Much of the argument for publicly funding R&D activity either in universities or companies rests on the assertion that the knowledge created is a public or quasi-public good, i.e. it has the potential to generate benefits for society at large. Big investments in public R&D in a particular locality may, for example, generate clustering effects attracting other firms to co-locate. Knowledge or innovation stimulated by publicly funded R&D may stimulate new business and generate positive multiplier or supply chain benefits.

Here, we aim to use matched data from the Gateway to Research (GtR) database and UK Innovation Survey to explore these spillovers. The UK Innovation Survey provides detailed data on the internal factors which shape firms’ innovation outputs. GtR provides comprehensive data on public R&D spending which we can categorise by locality and broad sector. Linking the two datasets will allow us to assess the (direct) contribution of public funding to the innovation activity of UKIS recipients and assess any (indirect) spillover effects. The central question is whether firms which are in industries or localities which receive high levels of public support are more innovative than they would have been without that public support? In what industries or areas are these spillovers strongest? The results will be relevant to current thinking about the IS and questions about the allocation of IS Challenge Fund resources between industries.