Assessing the business performance effects of receiving publicly-funded science, research and innovation grants – Research Paper No 61( Revised )
Published: 6 September 2017
UK Research Councils spend around £1.7bn pa on supporting research. Here, we provide the first comprehensive assessment of these research grants on the performance of UK firms. Using data on funding and partnership from Gateway to Research on all funded projects by the UK Research Councils over the 2004 to 2016 period and business performance data from the Business Structures Database we have applied a difference-in-differences propensity score matching technique to evaluate the performance of UK firms who participated in publicly-funded research projects. Our analysis suggests five key conclusions. First, firms who participated in research projects funded by UK research councils grew their turnover and employment 5.8-6.0 per cent faster in the three years after the project, and 22.5-28.0 per cent faster in the six years after the project, than similar firms which did not receive support. Second, the impact of participating in projects is larger for firms in high-tech manufacturing and knowledge intensive services. Third, we find evidence that the impact of participating in projects is larger for small firms and those with lower starting productivity (turnover per employee). Growth impacts on firms in the top quartile of the productivity (turnover per employee) distribution are small. Fourth, support relevant to businesses is provided largely by EPSRC and Innovate UK. Participation in projects funded by both organisation increases both employment and turnover growth in the short and medium terms with only marginal differences in their impact. Fifth, the effects of grants vary depending on the size of the project. Participating in projects involving small and very large grants have smaller growth effects than medium-sized support packages. Our results have implications for the extent and targeting of future Research Council funding.
Our analysis is subject to a number of caveats. First, data limitations mean that we measure economic impacts using turnover and employment data rather than value added per worker or hour worked. Secondly, at this point we only consider the direct impacts on firms. Spillovers or multiplier effects may significantly enlarge these effects; displacement may reduce them. Both will be considered in a future study. Thirdly, data linking and the timing of some grant awards in recent years mean we are able to consider growth effects for only around two-thirds of firms which participated in publicly funded science and innovation projects.
Assessing the impact of Covid-19 on Innovate UK award holders Survey and case-study evidence Wave 1 – June/July 2020
This is the first in a series of benchmark reports on the impact of Covid-19 crisis on the status of Innovate UK award holders. The analysis focuses on the impact of the crisis over the last three months and firms’ plans for the next three-month period. Both firm level and project-level effects are considered. Data was derived from extensive survey work with IUK award holders and, where survey respondents agreed, more detailed interview follow-up.
The dynamic nature of the Covid-19 crisis and the imminent ending of a number of government support measures – particularly the furlough scheme – means that it is important to take into account the timing of the survey. The analysis is based on an on-line survey of 334 IUK award holders conducted between 5th and 19th of June 2020 and in-depth interviews undertaken between 29th of June and 13th of July. The on-line survey was distributed by Innovate UK but individual respondents’ information has been treated as confidential to the research team. In-depth interviews were conducted by OMB Research Ltd.
Published: 9 September 2020
In light of concerns about persistently weak productivity levels in UK firms, this study focuses on the relationship between investment in R&D and innovation activity and how this relates to business growth and productivity. The context for our investigation is micro-enterprises, i.e. employing up to 9 employees. These enterprises dominate the business landscape and in Northern Ireland account for almost 20 per cent of the workforce while also playing an important development role in the economy.
Drawing on survey data of nearly 10,000 micro-enterprises in 3 countries: the UK, Ireland and the US, our analysis emphasises the importance of R&D – an investment activity that is often considered not suitable for small enterprises - in supporting the relationship between innovation and productivity.
Some of our main findings include:
• Despite resource and capability constraints within micro-enterprises, that curtail their ability to undertake R&D, we find that investing in R&D has a strong and positive effect on enhancing the contribution of innovation to productivity and turnover growth. This result is consistent throughout all of our estimations, even though the actual effect might be varied across different types of industry.
• In order to explain the importance of R&D investment, we also estimate the innovation function with two innovation outcomes: product and process innovation. Our results indicate that investing in R&D activity is important not only for product/service innovation, but also for process innovation.
• R&D investment undertaken inside the enterprise is positively associated with both product innovation and process innovation, however R&D acquired externally has no significant relationship with product innovation but is positively related to process innovation.
• In line with previous studies, we identify a significantly lower level of productivity for Northern Ireland micro-enterprises.
Published: 14 July 2020
Published: 17 June 2020
Enterprise Research Centre
Warwick Business School
University of Warwick
Coventry CV4 7AL
Enterprise Research Centre
Aston Business School
Birmingham B4 7ET
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