Beyond input & output additionality of public R&D support: behavioural additionality & implications for industrial strategy

Lead Research Organisation: University of Bath
Department Name: School of Management

Abstract

Having identified a gap in the literature of innovation policy I would like to explore further the behavioural additionality of public R&D support programmes. This project will involve collection of survey data on firms' innovation behaviour. Given that well-established practices on collecting behavioural additionality data do not exist, the survey design is rather critical in the success of the PhD project. Firms that have received R&D support & firms that have not received but applied for R&D support will consist the units of analysis. Data on public R&D support will entail both R&D tax credits and R&D subsidies, which would enable identification of potentially differential behavioural additionality effects across the two measures. This has never been explored so far. These effects can be explored within European economies for which rich data on innovation are available; namely, Flanders, Germany, Spain, UK and Turkey (if possible through OIVs). More specifically data will be collected on: R&D tax credit/subsidy; Private R&D spending & innovation outputs of firms; Behavioural additionality indicators; Firm characteristics such as number of employees, sectoral affiliation, year of establishment, spending on R&D, turnover etc which can all serve as control variables. In this PhD project, an attempt to build upon & extend the literature on the determinants of R&D behavioural additionality will be made. Both quantitative and qualitative analysis will take place. From a quantitative perspective, parametric and non-parametric micro-econometric approaches will be used to test the hypotheses developed in the theoretical part of the PhD project. Propensity Score Matching (PSM) will be implemented as a means to evaluate the behavioural additionality of public R&D support. This evaluation method will address the potential endogeneity arising from the selection of firms in the R&D support schemes. The matching will take place conditional upon pre-specified firm characteristics(eg industry, size, innovation intensity etc) & some comparison behavioural indicators could be the size of the projects, the willingness to cooperation and willingness to engage in risky R&D. However, a serious weakness of matching approaches is that these methods account only for observable and not for unobservable influences. To this end, & given that longitudinal data may be difficult to obtain (to adopt a Difference-in-Differences estimation), we will also use appropriate instruments to estimate the corresponding regressions. All these types of additionalities are expected to contribute to higher levels of R&D & innovation which, in turn, can lead to higher productivity & eventually higher growth rates in the economy. This PhD project will inform the policy maker of the potential need for restructuring existing STI policy instruments &/or the development of new STI & industrial policies able to also accommodate the behavioural effects stemming from such R&D policy measures. Further, given that R&D subsidies can be more targeted to specific sectors while R&D tax credits are of a more horizontal nature (they apply equally to all eligible firms), perhaps a vertical innovation & industrial policy allowing for sectorally-differentiated R&D policies would be desirable. Such policies would be determined by the potentially various degrees of input, output & behavioural additionality realised across different sectors of the economy.

Publications

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Dimos, C. (2020) Conference Paper

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Dimos, C. (2020) Working paper

Studentship Projects

Project Reference Relationship Related To Start End Student Name
ES/P000630/1 01/10/2017 30/09/2027
1930890 Studentship ES/P000630/1 01/10/2017 03/04/2022 Christos Dimos
 
Description So far the project attempted to investigate the effectiveness of public support in promoting private R&D activities in the UK. My current work has revealed that receipt of public financial support can induce additional R&D inputs of firms and additional innovation outcomes. Furthermore, my current work also found that even in cases where public R&D support does not induce additional R&D inputs or innovation outputs for funded firms, there may be some significant firm-level behavioural changes. These changes may encompass the formulation of clear R&D strategies and increase in the competence of firms. I have also found that the timing of these effects does vary.
Exploitation Route The outcomes of this funding are particularly relevant to policy-makers. Innovate UK has already expressed interest in my research and are already putting forward internal proposals to change the way they assess the effectiveness of their public funding in line with the findings of my research. Further, I was approached by KPMG and they expressed their interest in using these findings so that they better support their customers.
Sectors Communities and Social Services/Policy,Creative Economy,Government, Democracy and Justice

 
Description Innovate UK has put forward internal proposals to change the way they assess the effectiveness of their R&D funding activities. In particular, Innovate UK is interested in designing and developing internal processes to enable the organisation to better assess the effectiveness of their funding programmes (beyond assessing potential changes in R&D inputs and innovation outputs) and in particular to additionally capture behavioural changes in firms due to receipt of public support for R&D
First Year Of Impact 2019
Sector Communities and Social Services/Policy
Impact Types Economic,Policy & public services

 
Description HMT
Geographic Reach National 
Policy Influence Type Gave evidence to a government review
Impact My work at the HM Treasury has led to evidence on the value of the UK's public sector intangible assets that will be published in government reports. This work is expected to change the way governments manage and exploit public sector intangible assets, generate additional cash flows for the public sector (through commercial exploitation of these assets) and generate wider economic impacts.
 
Description European Commission
Amount € 823 (EUR)
Organisation European Commission 
Sector Public
Country European Union (EU)
Start 08/2018 
End 10/2018
 
Title Survey data 
Description I have collected data through an online survey. This survey includes information on UK firms and contains information on their innovation and research activities, public R&D support and firm characteristics. 
Type Of Material Database/Collection of data 
Year Produced 2019 
Provided To Others? No  
Impact For the time being, collection of this data has contributed towards the development of a research conference paper and to the findings outlined in the corresponding section in this submission. 
 
Description Innovate UK collaboration 
Organisation Innovate UK
Country United Kingdom 
Sector Public 
PI Contribution Innovate UK got interested in my research and we have initiated a collaboration. This collaboration, which is underpinned by a memorandum of understanding, entails common activities in data collection, data sharing and exchange of knowledge and expertise.
Collaborator Contribution Innovate UK has been very keen on the project and has amply provided me with knowledge and access to their facilities. Further, Innovate UK has provided me with relevant data and facilitated data collection.
Impact Had it not been for this collaboration, it would be harder to collect the required data for the purposes of my research. Further, this collaboration enabled me to obtain access to the organisation's knowledge stock and it led to an internship in 2019.
Start Year 2018
 
Description KPMG 
Organisation KPMG International Cooperative
Department KPMG Leeds
Country United Kingdom 
Sector Private 
PI Contribution This is an informal collaboration between myself and KPMG. KPMG got interested in my research and contacted me to discuss further my ongoing research and potential avenues for future cooperation. They are also interested in using the findings of my research to better support their worldwide customers in their research and innovation activities.
Collaborator Contribution No particular contribution for the time being, but there is the potential for an in-kind contribution in the future and before the end date of the award.
Impact No particular outputs from this collaboration for the time being, but there is the potential for outcomes in the future and before the end date of the award.
Start Year 2019
 
Description Expert panel on valuation of intangible assets 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact I organised and attended an expert panel on valuation of intangible assets at the HM Treasury.
Year(s) Of Engagement Activity 2019
 
Description Innovate UK - blog 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact A blog co-written with a colleague from Innovate UK to promote our joint research collaboration.
Year(s) Of Engagement Activity 2018
URL http://blogs.bath.ac.uk/cgr-and-is/2018/12/19/from-little-acorns-oak-trees-grow-the-importance-of-pu...
 
Description Innovation Caucus Blog 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact A blog to promote my work with Innovate UK, Innovation Caucus and the Knowledge Transfer Network.
Year(s) Of Engagement Activity 2019
URL https://innovationcaucus.co.uk/2019/10/06/modelling-return-on-investment-roi-at-the-firm-level/
 
Description Regions Magazine article 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact After I participated in the 6th Masterclass on EU Cohesion Policy (which is highly selective and expenses are covered by the EU) organised by the EU Commission, I was asked to choose one more participant of the event and co-write a report for the event (see below link) to be published in the international magazine of "Regions" issued by the Regional Studies Association (RSA). The purpose of the article was to publicise both the event and my own research to a wider audience of policy makers, academics and postgraduate students who are the main audience of the magazine.
Year(s) Of Engagement Activity 2019
URL https://regions.regionalstudies.org/ezine/article/report-on-the-th-masterclass-on-eu-cohesion-policy...