Innovation Policy

How do policy-makers access the evidence base to formulate policy? To answer this key question, we will engage with the Chief Scientific Advisers to the UK government departments and with the Cabinet Office’s Capability Review Programme. We aim to deliver a programme of work which will address key innovation policy-related issues arising from the work and activities of government. We will also draw on the international review of developing systems in other countries as well as the internal knowledge base of our partner institutions and sponsors.

This project draws on inputs by senior academics associated with the UK~IRC programme, including principal investigators linked to other projects, and other academics and policy makers taking part in the research process. Its objectives are to identify the principle channels by which the evidence base on innovation informs public policy in its national comparative context.

Project Progress

In the last year this project has surged ahead, undertaking many activities in research and dissemination.

One of the main pieces of work for the project team was the collaborative UK~IRC/CIHE Enhancing Value Task Force.

The Enhancing Value Task Force was set up in 2012 to address four principle tasks:

1.            To place UK public and private sector research in an EU and global context.

2.            To explore the similarities and synergies between public and private sector research.

3.            To isolate the characteristic of different business sectors and explore appropriate sectoral systems of innovation.

4.            To identify and prioritise a small set of key actions for change that will enhance the value of publicly funded research and collaboration with business.

Substantial progress was made during the year and the project was completed in December 2012. The work of the Task Force produced 10 core conclusions and four key recommendations.

 Conclusions

1.            There is a global trend towards greater openness in research and collaboration between companies and research institutions. These dynamics are present in the UK, with some institutions being leading practitioners.

2.            The openness and excellence of the UK research base is reflected in its attractiveness to overseas firms. The UK has the world’s highest percentage of R&D coming from foreign subsidiaries. But this extreme position carries risks. This investment could go elsewhere as developing countries incentivise inward investment, or the UK could increasingly be viewed as providing a higher education and research service ‘at cost’ to the world. This would profit other countries’ innovation systems with little or no follow-on benefit to the UK.

3.            Research is a competitive, global activity and developing countries are capturing market share. The UK needs to compete for a greater share of supply chains, from research through to wide-scale deployment of new concepts and products, in order to support the UK’s economic prosperity and sustained investment in the higher education and research base.

4.            Enhancing the impact of the UK’s higher education and research base requires a joined up or systems-based approach, which recognises the linkages from research through to deployment, and from start-up companies through to major multi-nationals, as well as the importance of infrastructure and finance in achieving growth.

5.            Large international companies account for the majority of the UK’s business research and have the capacity to interface effectively with UK universities and funding organisations. These same companies choose to invest where they can find the best people, leveraging national research expenditures and infrastructure. Smaller companies account for a small fraction of R&D, and those seeking to innovate often struggle to leverage the university and funding systems, due to a lack of resources and relevant ‘bridging’ skills, both in the companies and in universities.

6.            The commercialisation of research is one of many ways in which value is created and it is inherently risky. Large companies are practised at this and have the ability to manage the whole innovation pipeline and portfolio. Failures occur regularly and are to be expected. Smaller companies have fewer resources and a narrower portfolio, making failure terminal, but success also more dramatic.

7.            The impact of publicly-funded research is difficult to quantify, but is consistently assessed as strongly positive where capacity exists to absorb the research into business and community activities.

8.            Innovation pathways vary by sector, depending for example on the ‘clock-speed’ of specific industries, industry structure, maturity, and the significance of IP. There is no single ‘silver bullet’ solution to enhancing the value and impact of university inventiveness that would work across all sectors. Equally, many technologies have multiple applications across many sectors.

9.            The absence of an industrial strategy has arguably resulted in offshoring of manufacturing, fewer opportunities for local leverage of the research base and a lack of strategic prioritisation of public research funding. Each sector has a particular set of strategic requirements and particular growth trajectories, and requires specific policy support.

10.          Despite having a vibrant financial services industry in the UK, UK inventions often end up being funded by overseas businesses, and their value is not captured in the UK.

Recommendations

  1. Maintain the excellence of the UK Research Base through long-term strategic commitments from government.
  2. Prioritise and finance collaboration, and the sharing of best practice in innovation, between UK universities and businesses, local and global.
  3. Promote entrepreneurship and entrepreneurial corporate management in universities in order to enhance risk-taking and innovation in business.
  4. Develop consistent differentiated sector strategies to incentivise university-business interactions designed to match specific sectoral systems of innovation.

The Enhancing Value Task Force was carried out with funding and support from the BBC, BP, Cisco, the Technology Strategy Board, HEFCE, the EPSRC and one of the UK~IRC’s strategic partners, the Council for Industry and Higher Education (CIHE).

The findings and insights deriving from this work have attracted very positive feedback from BIS and HEFCEand have been included in numerous internal BIS briefing documents. Download the reports here.


Evidence Based Policy Analysis

In addition to the work of the Task Force, further work continued on the input of advice into policy formation at UK, EU and broader international domains.

David Connell prepared presentations on EU/US style public procurement SBIR programme at a workshop organised by the European Parliament in Brussels in April 2012 and on the role of lead customers at a Euroscience Open Forum in Dublin in 2012 as well as giving the presentations at the University of Vilnius in Finland and took part in a series of meetings which led to the launch of public procurement linked policy initiatives in the EU.

Alan Hughes
, UK~IRC Director, worked on the evidential and conceptual basis for industrial policy. He wrote an invited paper for an ESRC & CEPR BIS conference hosted by the Rt Hon Vince Cable MP on National Innovation Policy and Global Innovation Systems: Key Challenges and Opportunities for the UK, 14th June, which was published in the resulting edited book. He made presentations at numerous OECD and EU policy meetings. He was invited to speak by the Foundation for Science and Technology at the Royal Societyalongside the Rt Hon David Willetts MP, the Minister for Universities and Science, and Sir John Parker, the President of the Royal Academy of Engineering, where the topic for debate was “Intervene or stand back – what should be the industrial strategy for the UK?”. He was appointed as one of eight lead experts advising the UK Government’s Foresight Programme on the Future of UK Manufacturing. As a member of the Council for Science and Technology, he attended meetings with the Rt Hon Vince Cable MP, the Rt Hon David Willetts MP, and produced policy advice and presentations to senior officials at BIS and at HEFCE as well as at seminar and conference presentations on the theory and practice of innovation policy in the UK and Australia. He was also appointed as Innovator in Residence to the Queenland’s State Government in Australia in July 2013.

Elif Bascavusoglu-Moreau and Cher Li were commissioned by the Government’s Foresight Programme on the Future of UK Manufacturing activity to analyse the evidence on the nature and extent of knowledge spillovers from R&D and innovation in manufacturing and their impacts on regional development. Their report will be published in the supporting evidence to the main report which is due to be published in October 2013.

Going Forward

The project team will  be conducting analysis of international comparative inputs into the formation of selected policy domains. This will allow a focus on the types and forms of evidence used in the development of innovation policy. Fieldwork interviews will be conducted in a sample of countries to be chosen from UK, USA, Finland, Norway, Denmark, Sweden, France, Germany, Japan, Korea and Australia, and with the OECD Innovation Policy Secretariat.

Continue international comparative analysis with focus on role of  evidence base in relation to policy developments in:

a.            university industry links and  public sector research

b.            financing high technology businesses

c.             intermediate organisations

This research will produce both academic research output and, more specifically, a series of high-level policy briefing papers for three Chatham House Rule events to be held. Alongside this activity briefing notes will be produced supporting the policy research programme.