Promoting the roles of R&D service firms in the innovation system

Lead Research Organisation: University of Manchester


R&D service firms offer specialised R&D services to other parts of the economy. They are a key source of external knowledge for other businesses. Firms operating in the UK R&D service sector rose from 2,642 in 2007 to 4,620 in 2015, an increase of 71.4%. This sector has become the major R&D performing sector in the UK. In 2015, it accounted for £5.3 billion of expenditure, representing 25% of total Business R&D Expenditure.

My PhD research explored the in-house innovation of R&D service firms. Based on in-depth interviews with senior managers of 32 UK R&D service firms, this study not only mapped out the process of innovation, but also revealed the diversity of innovation practices. The analysis revealed that these firms are real innovators, producing novel knowledge, technologies and intellectual properties via undertaking in-house R&D and leveraging external knowledge. Their innovation process can be initiated by either technological opportunities or market requests. Determined by the internal and external resources, they choose between informal exploration activities and formal in-house R&D projects to produce new services or products. This enables them to carry out complex projects to support their clients innovation. But lack of financial resources and a supporting policy environment appears to constrain innovation in R&D service firms. This may be because government policies and incentives overwhelmingly tend to focus on supporting research in universities and public research organisations to innovate.

The aim of the fellowship, therefore, is to put the roles of R&D service firms in the UK economy firmly on the agenda of policy makers, industrial associations and bodies, academics, and businesses. I will spend 75% of time in communicating research findings to key stakeholders, and 25% in doing further research based on my PhD work.

1. Communicating research findings
-Publication. I will produce two journal articles from the thesis: 1) comparative analysis on R&D service firms, knowledge-intensive business services and technology-based firms; 2) Dynamic changes between different types of R&D service firms.
-Strengthening existing networks and building networks. I expect to strengthen existing networks and expand new networks via 1) attending R&D Management conference 2019 and DRUID conference 2019; and 2) organising a one-day workshop towards the end of the fellowship.
-Engaging with users. I will engage them by mobilising the existing networks of my mentor and institute colleagues, especially with innovation policy-makers in the Department for Business, Energy and Industrial Strategy (BEIS), Innovate UK/UKRI, and key stakeholders and intermediaries such as NESTA, AIRTO, EARTO, RADMA etc. I will identify suitable platforms for industry-facing and policy-facing non-academic writing, such as the publications/blogs of the above-named organisations, specialist trade publications such as Research Fortnight, and wider but targeted use of blogs (e.g. Policy@Manchester, The Guardian 'Political Science' blog) and social media (e.g. Twitter, Linkedin).

2.Further research
As demonstrated in my thesis, the overseas market accounts for a large share of R&D service firms, ranging from 25% to 90%. Europe and the US are the two major markets for UK R&D services exports. 20.3% of R&D services were exported in 2013, but this lags behind 45.6% for Germany and 43.4% for France. The uncertainty caused by Brexit raises the question of how best to secure and expand the UK R&D service sector in the international marketplace. By using existing data and undertaking 8-10 interviews with previous interview participants, my further research aims to explore 1) how far they work for overseas clients; 2) how far they collaborate with other European organisations; and 3) how far they look for expanding into other overseas markets. It is expected to provide advice on stimulating the trade of UK R&D services in global market.


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Li X (2018) Innovation in R&D service firms: evidence from the UK in Technology Analysis & Strategic Management