Impact of Tekes activities

Transcription

1 Impact of Tekes activities VINNOVA Seminar on the Relationships between R&D investments, Innovation and Economic Growth Stockholm, May 5, 2008 Jari Romanainen Executive Director, Customerships Tekes, Finland

2 Public sector activities of R&D in Finland PARLIAMENT Science and Technology Policy Council Ministry of Education GOVERNMENT Ministry of Employment and the Economy Other ministries and their institutes Academy of Finland Universities Tekes VTT Sitra Finnvera Oyj Finpro Regional TE-Centres

3 Allocation of R&D resources Uncertainty Risk Basic research curiosity research Finnish Academy Universities strategic basic research Applied research Product development Commercialization Marketing Internationalization Business development Investment Tekes Finnvera TE-Centres Distance to markets Allocated total Industries Venture capital Allocated resources

4 Tekes key partners and stakeholders Other ministries Regional Councils Science and Technology Policy Council Key ministries Invest in Finland Innofin Academy of Finland Municipalities and cities Finnish Industry Investment Ltd Sitra Private investors and Business Angels National Board of Patents and Registration of Finland Associations for industry and services Finnvera TE- Centres Tekes Finpro Technology Centres Centres of Expertise Customers Companies Universities Research institutes Polytechnics

5 Major driving forces - External drivers Globalisation of businesses Relocation factors for various business activities; Leading role of MNCs; Market dynamics and hot spots of STI Changing societies and customer markets Social challenges (e.g. ageing population); Social dynamics (e.g. subcultures, virtual societies); Socio-economic changes (e.g. polarisation, digital divide); Changes in values (e.g. attitudes); Civic society (e.g. NGOs, social shaping of technologies) Changing nature of STI Context of use; Networks, systemic character of innovation, orchestration; Generic technologies and convergence; Open innovation; Multidisciplinarity, non-technological innovations Changing demands and dimensions of governance Multilevel governance; Global challenges, international governance; Self-control, NGOs; Politisation, awareness, trust

6 Major driving forces Internal drivers Need for more knowledge and increasingly sophisticated understanding Complexity; Continuous change and learning; Strategic intelligence; Capabilities Need for coherent and understandable policies Multilevel governance; Balanced policy mix; Coherence; Predictability Need for more effective and efficient use of resources Framework competition; Maximizing leverage; Public-private partnerships; Pooling resources Need for better public management New public management and accountability; Systemic, holistic, balanced STI policy mix; Awareness Need for continuous learning Continuously changing environment; Flexibility, agility; Experimentation; Strategic intelligence, foresight, systemic evaluation; Benchmarking JR

7 Actors and linkages in the innovation system JR Macroeconomic and regulatory context Education and training system Global innovation networks Knowledge generation, diffusion & use Communication infrastructures Regional innovation systems Other research bodies Firm s capabilities & networks Supporting institutions Science system Clusters of industries Product market conditions National innovation system National innovation capacity Factor market conditions Source: OECD COUNTRY PERFORMANCE Growth, jobs, competitiveness

8 Systemic approach to innovation policy Functional set-up Learning governance, strategic foresight, evaluation, monitoring, assessment innovation capabilities Knowledge base education science R&D skilled labour knowledge ideas Knowledge transfer awareness, co-operation, mediation complementary knowledge Innovation process complementary resources sophisticated demand competition clustering Market conditions customers competitors value-chains regulation services money Framework conditions culture, social capital, financial services, innovation services, regulation

9 Targeting behavioural change and clustering requires a more comprehensive approach Target Strategic behaviour Now R&D Previously Services Technology Business models Content Source: Gaia Group

10 Regional networking with partners from Oulu in electronics and telecommunications programmes Lappeenranta University of Technology (Lappeenranta) CCC (Oulu) Salcomp Oy (Kemijärvi) Sonera (Helsinki) Nokia Mobile Phones (Oulu) Efore Oy (Helsinki) National Semiconductor Finland Oy, former Fincitec Oy (Kemi) Cybelius Software Oy (Oulu) University of Oulu (Oulu) Tampere University of Technology (Tampere) Elektrobit Oy (Oulu) Projekti-Insinöörit Oy (Helsinki) Nokia Networks (Oulu) NetHawk Oy (Oulu) Teleste (Turku) ABB (Helsinki) ADC Telecommunications Oy (Oulu) JOT Automation Oy (Oulu) VTT, Technical Research Centre of Finland (Oulu) VTT, Technical Research Centre of Finland (Helsinki) Helsinki University of Technology (Espoo) Polar Electro Oy (Oulu) Extrabit Oy (Oulu) Filtronic LK Oy (Oulu) Nokia Research Center (Helsinki) Aspocomp Oy (Helsinki) Vaisala Oyj (Helsinki) Elcoteq Network Oyj (Lohja) Suunto Oy (Helsinki) Includes partners who participated in at least three projects in Tekes Electronics and Telecommunications technology programmes. Picopak (Lohja) Ultraprint Oy (Oulu) Planar Systems Oy (Helsinki) Nokia Mobile Phones (Salo) JR

11 Policy is about managing transitions Changes proceed with different pace Changing culture and mindset is typically slow Changing processes can be faster Changing structures is fast, but as such seldom solves anything Challenge of polarisation ( creative destruction ) Employment, labour market, regional development, social exclusion, etc. Controlled approach is required Balanced, systemic, holistic, adaptive The role of change agents is increasingly important Agility and adaptability are necessary Instead of a best system at one time, aim for a good system at all times, i.e. whoever understands change and manages to react to it appropriately (driver, early adaptor, follower, etc.), wins Understanding cultural context is important STI and related policies are path dependent What works in one context doesn t necessarily work in another Finding the appropriate policy mix

12 Policy governance processes are at the centre of understanding innovation systems Private interests Public interests Scientific research Agenda setting National strategy Strategic intelligence Policy learning Design Sector policies Implementation strategies Policy evaluation Performance evaluation Instrument set-up Implementation Impact evaluation Evaluation

13 Tekes and three roles of government Finance knowledge production, transfer and use Reactive funding of R&D projects Lead, stimulate and catalyze innovation Proactive funding of programmes and activation schemes Create favourable environment for innovation Developing the Innovation system and policy Source: Rand Europe (adapted)

14 Impact of Tekes activities Renewal of industries, economic growth, employment and societal well-being through R&D and innovation. Competitiveness, profitability and growth New businesses, start-ups Societal and environmental impacts Enterprises Projects and programmes International cooperation Research institutes and universities Tekes provides expert services and R&D funding coordinates programmes

15 Designing a Public Innovation Agency 0 Starting point Policy Mission Roles of public sector 1 Competencies Science, Technologies and Innovation (Global) Markets and Society 2 Processes Effectiveness: Impact of public R&D funding attached with other activities (smart money) Efficiency: Optimising the delivery 3 Organisation Actor in a larger (innovation) system

16 Characteristics of Tekes 1.Competencies In-house expertise Investment in continuous upgrading of competencies 2.Processes Continuous day-to-day interaction with all major stakeholders and performers Horizontal and vertical co-ordination of all activities (planning, joint implementation, etc.) National, international and regional networks Trust, shared commitment, resources 3. Organisation Mix of two cultures in a multidimensional matrix Individualism and teamwork

17 Impact of Tekes activities Investments Results Direct effects Impact on national economy and society Project monitoring, Tekes operative indicators (BSC) Innovation studies and research, evaluation, foresight International benchmarking, macroeconomic indicators, research on the impact of R&D and innovation on economic growth and social development

18 Our view on Evaluation ROLE Evaluation has a vital function in the STI policy cycle. Evaluation is one of the strategic intelligence functions that feed sense-making and learning. Evaluation itself is a continuous learning process. PURPOSE Improve understanding of how the system works and changes. Accountability. CONTEXT Innovation policies consist of mixes of schemes targeted at several systemic failures. Policy mix is a result of various decisions taken over time under different rationales. Evaluation should recognise the role single schemes play in the policy mix. APPROACH Policy relevant questions are complex and therefore require a more comprehensive approach and combination of methodologies. Learning and understanding requires participation JR

19 Development of Tekes Programmes from Technology to Targeting Behavioural Change and Enhance Commercialisation Technology Technology Commercialisation International competition Technology Regulation Regulation International competition Commercialisation and other benefits created from the use of R&D Evaluation of programmes during the transition from Technology orientation to Commercialisation

20 Programme evaluation at Tekes First generation Performance evaluation Feedback for participants Peer reviews Second generation Separation of performance and impact evaluation Internal performance evaluation supporting monitoring External impact evaluation supporting programme design and accountability Third generation Impact modelling and thematic evaluations (mixes of measures) Use of multiple methodologies Supporting renewal of technology programme concept Better policy relevance and support for policy design, easier to find the common language

21 Innovation is a profitable investment for the future R&D investments Competence New knowledge New business models Networking Innovations: products and services, methods and processes, organisational innovations Start-ups, new business areas and services Growth and globalisation of companies Productivity Renewing business structures Affluence Regional vitality Employment Environment and health Security and safety Social well-being Investments Results Direct effects Impact on national economy and society

22 Tekes investments: funding and know-how Additional investments from Tekes Investments Results Direct effects Impact on national economy and society

23 Research findings on the impacts of R&D funding from Tekes on companies own investments in R&D On average, public R&D funding in Finland increases the private innovation activities of the funded companies in both nominal and real terms. Ebersberger et al. (2006) Results from public R&D funding show a strong additionality to companies own R&D investment. Ebersberger (2005a) An increase of 1 in public R&D funding increases companies own investments in R&D by , bringing the overall impact to Ali-Yrkkö (2004) Analysis does not show R&D funding from the public sector to displace corporate financing. Receipt of public R&D funding increases the following year s R&D activities financed by the company itself. Ali-Yrkkö & Pajarinen (2003)

24 Research findings on the impacts of R&D funding from Tekes on companies own R&D investments Companies that received Tekes funding conducted more self-financed R&D than companies to which funding was not granted. Ali-Yrkkö & Pajarinen (2003) Public funding does not displace companies own investments in R&D. Lehto (2000) Public R&D funding increases companies own investment in R&D. Toivanen & Niininen (2000)

25 Results: competence and new business models Investments Results Direct effects Impact on national economy and society

26 Research findings on the impacts of R&D funding from Tekes on business models and competence Public R&D funding has a fairly positive impact on the innovation activeness, independence and cooperation of companies in Finland. Hovi et al. (2006) Public subsidies to the cooperation of universities and SMEs generates substantial added value. Kutinlahti et al. (2006) Public funding encourages closer cooperation between companies. A study of cooperation between traditional industry and knowledgeintensive service companies showed public funding to stimulate industry into cooperation with more service companies of different types. Ebersberger (2005b) Tekes funding has increased the risk level and productivity of R&D projects, promoted the construction of a network of cooperation between companies, increased the human capital of the companies by boosting competence level and impacted on the long-term business strategies of the companies. Pekkanen et al. (2004) JR

27 Research findings on the impacts of R&D funding from Tekes on business models and competence Tekes funding serves to increase cooperation and the risk level and duration of R&D projects. Vaihekoski et al. (2003) The importance of public R&D funding was highlighted in the development of the most radical innovations presenting the greatest challenges in terms of competence. Tanayama (2002) Some 60% of the most significant innovations developed in Finland over the past 15 years had received Tekes funding. In technology programmes, the importance of cooperation was highlighted especially in the product development projects of small companies. Palmberg et al. (2000) Low-technology sectors would seem to reap particular benefits from public sector technology programmes, which underscores the importance of technology policy in support of networking in these sectors. Palmberg et al. (2001) JR

28 Results of completed projects Public research projects Corporate R&D projects Feasibility studies Completed projects in total Academic theses Publications Patent applications by research organisations Patent applications by companies New or improved products New or improved services New production processes

29 Source: LTT Research JR Impacts of Tekes on company operations Funding renders possible research unrelated to our business needs in the short term Over time, funding has caused changes to our business strategy Tekes has allowed us to undertake riskier and more productive projects Funding has increased the competence of our personnel Funding has helped our company to internationalise Funding has helped in building a network of partners The availability of funding has impacted on the location of our production facilities The availability of funding has impacted on the location of our R&D facilities Completely agree 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % Somewhat agree Don t know No response Somewhat disagree Completely disagree

30 Source: Tekes customer survey JR Impact of Tekes funding on cooperation with companies by universities and research institutions Projects concluded in 2003, % Increased substantially Increased somewhat No impact Decreased

31 Competence and new business models are manifested as growth in the turnover, productivity and employment of companies Investments Results Direct effects Impact on national economy and society

32 Research findings on the impacts of R&D funding from Tekes on outputs and financial performance Tekes clients have experienced more rapid growth than companies in the business register in general. Business Aid Database Creation: Final Report by the Working Group (2006) R&D funding from Tekes increases the growth, activeness in seeking patents and demand for labour of companies and reduces the likelihood of business closures and mergers. Hovi et al. (2006) R&D funding from Tekes has increased the growth of productivity and improved employment in companies with a well compensated R&D staff. The impact on productivity was greatest in SMEs and companies near the pinnacle of productivity. Piekkola (2006) Tekes funding could be observed to have a clear positive impact on growth in the number of R&D personnel at the companies. Ali-Yrkkö (2005)

33 Research findings on the impacts of R&D funding from Tekes on outputs and financial performance Public innovation subsidies have a positive impact on the growth of employment in companies. A company receiving public funding is more likely to seek patents than other companies. Ebersberger (2005b) Nearly two in three companies perceived Tekes funding to have helped the company increase its net sales. Pekkanen et al. (2004) The study supports the hypothesis of public R&D funding having a positive impact on the generation of innovations in companies. Ebersberger (2004) Companies receiving a capital loan from Tekes had on average grown by nearly 30% annually while the average growth rate for SMEs was 10%. Miettunen & Nissinen (2000) The networking relating to R&D efforts would seem to increase company profitability. Niininen & Saarinen (2000) JR

34 The impacts of R&D projects are widely reflected in society Investments Results Direct effects Impact on national economy and society

35 Impacts of Tekes on the national economy and society The great majority of Tekes impacts on the national economy and society arise from the improved productivity and business operations resulting from innovations, but the activities of Tekes also have direct social impacts.

36 GDP and the Well-being Index Finland has had better success than other industrialised nations in combining higher income levels with well-being. GDP per capita in 1999, (corrected for purchasing power) in US dollars 45,000 Luxembourg 40,000 35,000 30,000 25,000 20,000 USA Denmark Germany Switzerland Canada Norway Iceland FINLAND Austria Sweden 15,000 10,000 5,000 0, , , , , , , ,0 WI=Well-being Index Sources: Robert Prescott-Allen (2001): The Wellbeing of Nations: A Country-by-Country Index of Quality of Life and the Environment; Human Development Report The United Nations Development Program JR

37 GDP and the Human development index GDP per capita in 2006 in US dollars (corrected for purchasing power) 35,000 USA Norway Ireland 30,000 25,000 Israel Germany Great Britain Italy Hong Kong Belgium Austria Switzerland Denmark Netherlands Canada Finland Japan France Sweden Australia Iceland Spain 20,000 0, , , ,945 0, , ,960 0, , Human development index Sources: United Nations Development Programme: Human Development Report 2007/2008 and Statistics Finland JR

38 Environmental quality and growth competitiveness In Finland, investment in the quality of the environment and competitiveness complement one another. EPI-Index *(2008) Switzerland Norway Sweden Finland New Zealand Austria Iceland France Great Britain Canada Germany Estonia Japan Denmark Spain Ireland Taiwan USA Australia Israel Belgium Netherlands 75 4, , , , , , , Global Competitiveness Ranking (2007) * EPI = Environmental Performance Index Sources: WEF: Global Competitiveness Report and Yale and Columbia universities: Environmental Performance Index JR

39 Thoughts on Evaluation based on our Experiences Traditional approaches do not work any more or at least have a very limited use Too narrow view to provide any true understanding Difficult to answer policy relevant questions either overestimates or underestimates impacts New approaches are needed Approaches using multiple methods Approaches recognising the underlying characteristics of policy culture and thereby inherent path-dependencies Approaches recognising and providing understanding of the wider mix of policies and measures both intentional and unintentional Approaches that provide results sooner to allow continuous adaptation and improvement (real-time learning, support to policy experimentation) Approaches based on impact models and target group or thematic orientation Taking a more advanced approach Experimenting will inevitably lead into some failures, which must be accepted Is more costly and demanding, but will inevitably improve policy relevance of evaluations significantly

40 Thoughts on Communicating Evaluation results Challenges Language barrier Different perception/understanding of the key questions Approaches attempted - experiences Workshops between researchers and policy makers typically limited view on isolated topics/instruments/structures, which are hard to take into policy relevant discussion; typically analytical language of researchers does not provide clear enough answers to policy makers Evaluation reports limited use in learning, but hardly any use in communicating to policy makers Impact reports a wider look into the impact of public policy/funding and the role of Tekes in it communicates much better, some impact on learning, but small because of the lack of a dialogue Case studies too technical do not work, difficult to generalise, can support main messages from evaluations What next? Making the anticipated impact mechanisms and the role different activities play in reaching the objectives visible Looking at mixes on policies and measures to tackle the really important questions why objectives are reached and why not; reason is very seldom in one single instrument Involving policy makers in to the evaluation process, because typically most of the value gain through evaluation lies in the process, less in the report

41 Barriers in Communicating Evaluation Results Analyst/Agency How can we validate our existence? How can we validate the investments to our activities? How can we convince policy makers that our existing and proposed activities are worth investing in? How can we learn to do our work better? Policy maker What is the appropriate level of investments in R&D and innovation? How should this investment be channelled? What instruments should be strengthened, what changed, what killed and what new should be launched?