Annual Conference of Taftie, Wien 25.11.2003 Additionality and Tekes Markus Koskenlinna Impact Analysis Tekes, The national technology agency Finland markus.koskenlinna@tekes.fi www.tekes.fi
Criteria for Selection in Tekes The qualification criteria: Following factors are evaluated: The company's competitiveness and growth The competitive advantages of the technology or technique The company s resources How Tekes financing will influence the project. Tekes takes a positive view towards projects that involve: networking with other companies joint ventures the use of local SME subcontractors in the case of larger companies participation in national technology programs contracting of services from Finnish research institutes and universities and promotion of international cooperation. The Tekes financing is directed to the funding of R&D work at companies registered in Finland and at Finnish research institutes and universities.
DM 32189 11-2002 Copyright Tekes Impact of Tekes activities To increase exports, broaden Finland s industrial base, generate new jobs, expand welfare. competitiveness profitability growth Enterprises new businesses new enterprises projects and programmes international cooperation direct societal and environmental impacts Research institutes and universities Tekes provides expert services and R&D funding coordinates programmes
Turnover expectations of completed SME R&D projects DM 58620 08-2003 Copyright Tekes New turnover expected, million euros 400 300 At start of project At end of project 200 100 0 2001 2002 2003 2004 2005 2006 The figures cover 150 SME R&D projects completed in 2002 which Tekes funded by 35 million euros. Additionality: included in the figures.
DM xxxxx 10-2003 Copyright Tekes 1a. How well were the targets concerning the development of the particular technologies set to the projects met? 50 40 30 20 10 VTT 2002 2003 N = btw 200 300 Additionality: included in the columns. 0 Very well well moderately well not well the project failed
Regional networking with partners from Oulu in electronics and telecommunications Lappeenranta University of Technology (Lappeenranta) programmes CCC (Oulu) Salcomp Oy (Kemijärvi) Sonera (Helsinki) Nokia Mobile Phones (Oulu) Efore Oy (Helsinki) National Semiconductor Finland Oy, former Fintec 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) VTT, Technical Research JOT Automation Oy (Oulu) VTT, Technical Research Centre of Finland (Helsinki) Centre of Finland (Oulu) 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) Picopak (Lohja) Nokia Mobile Phones (Salo) Ultrapoint Oy (Oulu) Planar Systems Oy (Helsinki) Additionality: Included in the figure, BUT market mechanism could not produce this kind of cluster. DM 58620 08-2003 Copyright Tekes
Regional networking with partners from Turku in electronics and telecommunications programmes Miratel Oy (Turku) Nokia Multimedia Terminals (Turku) Finnish Broadcasting Company (Helsinki) Elisa Communications (Helsinki) Sonera (Helsinki) Nokia Research Center (Helsinki) University of Oulu (Oulu) Tampere University of Technology (Tampere) Helsinki University of Technology (Espoo) VTT (Helsinki) Satel Oy (Salo) Teleste (Turku) Nokia Mobile Phones (Tampere) ADC Telecommunications Oy (Oulu) Nokia Networks (Tampere) Filtronic LK Oy (Oulu) Mariachi Oy (Turku) ABB (Helsinki) Additionality: Turku region does not have an electronics competence centre; yet there Is the cluster. VTT (Oulu) Wallac Oy (Turku) DM 58620 08-2003 Copyright Tekes
Network of universities, polytechnics, public research organisations and science parks in Finland University University unit Polytechnic Polytechnic unit VTT, Technical Research Centre of Finland or other public research institute Unit of public research institute Science Park Additionality: Base for additionality policies; Regional competencies rely on competence centre links that convey international-level knowledge into regions. DM 58620 08-2003 Copyright Tekes
Networking in corporate R&D projects funded by Tekes Share of networked projects, % 100 80 60 40 Total corporate R&D projects Subcontracting from research institutes Part of technology programme International cooperation 20 0 1999 2000 2001 2002 Additionality: share of networked projects is more than 30 %-units larger than that in non-funded corporate R&D Large company subcontracting from SMEs DM 58620 08-2003 Copyright Tekes
What added value does public financing bring to the innovation activity of enterprises? The results of recent studies 1 Approx. 60% of the significant Finnish innovations for the last 15 years were partly financed by Tekes. Palmberg, Niininen, Toivanen, Wahlberg 2000: VTT Group for Technology Studies, Working Papers, 47 Additionality:Tekes is involved in perhaps 1 out of 7 8 innovation developments. Input- additionality? Low-tech industries seem to benefit especially from public financing programmes. This stresses the importance of a technology policy favouring networking. Palmberg (2001): Sitra Reports series 8 Additionallity: Obvious. The importance of public R&D financing was emphasised in the development of radical innovations representing the severest challenge to know-how. Tanayama (2002): VTT Group for Technology Studies, Working Papers, 53 Additionality: obvious Networking related to R&D work seems to increase the profitability of the enterprise. Niininen, Saarinen (2000): VTT Group for Technology Studies, Working Papers, 53 Additionality: encouragement of networking brings additionality DM 38065 02-2002 Copyright Tekes
What added value does public financing bring to the innovation activity of enterprises? The results of recent studies 2 Half of the key projects of the randomly selected enterprises were partly financed by Tekes. Of public players, Tekes has the most substantial guiding effect promoting networking. Halme, Pulkkinen, Tiilikka (1999): Tekes, technology review 78/99 Additionality: in line with finding concerning significant innovations. Public financing increases the own R&D investments in enterprises with high research intensity. Niininen (1999): Helsinki School of Economics and Business Administration A-158 Additionality: Increases corporate R&D, does not replace Public financing does not take the place of corporate R&D investments. Its growth by one unit increases corporate R&D investments by one unit. Lehto (2000): Labour Institute for Economic Research, Studies 79 Additionality: Increases corporate R&D, does not replace. DM 38065 02-2002 Copyright Tekes
What added value does public financing bring to the innovation activity of enterprises? The results of recent studies 3 In 53% of the projects, a financing decision from Tekes played a role in the start of the project. In addition, due to financing through Tekes, in half of the projects the goals were set higher than originally, in one third the project was extended, and in more than a third, the implementation was speeded up. Numminen (1999): VTT Group for Technology Studies Additionality: Obvious, based on the survey. The enterprises which had received a capital loan from Tekes, had grown by almost 30% in a year, whilst the average growth of SMEs was 10%. Due to the loan, the enterprises had in four years crossed the valley of death. Without the loan, the equity ratio of one third of them would have been negative, and liquidation would have threatened 39% of them. Miettunen, Nissinen (2000): Helsinki School of Economics and Business Administration Additionality: Obvious DM 38065 02-2002 Copyright Tekes
What added value does public financing bring to innovation activity of enterprises? The results of recent studies 4 57% of the enterprises would not have implemented the project without Tekes financing. Due to Tekes financing, other projects, too, were often implemented larger and sooner than planned. Ojala, Sarpakunnas (2000): Auditing Memorandum, National Audit Office Additionality: Obvious In the survey of approx. 30 enterprises, no effect of Tekes 1995 and 1996 financing on the appreciation of the enterprises between 1995 and 1997 could yet be discovered. Venetkolis (2001): Government Institute for Economic Research, studies 83 Additionality: Non found, but small sample and short time period. Public R&D financing increases the enterprise s own investments in R&D work in companies with adequate cash flow but not enough internal financing for covering R&D costs. Toivanen, Niininen (2000): Helsinki School of Economics and Business Administration, Working papers, W-264 Additionality: Points towards addionality DM 38065 02-2002 Copyright Tekes
DM 58620 08-2003 Copyright Tekes What added value does public financing bring to innovation activity of enterprises? The results of recent studies 5 Especially in recent years, enterprises with Tekes financing have contributed to the growth of net employment considerably more than other enterprises. Tekes-financed enterprises also seem to have been able to offer more stable jobs. Maliranta (2000): ETLA, B168 Additionality: Points towards additionality, but does not rule out a selection bias. Public R&D funding complements and increases corporate R&D activities. An input of 100 units of public funding gets a company to add 114 units to its own R&D input. ALI-YRKKÖ, JYRKI - PAJARINEN, MIKA Julkinen T&K-rahoitus ja sen vaikutus yrityksiin - Analyysi metalli- ja elektroniikkateollisuudesta. ETLA Nro 846, 2003. Additionality: Obvious, in line with previous findings
What added value does public financing bring to innovation activity of enterprises? The results of recent studies 6 An ETLA survey of the metal and electronics industries shows that rather than displacing research funded by companies themselves, public R&D funding encourages companies to increase their own research funding input the following year. ALI-YRKKÖ, JYRKI - PAJARINEN, MIKA Julkinen T&Krahoitus ja sen vaikutus yrityksiin - Analyysi metalli- ja elektroniikkateollisuudesta. ETLA Nro 846, 2003. Additionality: Obvious An ETLA survey shows that companies whose activities depend more than average on external funding invest more in R&D and are more growth driven if they have access to more public funding. The findings are important from the economic aspect and confirm the idea that increased corporate investment is a consequence of public investment and not vice versa. HYYTINEN, ARI - TOIVANEN, OTTO Do Financial Constraints Hold Back Innovation and Growth? Evidence on the Role of Public Policy. ETLA Nro 820, 2003. Additionality: Obvious An important finding because several biases were controlled. DM 58620 08-2003 Copyright Tekes