-called seed- fund. Further, the establishment, operation and further development of business infrastructure 50 Analysis of material priorities and needs of individual areas within the competence of the Ministry of Industry and Trade at which the support from the EU’s Structural Funds should be targeted during the next programming period (2014+). are supported, such as the existing industrial parks, innovation centres, and regeneration of brown fields for business. Last but not least, also the quality consulting services are important that help businesses to make use of all market opportunities. In the programming period 2014–2020, the Czech Republic will have to focus on strengthening the role of innovation in strategic decision-making concerning the economic life of businesses. The current problem of the Czech Republic is the inability to transfer the research results into practice. It is therefore necessary to look for other ways to reduce the deficit and to enable the development of interconnection between the private sector and academia in relation to the research institutions. Requirements for the support of investment projects focusing on improving competitiveness in agriculture, food industry and forestry have been exceeded several times, which shows that there is still need for investment into agricultural and processing. Also, the quality of infrastructure in agriculture and forestry should continue to be increased, especially with regard to the so-far insufficient implementation of comprehensive land consolidation. Regional differences The support of enterprising and innovations depends on the potential and socio-economic standard of different types of regions. In particular, there are differences between metropolitan and non-metropolitan regions, and there are economically troubled regions. There are also significant differences between individual towns and microregions. In individual territorial units there are significant differences between the ability of local players to mobilise internal and external resources and to implement a sophisticated development strategy in accordance with the concept of smart specialisation. With regard to the location of the critical research and educational capacities, the main cities and the adjacent interlinked facilities are the driving force for the development of business and innovations. In particular Prague and Brno, in the recent years it is also Pilsen and Ostrava, despite the fact that the economy of the region of Moravia and Silesia has been affected and faces selective migration, above average rate of unemployment and a low level of entrepreneurship. In these metropolitan areas and other large towns, the absorption capacity is much higher with regard to supporting activities focused on higher order innovations. From the point of view of SMEs share, the capital city of Prague enjoys an above average position as nearly ¾ of total employment is down to SMEs. The regions of South Moravia and Zlín are in similar positions. On the other hand, the worst situation in terms of the SMEs share of total employment is in the region of Moravia and Silesia. As far as the actual support of SMEs is concerned and supporting people to start an enterprise, the need of support and the absorption capacity are more equally distributed among regions, with a need of special attention to the development of entrepreneurship in structurally affected regions. The entrepreneurship in rural areas, in particular in the economically less exposed regions (i.e. Karlovy Vary Region, Vysočina Region, Olomouc Region and the periphery areas of other Regions) suffers from many negative features (for example migration of talented young people, low intensity of entrepreneurship, high unemployment etc.). Tourism represent a specific part of regional economies. The importance of tourism where SMEs dominate is growing locally and in some areas it represents the main pillar of economic performance and employment. Support will include both urban and rural areas and will be focused on:  • developing areas as per the Regional Development Strategy 2014-2020.  • territories with high unemployment,  • economically weak regions according to the Regional Development Strategy of the Czech Republic for 2014-2020. Major identified problems and development needs:

Competitive Businesses. Starting points and characteristics Czech economy is currently at the threshold of transferring to competitiveness based on innovations. The existing innovation performance of businesses is mainly based on new innovations for companies, not for the market49. Impacts of these types of innovations are fundamental for productivity of businesses, however the impact on the labour market is ambivalent. In new innovations for the market, in particular innovations of higher order that represent, essentially, technology-based competitive advantages, the local business sector is still significantly lagging behind.50 A key precondition for a successful transfer to competitiveness based on innovation, which is the precondition for the creation of new, good quality jobs, is the development of business culture, entrepreneurship leading to the foundation of new companies and increasing the innovation and export performance of the endogenous business sector. It is also essential to decrease energy and material intensity. In order to understand the nature of the current problems, challenges and opportunities, it is essential to view the entire Czech business sector from the perspective of evolution. The inclusion of the Czech economy in the world economy after 1989 rested on the following internal factors: favourable price and workforce qualification ratio, strong industrial heritage and relatively technically advanced, good quality infrastructure compared to the countries in Central Europe, and a weak domestic sector that was able to compete in a very limited scope. These conditions were made more attractive thanks to the closeness to developed European markets with a prospect of entering the EU. As a consequence, there was a high influx of direct foreign investment in the Czech Republic and a follow-up strong demand for subsuppliers from the Czech Republic, which was significantly exploited by local companies. Most of them connected directly, or via an intermediary, to foreign companies operating in the Czech Republic and surrounding countries. This development enhanced the economy on the whole, and helped local companies to access managerial and technical know-how, and indirectly to access foreign markets. In addition to the indisputable positive side, the created strong dependency of the performance of the local economy on foreign companies has also its negatives that have been fully shown after the outbreak of serious problems in the world economy after 2008. The volume of production, investment and also employment greatly depends on the decisions made by foreign companies. In particular, SMEs are not able to compensate for the decrease in demand of their main customers. Their ability to find and enter new markets (in terms of territory and products) is limited. For these reasons, the Czech Republic needs to develop SMEs and also big companies as they have much higher capacity to systematically invest into R&D, including the development and use of KET, and to increase the innovation performance of the economy as a whole. Their success retrospectively influences the overall demand for SMEs production and innovations. The improvement of entrepreneurship environment in the Czech Republic (to improve the performance of public administration in entrepreneurship development, targeted development of infrastructure focused on removing problems with transport accessibility, better cooperation of the research sector with companies and improving the match between workforce competencies and business requirements) represents unused potential that can help to increase competitiveness. 49 MIT (2010): National innovation strategy of the Czech Republic 50 Analysis of material priorities and needs of individual areas within the competence of the Ministry of Industry and Trade at which the support from the EU’s Structural Funds should be targeted during the next programming period (2014+). Experience from the 2007-2013 programming period and the state of achievement of objectives Investments in the current programming period focus on the increase in motivation for doing business by offering preferential financing and preferential services for start-ups. The support involves also the provision of soft loans or bank guarantees for bank credits. Further, the establishment, operation and further development of business infrastructure are supported, such as the existing industrial parks, innovation centres, and regeneration of brown fields for business. Last but not least, also the quality consulting services are important that help businesses to make use of all market opportunities. In the programming period 2014–2020, the Czech Republic will have to focus on strengthening the role of innovation in strategic decision-making concerning the economic life of businesses. The current problem of the Czech Republic is the inability to transfer the research results into practice. It is therefore necessary to look for other ways to reduce the deficit and to enable the development of interconnection between the private sector and academia in relation to the research institutions. Requirements for the support of investment projects focusing on improving competitiveness in agriculture, food industry and forestry have been exceeded several times, which shows that there is still need for investment into agricultural and processing. Also, the quality of infrastructure in agriculture and forestry should continue to be increased, especially with regard to the so-far insufficient implementation of comprehensive land consolidation. Regional differences The support of enterprising and innovations depends on the potential and socio-economic standard of different types of regions. In particular, there are differences between metropolitan and non-metropolitan regions, and there are economically troubled regions. There are also significant differences between individual towns and microregions. In individual territorial units there are significant differences between the ability of local players to mobilise internal and external resources and to implement a sophisticated development strategy in accordance with the concept of smart specialisation. With regard to the location of the critical research and educational capacities, the main cities and the adjacent interlinked facilities are the driving force for the development of business and innovations. In particular Prague and Brno, in the recent years it is also Pilsen and Ostrava, despite the fact that the economy of the region of Moravia and Silesia has been affected and faces selective migration, above average rate of unemployment and a low level of entrepreneurship. In these metropolitan areas and other large towns, the absorption capacity is much higher with regard to supporting activities focused on higher order innovations. From the point of view of SMEs share, the capital city of Prague enjoys an above average position as nearly ¾ of total employment is down to SMEs. The regions of South Moravia and Zlín are in similar positions. On the other hand, the worst situation in terms of the SMEs share of total employment is in the region of Moravia and Silesia. As far as the actual support of SMEs is concerned and supporting people to start an enterprise, the need of support and the absorption capacity are more equally distributed among regions, with a need of special attention to the development of entrepreneurship in structurally affected regions. The entrepreneurship in rural areas, in particular in the economically less exposed regions (i.e. Karlovy Vary Region, Vysočina Region, Olomouc Region and the periphery areas of other Regions) suffers from many negative features (for example migration of talented young people, low intensity of entrepreneurship, high unemployment etc.). Tourism represent a specific part of regional economies. The importance of tourism where SMEs dominate is growing locally and in some areas it represents the main pillar of economic performance and employment. Support will include both urban and rural areas and will be focused on:  • developing areas as per the Regional Development Strategy 2014-2020.  • territories with high unemployment,  • economically weak regions according to the Regional Development Strategy of the Czech Republic for 2014-2020. Major identified problems and development needs: