40 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 44 | 2026 Policy recommendations As numerous Croatian policies and programs illustrate, excessive bureaucracy inhibits free market and entrepreneurial opportunities. Croatia should streamline the processes that support entrepreneurs, R&D, and innovation. Policymakers should clearly designate agency oversight, reduce day-to-day administrative burdens on businesses, and enforce collaboration through intermediary institutions that can coordinate activities. Education and early exposure to entrepreneurial opportunities could help challenge a culture of settling for the status quo. Although there can be benefits to prioritizing the EU’s collective well-being, streamlining processes to support individual enterprises will yield long-term gains by fostering a more technologically dynamic economy. Croatia’s innovation system does not lack policy initiatives; what it lacks is clear lines of agency responsibility about who oversees what. Support for R&D is split among different bodies, including the Ministry of the Economy and Sustainable Development, the Ministry of Science and Education, and the National Innovation Council (Leidecker & Bulman, 2023). Clarifying existing structures, rather than adding new programs, would be more likely to produce results. Administrative fragmentation at both the local and national levels require clearer allocation among governing bodies. Regulatory impact assessments should be simplified and conducted more frequently to determine policy effectiveness and necessary adjustments. Currently, new primary laws must be assessed for necessity and cost, but subordinate regulations that support those laws are not, and even the assessments that do occur often lack meaningful quantitative analysis (Leidecker & Bulman, 2023). Shared oversight between the Ministry of the Economy and Sustainable Development and the government’s Legislation Office complicates coordination and slows processes (Leidecker & Bulman, 2023). By expanding and consolidating these assessments, policymakers could direct resources to programs that work more efficiently, thereby reducing redundant bureaucratic layers and limiting the regulatory burden on businesses. Strengthening collaboration with higher education and public research institutions could increase innovation turnover in Croatia. Manufacturing companies that partner with research institutions tend to achieve higher rates of innovation (Prokop & Stejskal, 2017). Academics cite high tax rates, imposed both externally and internally by institutions, and a lack of incentives within their profession as barriers to pursuing collaborative commercial projects with business owners. To advance the relationship between business owners and academic institutions, indirect government support in the form of tax breaks for joint projects could nurture cooperation (Radas & Vehovec, 2006). Such schemes have worked in other EU countries such as Italy, which offers volume-based R&D tax credits. Italy also offers targeted incentives specifically for R&D carried out in collaboration with universities or public research organizations (OECD, 2025). Collaboration should also extend to clients and customers, who can provide useful market feedback to help firms produce products that meet demand. Additionally, cooperation with competitors can increase turnover rates by allowing for shared R&D, which could reduce costs (Prokop & Stejskal, 2017). Only 7.2% of Croatian SMEs collaborate on innovation, trailing the 10.3% EU average (Kostanjevečki, 2024). A network of partnerships could improve the ecosystem, particularly in rural areas, although establishing such a network would require targeted policy measures and an emphasis on the exploitation of EU funds in areas that need it. Current Croatian programs that have been demonstrably beneficial include the Ministry of the Economy and Sustainable Development’s grants for SMEs to strengthen innovation capacities as well as their “digitization and simplification of administrative procedures” (Kostanjevečki, 2024). Existing Croatian R&D grant programs require lengthy, costly applications involving multiple proposals to different bodies, each with its own objectives and timelines. Simplification and consolidation would make R&D financing more accessible (Leidecker & Bulman, 2023). Using financial mechanisms to increase institutional support has proven useful in other countries. Slovenian firms generate more innovation output from better use of R&D, funding, and partnerships. They also function more independently, reflecting a mature innovation infrastructure with a strong research base (Prokop & Stejskal, 2017). The Slovenian Innovation Hub and the Ljubljana University Incubator (dedicated to helping startups) are intermediary institutions that work with specific government agencies. A dedicated entrepreneurial discovery process in the country brought together stakeholders, including intermediary and government institutions, to determine priorities in Slovenia’s S3. Finland is another EU country that has built a strong innovation ecosystem by relying on dedicated orchestrators, like Aalto University, to connect startups, research, and industry. Finland’s research and innovation
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