R&D Public Policy Strategies: A simplified model

Public policies on R&D and innovation have proved to make a considerable impact on economy in most countries. The range of strategies adopted by governments is so wide and complex that it is difficult to establish a comparison among them, or to make a forecast on the potential outcomes from adopting one or other strategies. Thus, to ease the policy design process there is a need to outline a model that allows visualising the possible strategies and instruments available.

The model presented here (see figure below) provides a generic overview of strategies that may be adopted when making R&D policy, attending to two key parameters: the degree of interventionism, and the level of risk assumed by the managing government. As a results, there are four type of strategies that may be adopted:

Figure showing a model to define R&D and Innovation Public Policy Strategies, prepared by Francisco Velasco and licensed under CC BY-NCSA 4.0. Blog de Francisco Velasco: www.fvelasco.com

An attempt has been made to map some of the most common instruments (Di Comite & Kancs, 2015) in the proposed matrix as shown below. This mapped model is yet to be developed further and there is a likely misreading of some of the instruments. I will be happy to listen your views!

Figure showing a model mapping instruments of R&D Public Innovation Policies, prepared by Francisco Velasco and licensed under CC BY-NCSA 4.0. Blog de Francisco Velasco: www.fvelasco.com

An explanation both figures above is provided:

  • Enabling Strategy. Is characterised by low government interventionism and high-risk aversion (understood primarily as financial risk). This strategy is characteristic from economies based on primary industry and with a reduced and unsophisticated innovation ecosystem. Some typical instruments implemented under this strategy are: training programmes to raise the innovation profile of professional staff, promotion and marketing actions to raise public awareness on innovation, or the launch “innovation voucher” programmes that provide a small financial contribution for SMEs to hire external consultants to develop new products, conducting market research, or improving internal processes.
  • Dynamic Strategy. This strategy requires governments to take an innovation facilitator roll and take actions towards fostering R&D collaboration; the most typical instrument in this case is the implementation of funding programmes to R&D projects. The level of risk taken is variable and depends on the level of funding committed to such purposes; and the degree of government interventionism is relatively low, because policies focus on rewarding R&D activity, and not on influencing how such activity shall be conducted.
  • Regulated Strategy is characterised by a high interventionism to define the “game rules”, that is, regulation and legislation that obliges meeting certain standards concerning R&D directly or indirectly. Public Administrations taking this approach assumes relatively low risks, since no great sophistication is required on the design of specific instruments; however, a relatively high investment is required in the preparation of regulatory and tax-related measures. Some common instruments adopted with the regulated strategy are the introduction of corporate tax discounts on R&D, the implementation of ISO standards related to R&D management practice, or the application of green-related normative (such as CO2 emissions requirements, which pushes companies developing novel technological solutions)
  • Open Systemic Strategy. This strategy assumes innovation as an intrinsic part in the way government manages office (the government innovates itself). Such approach implies a high interventionism under the premise of having a good understanding on innovation and R&D strategy, and places the government as a key stakeholder in the country´s innovation agenda. Government thus assumes a high level of risk in the design of new instruments that usually involve participative and co-creative processes with the private sector. This model requires highly qualified personnel with world-class knowledge on innovation and R&D processes, and takes place in the most advanced economies in the world. Some of the usual instruments adopted with this strategy are the public procurement of innovation, technology foresights, or the long-term transformation of the educational system itself to ensure the creation of an innovative culture.

The proposed model is subject to discussion and has no scientific grounds. However, it is based on fieldwork observation and provides the advantage of being simple and building on two solid parameters (interventionism and risk). The model may aid the strategy design process because allows understanding some underlying implications of adopting specific strategies, and designing the appropriate instrument policy mix for each country. I am intending to refine and improve some of the assumptions, and I will be happy to hear your comments!

 

REFERENCES

Di Comite, F., & Kancs, D. (2015). Macro-Economic Models for R&D and Innovation Policies.

 

Launched APTA Hub in Chile, a model worth following

Last 20th April 2017, the “Andes Pacific Technology Transfer Hub (APTA) was officially presented in Santiago de Chile., resulting in a highly interesting initiative worth following!

Picture of Francisco Velasco presenting the Needs Programme at the APTA Hub launch in Chile

The HUB model on technology transfer was launched last year by the Chilean government (more specifically, the Corporación Andina de Fomento de la Produción, CORFO), with an approximate 20M€ investment for a period of 5 years. The initiative aims to build 3 organisational structures (named Hubs) specialised on innovation management and prototyping at national level. The 3 Hubs shall bring together a large part of the Chilean innovation ecosystem, including a total of 26 universities, 8 scientific & technological centres, 4 international centres of excellence, 3 investment funds, 7 trade associations and several key international partners, such as KIM (the entity I currently represent).

The most interesting aspect of this initiative is the fact of financially empowering “off-campus” teams to provide services to several universities. Such measure could potentially address many of the issues observed in university tech-transfer models in the past: setting the Spanish example, the named Oficinas de Transferencia de los Resultados de la Investigación (OTRIS) has evolved in most cases into a bids and funding management offices, rather than actual technology licencing offices, and have proved low results in terms of return of investment. One key reason for such failure lies on the fact that such offices were designed with small teams (1-2 person), while technology transfer requires larger teams in order to offer the required knowledge and skills in tech transfer (technical evaluation, market research, business development, intellectual property management, negotiation, legal, financial, marketing and communication among other). Thus, the creation of larger “off-campus” teams (7-15 people) that provide services simultaneously to several universities seems an excellent example of rationalisation of resources and optimisation of results. And to avoid any concerns on the potential disappearance of the OTRIS (named in Chile OTL – Office for Transfer and Licensing), the Chilean model has enabled that such OTLs form part of the Hub governance structure and a clear communication link with each university.

The APTA Hub is also pioneering in reversing the typical order in tech transfer to focus on the demand –side of technology, rather than the supply-side. In this same meeting, APTA has have launched the Chilean Business Challenge Programme (Programa de Retos Empresariales de Chile), which is designed and powered by KIM. This will focus on building a portfolio of industry needs working in collaboration with some of the most relevant trade associations in the country, in order to match existing and new technologies within the Hub and other knowledge generators worldwide.

It is yet early to evaluate results, however the initiative shows clear signs of an intelligent model to promote innovation, which builds on the principles of rationalising public resources and being a programme of national interest. We will follow it closely!