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.
Innovation and Exporting
This White Paper contains summaries of presentations given at a workshop on rural, non-farm enterprise supported by the Enterprise Research Centre and hosted at Aston Business School on 27th February 2014. The final contribution by Roger Turner, who co-ordinated the event for ERC, provides a summary of the discussions from the day and some of the issues which arose.
The Enterprise Research Centre has a dual objective: to carry out leading- edge research on small business growth and development and to ensure that where evidence does exist it is made available as widely as possible. The ‘Out of the Shadows’ event was linked to the second objective, and brought together academics and other researchers conducting research on rural business development with those formulating policy for and directly supporting rural enterprises.
The ERC is grateful to all of the contributors for their input at the ‘Out of the Shadows’ event and their permission to include material in this summary report.
Published: 4 September 2014
Among SMEs high growth is often episodic and not sustained. This paper reviews a number of international support measures designed to give SMEs the capabilities and resources to sustain fast growth.
Published: 1 September 2013
Enterprise Research Centre
Warwick Business School
University of Warwick
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Enterprise Research Centre
Aston Business School
Birmingham B1 7ET
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