Research and technology institutes and the service economy - A

RISE - RTOs in the service economy Synthesis report , workpackage 2

Research and technology institutes and the service economy - A functional perspective on innovation related services Brigitte Preissl DIW - Deutsches Institut für Wirtschaftsforschung Direct line:

+49 30 89 789 237

Email:

[email protected]

A final report of RISE: RTOs in the service economy - Knowledge infrastructures, innovation intermediaries and institutional change RISE reports may be downloaded from: http://centrim.bus.brighton.ac.uk/go/rise/

s

RISE coordinator: Dr Mike Hales CENTRIM - The Centre for Research in Innovation Management Direct line:

+44 1273 642190

Email:

[email protected]

This report constitutes a deliverable specified in the RISE work programme Contract number: SOE1-CT98-1115 Funded under the TSER programme by the European Commission, DG Research Date: December 2000

Research and technology organisations in the Service Economy (RISE) Final Report WP2

Research and Technology Institutes and the Service Economy A functional perspective on innovation related services

Summary prepared by

Brigitte Preissl (DIW)

based on country analyses by Thor Egil Braadland, Morten Fraas (STEP) Margarida Fontes, Mureil Pádua, Rui Carvalho (INETI) Sander Kern /TNO/STB) Lennart Norgren (NUTEK) Jeff Readman (CENTRIM) Ulrich Wurzel, Anja Dresenkamp (DIW)

Berlin December 2000

Table of Contents 1

Introduction .................................................................................................................................... 3

2

The evolution of the concepts of RTIs and their role in innovation................................................. 5

3

RTIs and KIBS firms in national innovation systems...................................................................... 9

4

RTIs, KIBS and innovation service functions: Survey results ....................................................... 17 4.1 Sample selection............................................................................................................... 17 4.2 The questionnaire ............................................................................................................. 18 4.3 Survey results ................................................................................................................... 19 4.3.1 Characteristics of the sample population .......................................................................... 19 4.3.1.1 Types of Organisation ................................................................................ 19 4.3.1.2 Size ............................................................................................................ 21 4.3.1.3 Employees.................................................................................................. 22 4.3.1.4 Affiliation .................................................................................................. 23 4.3.2 Funding structures in RTIs and KIBS ............................................................................... 23 4.3.3 Composition of Output ....................................................................................................... 28 4.3.4 Competition in research markets ........................................................................................ 34 4.3.5 Service functions ................................................................................................................ 36

5

Indicators for institutional and functional orientation.................................................................... 44 5.1 The design of the set of indicators .................................................................................... 44 5.2 Institutional and functional orientation in RTIs and KIBS................................................ 50 5.3 Correlation between indicators ......................................................................................... 76

6 Country summaries ....................................................................................................................... 97 7 Conclusions.................................................................................................................................. 107 References ......................................................................................................................................... 86 Appendix 1: Questionnaire................................................................................................................... 109 Appendix 2: Indicators and typologies ................................................................................................. 110

Tables 1 2 3 4 5 6 7 8 9 10 11 12 13

Surveys on RTIs and KIBS firms by RISE country teams ............................................................ 18 Size of organisations in % of respondents..................................................................................... 22 Sources of funding in % of budgets and turnover (averages) ........................................................ 24 Average share of foreign and domestic sources in total budgets in % ........................................... 28 Average shares of labour input dedicated to... (in %).................................................................... 29 Importance of output categories for research institutes ................................................................. 33 Importance of output categories for KIBS firms .......................................................................... 34 Competitors: share of all respondents that are competing with .................................................... .35 Factors providing competitive advantage...................................................................................... 36 Service functions - Share of all respondents that offer this service function in %................................................................................................................................. 41 Ranking of service functions according to relative frequency of supply ....................................... 44 Attribution of variables to indicators............................................................................................. 49 Indicator results for four countries - % of all respondents included in the indicator..................... 51

Diagrams 1 2 3 4 5 6 7 8 9 10 11

KIBS-Orientation.......................................................................................................................... 52 Institutional Dynamics .................................................................................................................. 54 Public Orientation ......................................................................................................................... 57 Research Orientation..................................................................................................................... 59 Institutional Orientation ................................................................................................................ 61 Academic Orientation ................................................................................................................... 63 Policy Orientation ........................................................................................................................ 65 Service Orientation ... .................................................................................................................. .67 Technology Orientation ................................................................................................................ 69 Functional Diversity...................................................................................................................... 71 Functional Dynamics ................................................................................................................... 73

Figures 1

Innovation Service Functions........................................................................................................ 39

1

Introduction

The RISE project (Research and Technology Organisations in the Service Economy) looks at the role of RTIs (Research and Technology Institutes) in innovation. This role changes in response to changes in processes of innovation and due to modifications in funding and the subsequent adjustments of the functional orientation of RTIs. In a simultaneous process, innovating firms express more varied needs for innovation related services, and RTIs adapt to requests of high applicability of their research results. In delivering services to enterprises, however, RTIs compete with providers of knowledge intensive service firms (KIBS). At the same time, service firms have become serious competitors for RTIs in contract research for public bodies. An increasing range of service inputs to innovation and a greater service orientation of RTIs are the two trends that mark processes of innovation in a service economy. These trends can be observed from the demand side (focussing on firms that adopt RTI/KIBS services) or from the supply side (focussing on RTIs/KIBS that provide innovation related services). This paper takes the second perspective1.

Providing a definition of RTIs that is valid for all countries on an institutional basis was difficult because of the diversity of RTIs in Europe. Concentrating on public sector research as the main characteristic would have excluded British RTIs. In some countries most of the research that is relevant in the present context is allocated in universities, in others, including universities would not have made sense. Therefore, in a broad approximation, all organisations have been included which provide output that is relevant for innovation and which have a ‘public mission’. This includes publicly as well as foundation supported entities and excludes private business firms. Usually these organisations rely on public funds for part of their budgets2. The difficulty to define RTIs according to institutional criteria underlines the need to describe and categorise them rather according to what they do and – in this case – what they contribute to innovation than according to ‘what they are’. However, in order to address a meaningfully assembled sample population, an institutional definition was needed, which subsequently was to be substituted and complemented by a functional one. On the basis of the broad criterion of ‘providing services that are related to processes of innovation’ each country team selected the organisations that fulfil this condition. Unfortunately, this rather humble ‘definition’ of RTIs resulted in units of research that do not match statistical 1

The first perspective is at the centre of another workpackage of the RISE project that deals with innovation clusters (see Denhertog/Whalley 2000). 2 In the UK a group of RTIs, the so-called Research and Technology Organisations (RTOs) have been completely privatised, and thus are seen as KIBS firms in this text. However, due to their history and ‚mission‘ and to their current status, they occupy a position between RTIs and KIBS. .

e:\preissl\rise\wp2\RISE-sept-00

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categories, and thus, no statements on the representativity of samples was possible. In addition, different organisations were relevant in each country – for example, the Swedish sample includes no university institutes, while universities are a main group in the Dutch sample, and the German sample comprises only a specific group of university institutes, socalled An-Institutes. Hence it would be misleading to aggregate the data into a ‘multi-country sample’.

This report will start with a short outline of the discussion on RTIs in national innovation systems which will position the research undertaken in this work package of the RISE project in a wider context (chapter 2). Seven country teams have contributed to the analysis by providing reports on their national systems of innovation (NIS) and the institutional configuration of RTIs. The following countries are included in this part of the study: Germany, Italy, the Netherlands, Norway, Portugal, Sweden and the UK. A short summary of NISs and R&D configurations is contained in chapter 3. More in-depth analyses have been provided for six countries (the above, except Italy). Here postal surveys in RTIs (and partly also in KIBS) have been conducted in order to retrieve information that could not be obtained from official statistics. The surveys focussed on activities of RTIs, their configuration of budgets, clients, types of output and functions exercised in innovation processes of their clients. The two main purposes of the surveys were to map changing institutional and organisation settings in the provision of innovation related services and to generate a typology of service providers that focuses on functional rather than institutional distinctions. Survey results will be presented in chapters 4; in chapter 5 these results will be transformed into indicators that serve as a basis for RTI and KIBS typologies. Chapter 6 will present summaries of country reports. Finally, conclusions will be drawn with respect to changes in innovation systems and processes of innovation, and to the methodology adopted to monitor these changes (chapter 7).

To a large extent the units of research in the RTI part of our samples overlaps with public sector research institutes which have been the object of another TSER project (see Senker et al. 1999). Their definition of public sector research comprises institutions “...for which the major source of funds is public; and which are in public ownership or control (or have converted to private ownership since 1980); and which aim to disseminate their research.” (Senker et al. 1999, p.3). The parentheses solve the problems with British RTOs that are a sort of hybrid between ‘public’ and ‘private’3; and the clause about dissemination 3

Thus, British RTOs are being treated as ‚public‘ in the Senker report and as ‚private‘ in this report.


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corresponds with the ‘public mission’ term in the RISE definition. Strictly speaking, this definition of public sector research would exclude most of the RTIs in Germany, because either public funds are not their main source of finance (as in some Fraunhofer institutes) or because they are not in public ownership or control, since usually RTIs are organised as ‘registered associations’, and an important feature is their strict independence from government control. Despite the restrictive definition, all these RTIs have been included in the German part of the public sector research project (see Schimank/Winnes 1999). This hints at similar problems with a general definition of RTIs as in the RISE project. The focus of the Senker project is much narrower than that of RISE, because empirical investigation concentrates on human genetics research only.

The identification of KIBS firms is less controversial. They are defined as companies which provide knowledge intensive business services that are supporting innovation, such as engineering firms, software providers, consultancy firms, training and human resource management and development as well as firms specialising in technical analysis and testing. The more difficult part was the compilation of address material for empirical research, since in most countries no comprehensive company registers exist for service industries. This also made it difficult to assess the degree of representativity of the KIBS samples.

2

The evolution of the concepts of RTIs and their role in innovation

National innovation systems (NIS) differ with respect to their institutional configuration. Public, semi-public and private organisations contribute in varying intensity to the generation, diffusion and application of knowledge. It is this institutional diversity which has stimulated the debate about the systemic nature of innovation systems, their ‘optimal’ configuration in a historically given economic context and measures to improve systemic efficiency (Nelson 1993, Edquist 1997). The attention of researchers and policy makers alike moved from processes of creation of knowledge to its diffusion and, at the present stage, to the absorption or implementation of knowledge in innovating companies. Reaching and maintaining high levels of R&D expenditure seems to be a major concern in many economies (see, for example, the indicator system of the EU for science and technology, EU Commission 1997). Enhancing the diffusion of knowledge in order to guarantee a wide-spread use of state-of-theart technology and to give access to new technology also to those firms which do not generate it themselves, induced the creation of agents to enhance technology transfer (see Abrahamson


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et al. 1997). The difficult balance between promoting the diffusion of knowledge (with the possibility to create positive external effects) and the legitimate protection of the copyrights of its creators stimulated debates on spillovers and their effects on R&D and innovation activity (see, for example, Levin, Cohen and Mowery 1987). Process re-engineering and organisational adjustment became key issues in the implementation of new technologies. The success of a technological innovation seems to depend to a large extent on how the technologies on which it is based are used. This implies the integration of new technologies into existing routines as well as the adjustment of organisational patterns and procedures to technological paradigms. Services involved in all three dimensions of technology and innovation, the generation, diffusion and adoption of knowledge, are provided either by the innovating company itself or by other actors in the NIS. RTIs and KIBS firms belong to these groups of actors.

There are strong arguments for public support of R&D and thus, also of the institutions that provide it (for a review of the literature, see Farina/Preissl 2000). There are basically three ways in which the output of RTIs enters processes of innovation: via publications and publicly accessible documents, via training of personnel and via industry contracts. These mechanisms as well as processes of production and innovation themselves create spillovers which enhance innovation activities in national economies. The support of knowledge creation which would not have occurred in a market context, because the outcome of the relevant R&D is too uncertain, not directly profitable, or costs are too high to be borne by a single enterprise, is one of the aims of public innovation policies. Stimulating the diffusion of knowledge by making it publicly accessible is another. In most countries, thus, financing R&D with money from government sources was a well-established pillar of economic policy. However, doubts concerning the efficiency of this kind of support in terms of innovation activities induced and their success have led to a reconsideration of the mechanisms and institutions of public R&D support. Furthermore, budget deficits have forced governments in Europe to look for more efficient ways to promote innovation. A re-organisation of public sector research has thus been initiated in many European countries (for an extensive documentation, see Senker et al. 1999). RTIs are increasingly funded on a project or programme basis, and not on an institutional basis. Thus, basic research whose results are open for the general public will be reduced (or conducted only in projects with a limited duration and scope), and contract research becomes more common. The main reason for this is to make funding organisations have a greater influence on the research agenda (and the outcome) (see also Senker et al. 1999, p.30). This holds for public as well as private sponsors


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of research projects. Cuts in basic funding, doubts about the efficiency of publicly funded institutions and the need to make research in RTIs more directly useful for enterprises have led to pressure on RTIs to increase the share of industry contracts in their activities4. It has been argued that the relationship between RTIs5 and industry has changed due to the specific features that characterise a knowledge society (Jacob et al. 2000). Jacob et al. provide a list of these features: •

transdisciplinarity: expertise from more than one discipline is necessary to provide comprehensive solutions to practical problems;

•

collaborative partnerships: researchers and practitioners engage in an iterative dialogue from the definition of the problem to the implementation of a solution;

•

heterogeneity of organisations in the market for knowledge production;

•

strong need for experts who are able to translate academic knowledge into applicable solutions of practical problems, and to take practical problems and knowledge from productions sites as an input for advancement in theory;

•

stimulus for research comes primarily from practitioners’ problems and not from academia. (Jacob et al. 2000, p.255.)

The authors argue that these characteristics of a knowledge society lead to relationships between industry and RTIs that are based on partnerships, in which participatory research, dialogue, interaction and collaboration (Jacob et al. 2000, p.257) prevail over a simple transfer of knowledge in codified form. The typical problems of relationships between RTIs and industry, timing, control over research processes and property rights, can thus be overcome.

The identification of a knowledge society goes along with the transition from a manufacturing to a service economy. Thus, it is being argued in this paper, the relationship between RTIs and industry that focuses on the joint creation, transfer and exploitation of knowledge will also reflect the specific characteristics of a service economy, i.e., the emphasis of services as inputs to innovation and the presentation of RTIs’ output as services to various groups of clients. However, interpreting the industry-RTI interaction in terms of contracts between service provider and client takes away some of the rather harmonious view 4

In a quite contradictory way, evaluation procedures in German RTIs have led to a strong pressure to increase academic output, thus to do less project work and publish more articles. 5 The authors use the term ‘academies‘ which, however, seems to be very close, if not undistinguished from RTIs in this paper.


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of the Jacob paper. The role of the client in a market relationship is more dominant with respect to control over the process, appropriation of outcomes and definition of the service than a partnership concept suggests.

Another aspect of the service perspective on innovation and RTIs is competition in service markets. It must be assumed that RTIs do not only compete with each other in the provision of innovation-related services, but also with private service firms or KIBS. The impressive growth of these services in most European countries in the last ten years (see RubalcabaBermejo 1998 and OECD 1999), has led to the assumption that they must play an increasing role in supporting innovation processes in their client firms. It is one of the concerns of the RISE project to explore the fields in which RTIs and KIBS firms are competitors and to investigate the division of labour between them. Therefore, in some countries, the surveys on innovation related service functions included KIBS firms6. The contribution of KIBS to innovation has been widely discussed in the past (see, for example, Miles / Kastrinos et al. 1994, DenHertog/Bilderbeek 1997, Preissl 1998, Farina /Preissl 2000, Windrum/Tomlinson 1999, Strambach 1997, Wood 1997). So far, the literature has concentrated on the reasons, why firms have increased their use of external service providers (see also Beije 2000). This report contributes to the debate by providing more evidence on the functions in which KIBS support innovation processes and the competitive ground they share with RTIs. However, the small samples of the RISE surveys do not allow to estimate the order of magnitude of the KIBS participation in innovation for the economy as a whole.

The following analysis concentrates on five hypotheses that are central for the RISE agenda: (1)

National innovation systems show a large variety of institutional forms of innovation service providers. Landscapes of NIS actors are changing in response to new patterns of innovation and as a consequence of new R&D and innovation policies.

(2)

Processes of innovation increasingly require services which go beyond traditional R&D tasks. These services can either be provided by RTIs, by KIBS firms or by the innovating company itself. RTIs and KIBS firms compete in markets for innovation related services.

(3)

One of the key elements of innovation support in the service economy is the efficient provision of innovation related services (as opposed to technology transfer which characterises previous stages of economic development.

6 These countries were: Germany, Sweden, and the UK; in the Netherlands, KIBS firms were part of the gross sample, but response rates were too low to proceed with any statistical evaluation.


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(4)

Service orientation and budget constraints require a reconsideration of national R&D strategies and innovation support policies.

(5)

Innovation patterns that are characteristic for service economies are shaped by the configuration and operational features of NIS; thus, to a certain extent trajectories of RTI / KIBS development will be country-specific. However, common trends in the functioning of markets or the organisation of production will have an impact on the harmonisation of innovation service provision.

These hypotheses are reflected in a series of institutional and functional characteristics of innovation service providers. From a micro (supply) perspective, these characteristics will be analysed using national surveys of RTIs / KIBS firms. The macro perspective will be covered by NIS reports. The hypotheses have guided the generation of questionnaires and indicators; they also are at the centre of the comparative perspective on country results.

3

RTIs and KIBS firms in national innovation systems

In the specific national innovation systems (NIS) of each country, there are organisations that provide innovation related services in the public and semi-public as well as in the private domain (for extensive analysis of NISs in Germany, Italy, the Netherlands, Norway, Portugal, Sweden and the UK see Rickert 1999, Farina/Solimene 1999, Leyten/ Limpens 1999, Leyten,/Whalley/Limpens/Kern/denHertog 1999, Hauknes/Näs/Solum/ Orstavik 1999, Fontes 1999, Norgren 1999, Hales 1999a and 1999b). Despite their institutional diversity, these organisations can be identified as RTIs and KIBS firms in each NIS report. Almost all the reports show how R&D expenditures are distributed between the different actors and which share is attributed to public and semi-public RTIs. The UK and Dutch reports try to estimate the RTI and KIBS shares of outsourced or extramural R&D. A large part of the NIS reports is also dedicated to descriptions of research institutes that can be classified as RTIs and their changing roles, i.e. they diagnose diminishing public core funding and a growing dependence on industry contracts. However, KIBS firms are not covered in any of the reports. Their R&D activities should be documented in statistics on business R&D, but in many countries these do not give data on R&D in service industries. Another difficulty of capturing statistically the role of KIBS in NIS is the fact that R&D statistics might show R&D in service industries, but not R&D provided by service firms on behalf of their clients (see Revermann/Schmidt 1999). The following chapter gives an overview of RTIs and KIBS and their roles in NISs.


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Norway The Norwegian R&D performing system is a tripartite system; with corporate R&D accounting for about 47% of national R&D performance, higher education institutes (HEI) accounting for about 27% and a conglomerate sector of public and private contract R&D institutions with 26% in1997. The autonomous technological and industrial contract R&D institutes, account for about 15% of national R&D). In national discourse on R&D and innovation policies the institute sector is recognised as a third major R&D performing sector, alongside the HEI sector and business enterprise R&D.

The R&D institutes are dominantly funded by public sources. National business enterprises funded slightly less than 25% of the R&D expenditures. The governmental regulation specifies that funding of the ”public” but autonomous R&D institutes generally combines three types of funds, (1) core grants, to be used to general competence enhancement at the specific institute, (2) strategic programs directed at competence building at a specific institute in a pre-selected scientific or technological area and (3) funding of other programmes and projects, allocated to the institute on the basis of scientific, technological or practical merit.

The SINTEF group is the largest R&D performing organisation in the institute sector, with a total employment of about 1 700, and an annual budget of about 1,5 billion NOK. The dominant position of the SINTEF Group in the Norwegian institute sector is clear from the fact that the SINTEF Group accounted for nearly 54% of total income of the technological industrial R&D institutes in 1998.

Industry-based and -organised R&D institutions play an important role particularly in less research-intensive industries. However, they represent only a small share of the overall R&D performance; accounting for less than 8% of R&D in the technological and industrial contract R&D institute sector. They are organised more strongly along an industry perspective than on the basis of fields of technology or technological orientations. Broadly speaking, while the research orientation of the technological RTIs is emphasised, these industrial RTIs are rather more strongly oriented towards development work related to the specific industries in question.


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Italy In 1996, the national R&D expenditure was distributed in the following way: RTIs 16%, universities 22%, Government 4% and enterprises 58%. Universities received the largest amount of public funding for research (42% in 1996), while the share of RTIs was 39.5%. One specific feature of the Italian NIS is that Italian universities are usually concerned with teaching and researching, but they have poor relations with industry.

Since 1989, most of the Italian public institutions and organisations other than universities, which have research and technology as their core mission, have been included in a single broad group in the public administration called “comparto di ricerca” (57 institutes). The only two other public RTIs not included in this group (for administrative reasons) are ENEA and ASI. The most important institution is the CNR. It carries out research in many scientific areas, including socio-economic and humanistic research. CNR has about 7,500 employees and it is organised in 195 institutes and 121 centres. In 1997, the total budget of the CNR was 1,318 billion Lire, most of which (1,183 billions, 90%) was represented by Government transfers, only 55 billion (4%) were funded by the private sector.

The second most important research institution (on the basis of R&D expenditure) is ASI, which promotes scientific and technological programs for the national aerospace industry. ENEA has the functions of supporting scientific research and of providing knowledge intensive services. It was established as a nuclear research centre, but since the abandoning of this field, it has concentrated on environmental research and new sources of energy. Two large institutes work in the field of physics (INFN and INFM), they are closely related to universities, having the task to transfer academic knowledge to firms and to co-ordinate the national physics policies. They are mostly publicly financed. The last large research institution is ISS (Higher Institute of Health), which promotes and co-ordinates national projects of research in the area of public health. It also has other important functions of testing and framing drugs and technical food standards.

These institutes share human resources and scientific structures with universities, and, for this reason, they carry out the largest part the transfer of technological knowledge from the academic to the firms’ world. They could be the bridging institutions in the Italian system, because they are deeply rooted both in universities and firms. The problem is that many of them had to face an oppressive bureaucracy. Only the reorganisation now under way can give them the deserved key role.


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Netherlands R&D investment in the private sector is characterised by the fact that the greater part is concentrated in five large multinationals (Akzo, DSM, Philips, Shell, and Unilever). They are responsible for about 45% of all private R&D in the Netherlands. The Netherlands has a relatively large public research infrastructure of which the large technological institutes, TNO and the universities form the heart.

In 1996, total R&D-outsourcing by Dutch firms, universities and research and technology organisations amounted to 1.2 billion EURO. About 54% of this amount went to RTIs and universities, while about a fourth of the national funds for outsourcing of R&D went to cooperation with other firms.

As opposed to the fact that private R&D is almost exclusively internally financed, R&D at RTIs and universities are almost exclusively publicly funded. The public sector represents a fairly large part of the total knowledge flows in the NIS: it is almost as high as the internal investments in the R&D of firms. Through an increase in outsourcing of R&D by 25%, private firms are primarily responsible for the growth of knowledge flows. Universities and research and technology organisations have lost market share to private firms. In 1995, 64% of all outsourcing of Dutch private R&D went to national public research and technology organisations and universities. In 1996 the share was only 52%. Whether this trend is structural, remains to be seen, but the service sector is growing rapidly.

Portugal The Portuguese NIS report concentrates on the biotech sector. There is a diversity of organisations that conduct R&D in biotechnology and biotechnology-related fields and offer research and technology services. The origin of most of these organisations is government laboratories and universities, with whom they often share a substantial part of their human resources. Several government laboratories can be classified as RTIs. Additionally we find a plethora of semi-private organisations, including centres closely associated with the university and centres that have a more private form of governance (usually having a "private non-profit" status).


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In addition to RTIs, a small number of dedicated biotechnology firms (DBFs), which can be classified as KIBS, have started to provide R&T services in biotechnology. Most of these firms are "academic spin-offs", created by young graduates/ post-graduates or, more rarely, researchers, to apply knowledge or technologies obtained in public research organisations directly or indirectly to the innovation system. Several DBFs are active service providers whether services are the firms' main business, an activity that adds value to the product sold, a cash-raising business pursued while a product is being developed, or a strategy to raise clients' awareness and open up new markets. In conducting these activities, some of these DBFs are performing a critical "technological intermediary" role between RTIs and established firms. The DBFs can act as a translator of competencies and generally contribute to increase the interactions within the biotechnology system. However, due to their still very small numbers, the DBFs impact on the system is more potential than real.

Germany Despite the large variety of research institutes, industry is still conducting most of the R&D in Germany. Applied research and experimental development are almost entirely performed by industry. The education sector possesses the next largest R&D shares. Industry-funded research in universities has been rising since the 1980s, and interaction between companies and universities intensified as a consequence.

Important research institutes are: the

Fraunhofer institutes, the Max Planck Society, the Helmholtz Centers, the Federation of Industrial Research Associations and An-Institutes, which are institutionally linked with universities.

Similar to the main features of the German economy, the German Innovation System has been characterised by a high degree of stability for the past decades. However, now the division of labour among the research organisations, universities, government, and industry seems to be in a process of re-organisation. Two events mark deep changes: Firstly, the cutbacks in financial resources channelled from government to RTIs, and secondly, the largescale evaluation of research organisations mainly in the direction of assessing the output of their research efforts. These processes appear to lead to an intensified competition for funds and towards a greater rivalry among the organisations, because, in many cases it has been questioned whether the quality and quantity of research results and the organisations’ missions justify public funding.


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The changes in the public R&D system and their rationale and motivation are not essentially different from what happens in other European countries. The situation in Germany is further complicated, however, by German unification. The merger of the two countries implied the integration of two very different research systems and resulted in a substantial downsizing of research capacities. Many East and some West German RTIs were closed down, others were reduced to considerably smaller units.

Nevertheless, it seems likely that the distinct feature of the German Innovation System, the existence of a very diversified body of research organisations with a highly developed division of labour, is not going to be eliminated in the future, and continues to lay a productive foundation for the development of technology transfer and of the German economic system.

UK A substantial part of research capacity in the UK is concentrated in private non-profit organisations called RTOs; the majority of them are SMEs. Two types of research and technology services organisations have merged to constitute the category of RTI; in the current UK context, following privatisation and liberalisation during the 80s, a third type may be added.

•

Ex-research associations (RA-type)

•

Contract research organisations (CRO-type)

•

Liberalised government labs (LGL-type)

Research associations were associated with a specific sector in the broad sense of a product type, an industry or a specific application domain for a technology. RAs (or 'co-operative research associations') were founded - and government-funded - along industry-specific lines to solve problems of collective concern in the sector, or on cross-sectoral lines to address national and sectoral issues such as manufacturing efficiency. CROs specialise in a technological field without necessarily having a dominant connection with any single industry. R&D are performed for clients on a contract basis. CROs may have been formed as spin-offs from R&D-intensive firms (for example, CRL was originally the Central Research Laboratories of Thorn-EMI) or from public utilities (EA Technology in the electrical supply sector). The RA trajectory has increasingly converged with the CRO-type as RAs have come


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to depend on contract funding, and the term RTI is now widely applied to both types. RTIs perform collaborative (as distinct from co-operative) projects with consortia of members; some are active within a familiar US model (members perform R&D themselves and pool findings through the consortium, convened by the RTI), most are passive, i.e., the initiative derives from a project steering group, and the RTI performs R&D, supported by funding, labour, factory time, and under the supervision of the steering group.

Liberalised government labs (LGL-type RTIs) originated as government laboratories or research establishments. LGLs in the UK have been required increasingly to fund themselves on a contract basis during the 80s and eventually were made into cost-centre 'agencies' trading in their own right, privatised, or in some other way brought into a market- or quasi-market relationship as contractors with a Government customer and non-Government customers. This trajectory also, therefore, converges in some respects with the CRO type. LGLs differ in the amount of core revenue that still comes from government (e.g. the defence R&D agency and the atomic energy agency maintain an effective core funding partly of standing contracts for operational services to the military).

The size of the UK population of RTOs is difficult to estimate. There is no simple basis for estimating how many RTOs of the CRO- or LGL-type that do not belong to the association AIRTO, there are in the UK, either. The AIRTO members have been the reference group for the identification for former RTIs that due to privatisation have become KIBS firms. In 1998, the total turnover of the 46 RTOs that are AIRTO members, was £464m. The size of these RTOs ranges from small (5 staff, turnover £0.25m) to large (650 staff, turnover £42m); the distribution is skewed (average turnover £11.5m; median turnover £6.7m). In the market for outsourced R&D, UK RTOs had around 58% of the UK market for extramural R&D in 1996. In 1991 the total contract research market was estimated at £670m, made up as follows: RTOs (AIRTO members) 28%, RTOs (non-AIRTO member) 9%, Universities 27%, Research council institutes 15% and other public organisations 21%.

Sweden In 1997, R&D expenditure was distributed as follows: universities 22%, government labs 3%, manufacturing industry 61% and service industry (including industrial research institutes which are not listed separately) 13%. Universities are the main performers of government financed R&D in Sweden. There are about 20 government labs linked to different ministries.


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Industrially relevant research at institutes outside the university sector is very limited in Sweden compared to other OECD countries. The Swedish semi-public industrial research institute system has been built up and developed since the early 1940's and has become an important, even if a small, part of the Swedish overall R&D-system. The “system” includes around 25 small institutes in terms of employees.

The business sector is the largest R&D performer. The R&D activity is to a high degree concentrated in the manufacturing industry. Within the manufacturing industry, the R&D efforts are in turn concentrated on a small number of large manufacturing companies. In 1995, seven large groups (Ericsson, Volvo, Saab, Astra, Scania, Sandvik and Incentive) accounted for 78 % of R&D expenditure by manufacturing industries.

The industrial research institutes can be characterised as RTOs since they provide R&T (or innovation) services to industry. Also universities and government laboratories supply such services to some extent. However, the order of magnitude of this contribution to service provision is unknown and impossible to estimate. Services are the sector in the national statistics where firms that provide innovation services, and semi-public R&D-institutes can be found. This sector’s share of R&D expenditure in 1997 was 13%. However, not all servicefirms supply such services and the RTI-share of Swedish R&D seems to be over-estimated. On the other hand in the R&D-statistics only firms with more than 50 employees are included. It is reasonable to expect that many RTIs have less than 50 employees. This means that the share given above in this sense under-estimates the RTIs’ share of R&D in Sweden.

4

RTIs, KIBS and innovation service functions: Survey results

Postal surveys of RTIs and KIBS firms in Germany, the Netherlands, Sweden, Portugal and the UK were conceived according to a common scheme, however left a lot of space for national diversity. A common questionnaire was used, however, some questions were added by country teams and in some cases the wording (and the categories that structure the answers in a multiple-choice form) have been adjusted to national peculiarities.

The survey for Norway has been conducted in the context of a broader research scheme, due to the regulatory constraints which limit possibilities to repeat surveys with similar topics in a short range of time. Therefore, Norwegian results cannot be directly integrated in the


16

evaluation procedures presented here. The Portuguese survey focused on the biotechnology sector only. This, together with the diversity of units covered in each sample limits the possibilities of quantitative comparison. Often, qualitative statements and explanations provide more accurate and meaningful results.

4.1

Sample selection

Table 1 gives an overview of size and coverage of the country surveys. The large difference between the numbers of cases in the samples reflects the differences in the sizes of countries, but also the difference in the overall number of institutions in each country which satisfy the selection criteria. Here the different configuration and operational variety of NISs leads to unavoidable heterogeneity. The unit of research was supposed to be the budgetary unit, i.e., entities that control and manage their own budgets. This criterion could not always be strictly adopted, for example, if the unit would have been too large or too heterogeneous. In these cases, other research units were defined.

The low number of cases for each country and difficulties in sample selection emphasise the pilot character of the surveys. Hence, results for KIBS cannot be considered representative; in the case of RTIs, coverage was more comprehensive and results can be generalised without, however, claiming representativity in a statistical sense.


17

Table 1 Surveys on RTIs and KIBS firms by RISE country teams Country

Team

Organisations covered

Sample size RTIs

KIBS

all

Germany

DIW

RTIs and KIBS

104

28

132

Netherlands

TNO/STB

RTIs

431)

-

43

Norway

STEP

RTIs

Portugal

INETI

RTIs in the biotechnology sector

37

2)

Sweden

NUTEK

RTIs and KIBS

19

32

51

UK

CENTRIM

RTIs and KIBS

20

13

33

1) 2)

21 questionnaires contained enough information to be used to calculate indicators. KIBS were included in the qualitative part of the Portuguese report.

Response rates were surprisingly low in all cases, especially for KIBS; partly, this reflects the generally low willingness of service firms to participate in survey activities, partly, obviously, RTIs and KIBS firms found it difficult to respond to the aim of the survey, and to its content. More intensive attempts to motivate potential participants might increase the response rates to a certain extent7, another way of stimulating response might be a further cut in survey questions, and a concentration on the essential institutional and functional variables. Questions most likely to be cut out in a short version would be those on patents (Q11), service delivery (Q12), co-operation (Q15 to Q17), and on competition (Q18 and 19). They added evidence about the characteristics and the activities of the responding organisations, but do not belong to the core areas of interest in RISE (see the basic version of the questionnaire in Appendix 1).

4.2

The questionnaire

A questionnaire was drafted by the German team according to the central RISE hypotheses of (a) an increasing importance of a functional perspective of RTI/KIBS activities and (b) a possible intensification of competition between providers of innovation services in the public and private domains. Standard variables, like size, budgets/turnover, funding structures and affiliation are used to describe the units of research in their institutional dimension. In 7 In most teams there were no resources for an intensive follow-up of non-respondents, for example, in a telephone survey.


18

addition, detailed output categories and services in the context of innovation processes of the RTIs’/KIBS’ clients cover the functional part of the characterisation of sample organisations. Questions on the competitive environment, patterns of co-operation and acquisition efforts deliver background material for the interpretation of data.

4.3

Survey results

4.3.1

Characteristics of the sample population

4.3.1.1

Types of Organisation

The units of research that have been analysed in the surveys show a large variety of organisational forms. They can be private companies, semi-public or public entities, and regardless of this distinction, they can be profit-making or non-profit organisations, and they can be organised as associations, societies or foundations. The type of organisation often has quite a strong impact on budget configurations and activities. It has to be compatible with the mission and purpose of the organisations.

The German sample consists of 28 private companies (KIBS) (21% of the sample), 49 public (37%), and 55 semi-public research organisations (42%). University institutes, which have a special status and explicit research missions (An-Institute) have close connections with universities, but they are legally separate units. Of the public organisations, some are organised as foundations (6%) and about 10% are registered associations (eingetragene Vereine, e.V.). However, also organisations that declared to be private belong to this last group (they obviously have to be not for profit companies, since they would loose their status as a registered association, if they made a profit). Most RTIs belong to larger research societies, such as the Fraunhofer Gesellschaft, which give varying degrees of independence to the individual RTI. Some RTIs have no affiliation to other organisations. The sample also comprises RTIs that are directly linked with a Ministry or a business enterprise.

In the Netherlands, only RTIs were part of the sample, these include those that directly cooperate with industry. The organisational forms are quite varied, 53% are public, 12% semipublic, 7% private, 21% are foundations and 7% have another institutional form (related to the gross sample of 43 cases). Of the RTIs in the sample, seven are academic research schools that are higher education institutes, but co-operate closely with industry; some are university


19

related research institutes and the rest are involved in more applied scientific research (for example, TNO).

All RTIs in the Swedish sample are semi-public. The RTIs were identified from a list of 28 RTIs supplied by the Swedish association of research institutes (IRIS). In addition, the sample comprises 21 so-called R&T firms, which provide innovation services. They will be called KIBS here.

The science-based research institutes in Norway consist of six larger institutes and about 35 medium-sized or smaller research institutes. The dominant institute in the system is clearly SINTEF. With its 1,4 billion NOK turnover in 1998 and 1.200 researchers, it is also the largest research group in Scandinavia. Two large groups of RTIs can be distinguished according to their research fields: technical industrial units and food-related units. The sample consists of 30 technical-industrial units, 22 food-related units and 5 ‘others’.

The UK sample combines ‘business service companies’ and ‘not for profit companies’ in a business enterprise sector. The government sector comprises institutions that are supported by seven research councils for different fields of technological or scientific specialisation. In addition, the higher education sector has been included, however, response rates were rather disappointing in this section. Altogether, the UK survey population has been divided into six categories: ‘government laboratory’(20% of the sample), ‘higher education institution’(13%), ‘public (government owned) enterprise’ (3%), ‘not for profit company’ (29%), and private enterprise’ (42%). The first three are categorised as ‘public’, the other two as ‘private’.

The Portuguese RTIs covered the biotechnology sector only; they present four types of organisation, university centres (40.5% of the sample), government laboratories (35.1%), private non profit institutions (8.1%) and ministry departments or government organisations (13.5%). Given the small numbers of private firms involved in service activities in biotechnology or related fields, the survey did not include KIBS firms. So the focus was exclusively on biotechnology RTIs.

The KIBS firms in all surveys in which they have been considered, included providers of software, R&D services, technological analysis and testing, engineering services and consultancy. In Germany, there was a larger group of data processing and software providers; in Sweden KIBS were mainly providers of R&T services, i.e. software consultants, scientific


20

R&D, technological R&D, medical R&D, mixed R&D, construction and other technological consulting as well as testing and analysis.

4.3.1.2

Size

Table 2 gives an overview of the size distribution of RTIs and KIBS firms. While in the Portuguese and Swedish sample small and medium-sized entities prevail, in Germany, there is a bias towards larger organisations. Norway also has a high percentage of small institutes, however, only researchers were counted, and the bulk of the cases falls into the category 10 to 49 (65% in 1999), i.e., they have to be allocated in the upper part of the category ‘small’. Therefore, the results presented below might reflect the fact that -on average- more smaller organisations contribute to these results in Portugal and Sweden and more larger ones in Germany. The average size of units is rather high in Sweden (96 employees for RTIs and 124 for R&T firms in 1999) as well as in the Netherlands (173 employees in RTIs; not in Table 2). Academic and university institutes seem to be significantly smaller than other RTIs. KIBS firms tend to be rather small, while more RTIs are found in the category ‘large’. It should be kept in mind, however, that the indicator ‘small’ attributes to RTIs and KIBS that have up to 50 employees, i.e., the organisations in this category can be very small, but also span into larger sizes of over 40 employees.

Table 2 SIZE of organisations in % of respondents Small

medium

large

public (RTIs)

21

44

35

private (KIBS)

79

21

0

public

42

47

11

private

73

17

10

public

22

11

66

private

48

30

22

Portugal

public

57

29

14

Norway

public

90

6

4

Germany

Sweden

UK

Germany, UK: compiled using a size indicator Sweden: only employees: 1 to 50 employees = small, 51 to 200 = medium, over 200 = large. Portugal: different categories


21

4.3.1.3

Employees

Apart from the number of employees in an organisation, an important variable characterising the workforce is its composition in terms of qualification. RTIs or KIBS firms with a high share of scientists or engineers will provide other services than those with a high share of technicians or support personnel. As a rule of thumb, it can be assumed that more technically qualified personnel will support functions in innovation that are closer to implementation, testing and construction than to research and planning. A larger share of engineers compared to scientists hints at a more applied and technical orientation of the organisation.

The relation between scientists, engineers, technicians and other personnel varies not only between countries, but also between organisations. The qualification levels are generally high, and on average more than half of the personnel have a degree of a higher education institute. These shares are rising, for example, in 1995 52% of the employees in Swedish research institutes were either scientists or engineers. In 1999, this figure had risen to 60%. In Portuguese biotech institutes the increase in the workforce between 1995 and 1999 was entirely caused by a higher number of researchers, while the number of technicians remained unchanged. This can either be the result of a change in orientation towards activities that require more academic qualifications, or of a change in services provided. However, the absence of personnel with low or medium qualifications can also be due to a division of labour which allocates most work at the scientist level without giving the possibility to delegate tasks to support staff. Changes resulting in higher shares of the academically qualified workforce may therefore express a change towards a more pronounced research orientation or a change in the division of labour within the organisation. However, in general, the more research oriented RTIs held larger shares of scientists/engineers than others.

4.3.1.4

Affiliation

The affiliation of RTIs and KIBS can have a positive impact on the resources they can use, however, it can also limit their sovereignty and control over research activities, funds and entrepreneurial initiatives.

In the Netherlands 67% of the RTIs are affiliated with a university, 14% belong to larger research societies (like TNO or TTI), 9% are independent, 5% are linked to a Ministry and another 5% to other kinds of organisation. 74% of all German RTIs and KIBS are affiliated


22

in one way or the other: 41% organisations belong to a research society, 28% are linked to a university, 20% to a Ministry, 4% to enterprises and 6% to other institutions (some respondents gave more than one affiliation). Most RTIs in Sweden and the UK are independent; no patterns of affiliation emerge in the cases of Portugal and Norway.

About 44% of the UK organisations are independent, 24% are affiliated with other companies and/or universities, 18% with a trade association, 27% with a Ministry or a government lab (double nominations were possible).

4.3.2

Funding structures in RTIs and KIBS

One of the distinctive characteristics of RTIs is the composition of funds they rely on. Budgets are usually covered by four sources of financing: basic institutional funding from public sources, contract research for public entities, contract research for non-commercial organisations (foundations etc.) and industry contracts. In many countries, institutional funding is being cut back in favour of project or programme financing. Governments try to gain better control over research content and resources, to intensify competition between RTIs and to increase flexibility in the allocation of funds. As a consequence, the resources available in RTIs for long-term basic research decrease. However, even private KIBS firms do not rely entirely on industry contracts for covering their budgets, some of them do contract work for government and/or non-governmental organisations. In a few cases (in Germany and the UK), KIBS even received institutional funding from public sources. Sometimes, the boundaries between RTIs (public) and KIBS (private) blur, if foundations or registered societies underline their independence form government by emphasising that they are ‘private’.

In some countries, it proved difficult to get retrospective information on budgets. Hence, no data were surveyed for 1995. Very few of the RTIs and KIBS rely on only one source of funding, and a mixture seems to be quite common also for private entities. Table 3 gives an overview for five countries.


23

Table 3 Sources of funding in % of budgets and turnover (averages) Institutional public funding

Public contracts

Non-commercial organisations

Private industry Contracts

1995

1999

1995

1999

1995

1999

1995

1999

Germany Public Private

70 17

67 12

19 13

19 11

3 5

2 4

9 65

13 73

Netherlands Public

50

49

28

28

10

8

13

18

Portugal Public

44

42

49

52

1

2

6

3

Sweden Public Private

12 0

30 9

9 2

51 81

UK Public Private

64 5

65 4

13 29

12 21

9 7

9 6

13 53

15 67

There are considerable differences in the level of public institutional financing between countries - with Germany and the UK at the high end, the Netherlands and Portugal occupying a middle range, and Sweden at the very low end. The high share of around 70% of budgets in German RTIs can be explained by the large number of public and highly subsidised organisations in the sample (about 35% of the RTIs belong to this category). The Swedish sample, on the other hand, does not comprise any government owned or controlled organisations and no university institutes. However, even taking into account variations in sample composition, the difference between Sweden and Germany hints at fundamentally different concepts. If public contracts and institutional funding are taken together as ‘public sources’, public research institutes in Germany and the UK show a wider gap, because British institutes earn less from public contracts than their German counterparts. The Netherlands move closer to the countries with higher public shares, but in Sweden still the public share in budgets remains extremely low, and Portuguese RTIs cover almost their entire budgets with funds from public sources. As a consequence, Swedish RTIs have high shares of industry contracts, whereas, Portugal, Germany, the UK and the Netherlands only earned between 3 and 18 % of their income from this source in 1999. Not surprisingly, KIBS compete to a certain extent with RTIs in the field of contract research for public and non-commercial


24

entities, get little or no institutional funding and earn the bulk of their turnover from contracts with industry.

The Norwegian survey used slightly different categories, here basic funding amounted to 16.4% of funding in 1999 (16.6 in 2000). However, this share differs considerably between technical-industrial units with 11.6% (10.3% in 2000) and food-related units with 31.1% (32.5% in 2000). Project income was comparatively high at 71.3% (77.4% in technicalindustrial units and 54.1% in food-related units) of budgets. ‘Stable assignments’ cover about 5% of average budgets, and 7.5% come from ‘other sources’.

Public institutional funding decreased in each country (except the UK, where there was a slight increase for public institutes) between 1995 and 1999 in relative terms. In Portugal, this has been compensated by a shift towards public contracts, and in the Netherlands and Germany the decrease in public funds has been accompanied by higher shares in industry contracts. Most RTIs expect the share of basic funding to go further down with most substantial cuts being expected in the Netherlands (from 49 in 1999 to 43 in 2002) and in Germany (from 67 in 1999 to 64 in 2002). Accordingly, industry contracts are expected to gain a much higher impact in all budgets by the year 2002. Interestingly, this holds for both, RTIs and KIBS firms, whereas neither of them believes that projects for public entities or non-commercial organisations will have a much higher share in 2002. Hence, the two innovation service providers will probably compete more fiercely for business contracts than for public money in the future.

Results on the development of budget configuration for Portugal are influenced by the different composition of samples in the years 1995 and 1999. In 1995 slightly less institutes reported public financing as a source, however, he average share of this source was higher (43.6% in 1995 against 41.7% in 1999). Contracts from government are the most important source, it has increased substantially in the four years observed here. Projects for private firms, on the other hand, have decreased considerably, in 1999 only 30.3% of RTIs mentioned them as a source, in 1995 the figure had been 44.0%. The overwhelming part of funds are from government sources, institutional funding as well as project based funding (on average 92.3% in 1995 and 93.2% in 1999). However, a shift of sources of finance from institutional funding to project based funding can be observed. In 1999 over 60% of the RTIs that received institutional public financing covered more than 50% of their budgets from this source. In the organisations which receive funds from other sources (non-commercial


25

institutions and private companies), these sources cover less than 10% of budgets in the majority of institutions. Their share very rarely is higher than 50%. Interestingly, less institutes expect to receive funds from government sources in 2002. Those organisations, however, which expect to receive public funds in 2002 do not think they will contribute less to budgets than in 1999.

Swedish RTIs and KIBS did not give enough reliable information to analyse 1995 budgets. However, some conclusions emerged from the survey: The average share of private funding has not changed since 1995, however, for individual institutes there was more fluctuation. This share is expected to rise to from 51% in 1999 to 55% in 2002 on the average. 30% of RTIs’ budgets and 17% of R&T firms’ budgets have been financed by public contracts in 1999. Thus, it can be expected that RTIs and KIBS firms compete in this market as well as in the market for industry contracts. However, only the analysis of functional variables will show, how big the overlapping areas are.

In Germany, as in Sweden, the competition between KIBS and RTIs shows in the large overlap in the categories ‘government funded projects’ and ‘projects for industry’. KIBS firms that receive institutional public funding are a specific feature of the German R&D landscapes. It can be assumed that these cases refer to ‘institutes for external industry research’, an institution to promote industry related research in the East German New Länder. They are organised as private limited liability companies, but are also likely to get government subsidies. Another group might be foundations that consider themselves private entities, but get some public support in addition to funds provided by the foundation. Subsidies are given to start-up firms in R&D service industry that are supposed to complement a poor R&D basis in (mainly East German) SMEs. This construction has been chosen in order not to establish a new kind of publicly funded institution. Hence, these organisations are expected to be financially independent in a few years time. The situation in the UK is mainly shaped by the fact that traditionally semi-public research institutes have been privatised. However, these ‘RTIs’ still earn a substantial part of their budgets from public contracts. This share has decreased since 1995 and – as in other countries, they rely more heavily on industry contracts, a field of activity in which they compete with public or semi-public institutes.

Based on the configuration of budgets, ‘typical’ features of RTIs emerge, i.e., a still substantial, but decreasing share of public funds. Whereas Dutch, German and Portuguese


26

RTIs only have started to earn a larger part of their income from industry, in Sweden and Norway, this share is already quite high. The figures on budget shares show a rather traditional distinction between RTIs and KIBS with the former mainly working for the public and the latter mainly working for the private sector. Changes in this distinction have been rather incremental than radical in the last five years.

RTIs were traditionally focused on the context of NIS. With the emergence of European research environment, mainly represented by contract research for the European Commission, and a general trend towards international integration in many industries, it can be expected that RTIs will open up their activities towards international markets.

In Norway about one quarter of the turnover of RTIs came from foreign sources in 1999. However, in the technical-industrial units the share of foreign contracts was considerably higher at about 40 %.

There is a trend of growing shares of international contracts in Germany and in Sweden. In the Netherlands and in Portugal opposite trends could be observed between 1995 and 1999. In

Table 4 Average share of foreign and domestic sources in total budgets in % Germany

domestic foreign 1)

Netherlands

Norway

Portugal

Sweden1)

UK

1995

1999

1995

1999

1995

1999

1995

1999

1995

1999

1995

1999

94

89

71

76

n.a.

74,1

77

83

90

87

76

77

6

11

29

24

n.a.

25,9

23

12

10

13

21

22

only RTIs

both countries, however, this trend is expected to be reversed: in the Netherlands a share of 28% of funds from foreign sources has been forecast for 2002. In Portugal this percentage is estimated to be 20%. Internationalisation therefore seems to be important, however, as it starts from a rather low level, RTIs and innovation service providing KIBS will for some time be mainly focused on domestic clients. The UK remains the primary location source for funding for all categories of organisations. However, this focus is much stronger for public than for private types.


27

4.3.3

Composition of Output

The functional characterisation of RTIs and KIBS can be based on output structures as one determining variable. The respondents were asked to give the share of labour input dedicated to four forms of output (contributions to the scientific community, public education, projects for industry and policy consulting). They were also supposed to document changes between 1995 and 1999 and to give an estimation for the composition of output in 2002. This implies the assumption that labour input dedicated to produce a certain kind of output will result in this output in exactly the same proportion. This approximation is often used for the measurement of service output due to the lack of ‘countable’ output units.

Table 5 Average shares of labour input dedicated to... (in %) Contributions to scientific community

Public education/ training

RD&T for industry

1995

1999

1995

1999

1995

1999

46 16

43 19

Netherlan ds

44

41

21 21 25

20 17 21

15 50 12

Portugal Sweden public private

58

54

27

23

9

46

42 5

8

41

UK

12

13

8 5 5

Germany public private

2

47

Policy consulting

Other activities

1995

1999

‘95

17 48

18 13

20 15

20

20

19

-

18

4

4

2

44 74

4(3.6)

4(4.4) 4

56

36

27

‘99

1 3 12

Contributions to the scientific community are the main output of RTIs in all the countries participating in the survey. In 1999, the average share of this category ranged from 41% of total output in the Netherlands to 54% in Portugal. Even Sweden as a country with low shares of public funding, contributes substantially to increasing the publicly accessible stock of knowledge. The same holds for German KIBS which combine a low share of public funding with a considerable output in form of scientific publications. While German, Dutch and Portuguese RTIs dedicated between 20 and 25 % of their output to activities in the public education system or for training purposes. This percentage was considerably lower in Sweden (6%). Projects for industry amounted to slightly less than one fifth of the output in German, Dutch and Portuguese and to more than two fifth in Swedish RTIs. With respect to projects


28

for public entities, Sweden and Portugal differ significantly from the other countries, here only 4% of output falls into this category, while in Germany and the Netherlands about one fifth of output are dedicated to policy consulting. Obviously, in Sweden a large share of public contracts and research for industry still allow to publish results. Compared with the average share of public basic funding, relatively small parts of the research are dedicated to scientific publications in Germany. Here, education and policy consulting take a larger share than in other countries.

The configuration of output can be determined by the research fields occupied by the organisations in the sample. Countries with a high impact of institutes that focus on industrial productivity and technology are more likely to produce output for industry than those with more institutes specialising in health, social sciences or spatial planning. Sixty % of the Swedish sample specialises in ‘construction and other technological consultancy’, one third in software consulting. There are no social sciences involved. In Germany, only 32 % of the sample list ’industrial productivity’ as their specialisation, however, almost 60% engage in ‘natural sciences’, ‘health care’ and ‘social sciences’ have been given as research field by about one fifth of the sample. The Netherlands show a more even distribution of specialisation: 30% of the RTIs give ‘industrial production’ as their field, 25 % ‘health care. ‘Spatial planning’ has been given by 20% as their main research area, and 10% are engaged in ‘social sciences’. No clear interpretation can be given with respect to the likely addressee of output for research fields, such as ‘environmental protection‘, ‘agricultural production’, ‘energy’ and ‘other civilian research’. In the UK sample, private organisations are to a large extent engaged in research on ‘industrial productivity and technology’, ‘environmental protection’ and ‘defence’. Public entities showed no clear concentration on a specific field, but were more often found in ‘space research’, ‘societal structures and relations’ and nontarget-oriented research’ than the private ones.

Almost all countries show a trend towards decreasing shares of scientific work and increasing shares of innovation related services for industry. This trend is expected to continue over the next few years. It is consistent with the expected growth of the share of industry contracts in RTI budgets. Public education has become less important in the Netherlands as well as in Portugal, while the share of policy consulting is likely to remain unchanged. RTIs in Sweden expect the share of scientific contributions in their output to fall until 2002 (from 41,5% in 1999 to 365.9%), KIBS firms expect it to rise (from 5.2 to 6.5%). In the UK changes in the configuration of output are particularly pronounced, large increases in output to industry


29

between 1995 and 1999 went along with an equally impressive decrease in policy consulting. In comparison, RTIs in Germany and Sweden show much more stable output structures. The changes in Portugal are mainly due to differences in the samples between the two reference years.

In addition to these rather broad output categories, a list of detailed output activities was provided, and RTIs/KIBS were asked to state the relative importance of the subcategories.

Contributions to the scientific community are differentiated into three sub-categories: (1) journal and book publications, (2) research reports for the general public, and (3) conference contributions. There is no general preference for any of these sub-categories (see Table 6). In Sweden RTIs consider research reports and conference contributions as more important as books and journal publications. This underlines the results of the previous question which characterises Swedish RTIs as focused on applied rather than on theoretical research. For KIBS all three categories are of no or little importance; and publications are the least important category. In Germany publications are by far the most important output for the organisations in the sample, but also conference contributions occupy a high rank. A very similar picture has emerged for the Netherlands. Here, the academic output in form of publications is even more important than for German RTIs.

Contributions to public education and training were divided into (1) ‘internships and the support of master theses’, and (2) ‘support of PhDs and postdoctoral qualifications’. Again, there is not much difference between German and Dutch RTIs, in Germany internships were ranked slightly higher in importance than doctoral theses, in the Netherlands the relationship between the two categories was reverse. Internships as well as the training of doctoral and post-doctoral researchers play a less important role in Swedish RTIs compared with the other two countries documented in Table 6.

Projects for industry were further divided into: (1) ‘technology consulting/technology transfer’, (2) ‘construction/testing’, (3) ‘process optimisation’, (4) ‘management consulting’ and (5) ‘certification‘8. All categories are attributed less importance than the contributions to scientific community categories, with the exception of Sweden, where technology transfer and construction score particularly high, even with respect to academic output. The ranking put technology consulting and construction in the first two places in all three countries.


30

Process optimisation only gained low-to-medium importance in Germany and the Netherlands, it was considered much more important in Sweden. Here also certification ranked slightly higher than in the other two countries. Process optimisation, management consulting and certification are by far less important than technology and construction related activities for RTIs in the three countries considered here.

With respect to projects for public bodies again, Germany and the Netherlands have to be set apart from Sweden. In the first two countries, the formulation of programmes is slightly more relevant than the other categories, programme implementation and programme evaluation. In Sweden RTIs consider implementation as more important than the other two.

KIBS firms were only studied in Germany and in Sweden. Table 7 shows the results for detailed output categories (the policy consulting categories are not detailed here, since the importance attributed by KIBS firms was so low that further dis-aggregation did not make sense). German KIBS firms show surprisingly high scores for publications and conference contributions. Obviously, the presentation of research results plays a major role in marketing for these firms. Whereas German KIBS contribute to a certain extent to public education –more intensively by supporting internships than by engaging in post-doctoral qualifications, these activities are ranked rather low in Sweden. Swedish KIBS present a strong dominance of construction and testing services for industry, whereas the other industry related output categories are much less important, and also score considerably lower than in German KIBS firms. Management consultancy is ranked significantly higher in Germany than in Sweden, and certification is marginal in both countries. German KIBS still attribute some importance to internships and the support of master theses, but much less to doctoral qualifications. In Sweden both categories score rather low, obviously, the firms do not consider to have a function to fulfil in these fields.

An interesting distinction has been made for the Swedish sample between RTIs that compete with R&T firms (the KIBS group selected in the Swedish sample) and those that do not. The competing institutes claim a high importance of construction and testing services and the optimisation of processes more often than the not competing ones; for technology consulting

8

The category ‘non innovation relevant services for enterprises’ yielded sensible results only for Germany, it will therefore not be further evaluated here.


31

the not competing RTIs show higher scores. Altogether, industry related output categories were considerably more important to the competing RTIs than to the non competing ones.


32

DIW

Table 6 Importance of output categories for research institutes (% of respondents) Forms of Output

Germany

Netherlands

Sweden

low

medium

high

low

medium

high

low

medium

High

magazines, book publication

11

23

66

6

19

75

64

32

4

research reports for the public

26

49

25

33

39

28

26

26

48

conference contributions

12

36

53

8

33

59

10

64

26

internships, master thesis

17

24

59

31

19

50

48

32

20

PhDs and post-doctoral qualification

25

17

58

28

19

54

31

42

26

technology consulting / technology transfer

45

23

32

44

25

31

5

32

63

construction /testing

52

20

28

44

28

28

11

26

63

65

16

18

73

25

2

32

16

53

79

12

10

75

22

3

84

5

11

Certification

90

5

5

92

3

5

78

11

11

studies, formulation of programmes

55

21

24

44

31

25

68

32

0

support, realisation, implementation of programmes

69

18

13

58

28

14

58

37

5

evaluation of programmes

65

23

11

56

28

16

89

11

0

process optimisation management consulting

1)

Italics: estimation 1)

in Sweden this category was substituted by ‘operational services’.

.

33


Table 7 Importance of output categories for KIBS firms (% of respondents) Forms of Output

Germany

Sweden

low

medium

high

low

magazines, book publication

43

18

39

97

0

3

research reports for the public

64

21

14

88

12

0

conference contributions

32

32

36

94

6

0

internships, master thesis

32

46

21

77

23

0

PhDs and post-doctoral qualification

75

14

11

94

6

technology consulting / technology transfer

29

29

43

49

32

19

construction /testing

29

36

36

29

13

58

process optimisation

43

25

32

45

42

13

management consulting

50

25

25

74

19

6

Certification

75

14

11

83

13

3

4.3.4

medium

high

Competition in research markets

Organisations that provide innovation services are increasingly faced with competition. Their competitors may be organisations of the same type, but also actors from other backgrounds. Table 8 shows that in all countries most of the RTIs and KIBS have competitors within their own group of service providers, i.e., RTIs compete with RTIs and KIBS with KIBS. In Sweden more RTIs and KIBS perceive competition from other organisations than in the Netherlands and in Germany. Dutch RTIs compete most often with universities (the sample comprises a large share of university institutes), and German Swedish RTIs often see universities as their competitors. This is much less frequently the case with KIBS and research departments in manufacturing companies.

One of the central hypotheses of this project is that RTIs and KIBS are competing to provide innovation services. If we take the organisations’ own perception, we can see that in Germany and Sweden RTIs see KIBS less often as their competitors than KIBS the RTIs.


34

Table 8 Competitors: share of all respondents that are competing with .... Germany

Sweden

Netherlands

Norway 1)

RTIs

KIBS

RTIs

KIBS

RTIs

RTIs

....RTIs

81

54

95

72

86

41

universities

75

50

89

72

88

34

KIBS

48

61

63

76

81

R&D departments in companies

43

54

21

68

79

9

1) In the Norwegian survey the question was about ‘medium or strong competition’, there was no distinction between KIBS and manufacturing companies.

For RTIs there is a clear distinction: universities and other RTIs are much more often perceived as competitors than KIBS and private companies. For KIBS the distinction is not as clear: here RTIs, universities and companies are mentioned equally often as competitors. Most RTIs and KIBS in the three samples compete with institutions or service providers in their own group. In the Netherlands a strong affiliation of RTIs with universities makes the latter also an important competitor. In Norway about 55 % of RTIs stated that competition with universities and other RTIs had increased over the last five years, but only 45 % felt that competition from private firms and laboratories had become stronger.

RTIs and KIBS have been asked in which fields they see their main competitive advantages.

Most innovation service providers rely on their specialisation as a major source of competitive advantage. The quality of work and experience gained from previous projects is also an important factor. Research area and experience are slightly more important for RTIs than for KIBS firms. The methods adopted distinguish RTIs in Germany and Sweden from their competitors, but Dutch RTIs do not often attribute importance to this factor. Surprisingly, cost advantages are more important for KIBS than for RTIs. Obviously, this is due to the fact that KIBS face a harder price competition, and RTIs do not perceive the public f u n d i n g

t h e y

r e


35

Table 9 Factors providing competitive advantage Germany

Sweden

Netherlands

RTIs

KIBS

RTIs

KIBS

RTIs

98

44

100

90

95

50

26

63

42

29

80

82

79

58

83

experience

52

46

95

90

88

cost advantage

33

44

16

23

20

confidentiality

11

11

-

-

20

research area/ specialisation methods quality of research

ceive as a means of achieving higher competitiveness by being able to realise lower service prices. Whereas other factors, like multidisciplinarity or economies of scale were mentioned only occasionally as additional sources of competitive advantage, the institutes’ independence seems to be an important advantage for Dutch RTIs. For the kind of service provided by the organisations in the samples, confidentiality does not seem to be a relevant factor.

In the Norwegian survey the relating question was formulated in a different way. Here competitive advantage was mainly attributed to the qualification of personnel, to reputation and to stable customer relations. Financing, market position and size were considered as factors that rather created disadvantage. These results did not differ between technicalindustrial institutes and food-related institutes.

4.3.5

Service functions

In order to investigate the activities of RTIs and KIBS with respect to the functions they held in the innovation processes of their clients, the innovation process has been dis-aggregated into 10 functions, and the survey participants were asked, for which functions they offered services. Before the results are presented, the terminology of ‘functions’ and ‘services’ as adopted in this project should be explained: For the sake of simplicity and transparency, a


36

model has been conceived, which presents the innovation process as a sequence of steps9 that leads from an innovation idea and basic research through applied research, feasibility studies, conceptual work, and planning to the implementation of a new production process or to the market introduction of a new product (see figure 1).

While a firm is moving towards the realisation of an innovation, it faces a series of tasks which are necessary to reach a successful completion of the process. Figure 1 illustrates the role of service functions and service providers. The lower part of the graphic names the innovation functions, and in the upper part possible service providers are listed. The attribution of functions to service providers is only exemplary here, many other combinations are possible. The innovation functions can be provided by an in-house department of the innovating firm or as an external service: for example, the development of a new product requires the study of the existing state of the art in the technological field, in which the innovation is going to be realised; patents have to be investigated and possible solutions have to be studied. The fulfilment of this task allows the firm to move on to more concrete planning and development tasks. The function of guaranteeing a sound information basis for the innovation can be exercised by the in-house R&D team or provided as a service of an external R&D service provider. One type of service can serve more than one function, for example, a consultant’s service package can comprise procedural development as well as implementation. On the other hand, one function can be divided into more than one service, if the construction of a prototype is divided into the development of tools and the actual construction plan of the new product.

One of the core purposes of the surveys conducted within RISE was to find out in which functions RTIs and KIBS contributed to innovation, whether there was an overlapping field between the two groups of service providers, and whether service functions changed over time. A list of ten functions was presented to those survey participants that had responded ‘yes’ to the question whether they supported companies in their innovation process.

9

This does not mean that any kind of ‘linear‘ model of innovation is being favored here, this picture is only used to explain the relationship of functions and services in this project.


37

DIW

Figure 1 Innovation Service Functions

consultancy KIBS suppliers IT-department R&D department

RTIs

research

development

design

planning

39

testing

prototypes marketing


Table 10 Service functions Share of all respondents that offer this service function in % Function

Country

Type of organisation Private

public

all

Basic research

G Neth Swe UK

32 64 56

60 100 95 100

54 100 77 68

Acquisition and study of information

G Neth Swe UK

63 11 76

65 88 26 78

64 88 55 76

Feasibility studies

G Neth Swe UK

58 55 84

57 64 63 56

57 64 59 76

Product /procedural development

G Neth Swe UK

45 93 76

67 72 95 67

62 72 94 74

Planning, project and personnel management

G Neth Swe UK

58 84

35 32 56

40 8 76

Construction of prototype

G Neth Swe UK

58 50 68

51 44 58 56

52 44 53 65

Testing

G Neth Swe UK

40 46 80

60 52 74 89

55 52 57 82

Implementation of innovation

G Neth Swe UK G Neth Swe UK

50 80

46 16 67

47 16 76

37 21 68

36 28 11 56

36 17 65

G Neth Swe UK

45 36 52

18 4 21 44

24 30 50

Documentation and certification Introduction into the marketplace

Respondents were asked to state whether they offered the respective service at all and whether they thought the importance of the service would increase, decrease or remain the same in the future. Table 10 gives the results for Germany, the Netherlands, Sweden and the UK.


41

The innovation functions that most frequently were supplied by RTIs in Germany, the Netherlands and Sweden are ‘basic research’ and ‘product/process development’. ‘Testing’, ‘prototypes’ ‘feasibility studies’, and ‘information services’ take a middle rank, whereas ‘planning and project management’, ‘implementation’, ‘documentation’ and ‘market introduction’ are positioned at the lower end of the frequency scale. In the UK, apart from ‘introduction into the marketplace’ all services are supplied by a large share of RTIs and KIBS firms.

However, for some functions, there are considerable differences between countries. In the Netherlands, a large percentage of RTIs engage in information research, in Sweden this is the case only for about one quarter of the sample. All RTIs in the Netherlands offer basic research as a service to companies, and only 60 % of German RTIs; documentation and certification are not frequently supplied on the average, but still more than a third of the German RTIs mentioned this service. In the Netherlands, more up-stream functions (preparatory functions as well as construction and planning functions) clearly prevail against the more down-stream ones (implementation and marketing). In the UK, RTIs concentrate on basic research, product development, testing and the acquisition of information, for KIBS feasibility studies, product development, project management, testing and implementation are the fields, where most respondents are active. Thus, the overlapping between RTOs and KIBS is most obvious in product development and testing. The category ‘product/process development’ has been separated into ‘product development’ and ‘process and organisational development’ in the English questionnaire. This proved to be wise, since there are remarkable differences between the categories: 89% of RTIs and 80% of KIBS offer product development as a service, but only 44% of RTIs and 72% of KIBS offer process and organisational development. In the UK, there is a clear division of labour between public and private organisations. The differences in the shares of RTIs and KIBS that offer a particular service are much higher here than in other countries. It can therefore be concluded that functional profiles differ more significantly between the two groups of service providers in the UK than elsewhere.

RTIs and KIBS in Germany are much more different in terms of services they provide than RTIs and KIBS in Sweden. However, this result is partly determined by the composition of the samples: in Germany RTIs cover a much broader range of institutes, more diverse types of institutional arrangements and a broader set of research fields. In Sweden, the RTIs in the sample are more directly focused on industry-relevant research, and the sample does not


42

include university research institutes. For example, in Germany there is a clear division of labour between RTIs and KIBS with respect to basic research: it is quite common for RTIs, but KIBS firms are not very likely to supply it. In Sweden the two types or organisations do not show much difference in the provision of this service function. Whereas in Germany RTIs are found more often than KIBS in the preparatory functions of innovation (the first three service functions), service supply in realisation functions (the next four categories) is almost equally strong in both types of organisation. However, KIBS dominate in the functions that are closer to the market (the last three). For Sweden no such pattern exists.

Table 11 ranks the service functions for the two types of providers in both countries. The service function with the highest percentage of suppliers in the sample is ranked 1st. The differences in the ranking scores mark the degree of deviation between RTIs and KIBS. Table 11 Ranking of service functions according to relative frequency of supply Function

Ranking Germany

Sweden

UK

RTIs

KIBS

RTIs

KIBS

RTI

Basic research

3

7

1

2

1

Acquisition and study of information

2

1

5

8

3

3

Feasibility studies

4

2

3

3

5

1

product dev. 2

product dev. 2

process dev. 6

process dev. 4

both 4

both 3

Product/ procedural development

1

4

1

1

KIBS

Planning, project and personnel management

8

2

-

-

5

1

Construction of prototype

5

2

4

4

5

5

Testing

3

5

2

5

2

2

Implementation of innovation

6

3

-

-

4

2

Documentation and certification

7

6

7

7

5

5

Introduction into the marketplace

9

4

6

6

6

6


43

5

Indicators for institutional and functional orientation

5.1

The design of the set of indicators

The usual method of characterising RTIs selects a set of institutional variables, such as size, share of public funding, research fields. In the following we would like to present a more differentiated scheme which uses functional along with institutional characteristics (for example, output categories, acquisition efforts, innovation service functions) to find ‘typical patterns of RTIs. In addition, RTIs and KIBS are analysed together, in order to discover similarities and differences. The generation of indicators and typologies has been inspired by Laredo (Laredo 1999). The work of Laredo is based on the analysis of government labs in the field of human genetics. He uses the term ‘research collectives’ to express the fact that the outcome of research processes is the product of teams hat operate in a certain context rather than of individuals. These research collectives are often allocated (or identical with) ‘labs’. The dimensions on which labs are characterised are: the endowment with resources, a production profile, and organisational, management and strategic styles (Laredo 1999, p. 810). The research of the Laredo group resulted in the generation of ‘activity profiles’ based on ‘relative involvement’ in training, academic, industrial and clinical activities (Laredo 1999, p. 82 –89). The main configurations presented are: ‘Teaching and research’ (focusing on training and academic activities) and ‘socio-economic’ (focusing on industrial and clinical activities). Since Laredo’s scheme has been conceived for human genetics research, it could not be adopted directly for our analysis. The surveys of the RISE project dealt with a much greater variety of research units, and the country-specific results could not be included in one data set without venturing into methodological swamps, and would have resulted in wiping out essential features of country-specific differences. Hence a slightly different approach was taken here.

A set of indicators has been produced from the survey data in order to reduce the complexity of data and to arrange the material in a way which gives immediate information on institutional and functional orientation of RTIs and KIBS. The indicators reflect RISE hypotheses and prepare the identification of ‘types’ of organisations. Indicator values provide information about relative positions. They combine data from several questions that contribute to describe a complex phenomenon. The following indicators were generated:


44

Institutional dimension A first set of indicators describes the units of research in terms of their institutional configuration. Apart from variables that indicate size and institutional affiliation, these indicators comprise data that refer to the organisations’ size, statutory mission and constitutional rationale.

Size: Obviously, many aspects of output and service provision as well as performance of an organisation may depend on its size. The size indicator serves to check these influences in a straightforward way. Higher scores in the indicators mark larger organisations.

Institutional dynamics: This indicator expresses the dynamics of growth in terms of number of employees and budget of the organisation. It will allow to match changes in the composition of output and /or acquisition efforts and the role in innovation services with trends in the organisations’ institutional features. Higher scores characterise organisations that either grow faster or do not decline as quickly as others.

Public/private orientation: In many countries, RTIs have a public mission: they are supposed to create knowledge and make it accessible to the public, either via publications or via the education system. The indicator will show to which extent RTIs (and in some cases also KIBS) in the sample fulfil this mission. Organisations with high scores will have large shares of public funding and distribute their research results mainly directly towards public users or publicly accessible channels.

Academic orientation: RTIs derive a large part of their reputation from academic excellence. In some countries their performance is subject to academic evaluation. As part of the scientific community, RTIs compete for academic reputation; however, their academic achievements do not always correspond with the needs of customers in the industry sector. Although academic achievements are the basis for fulfilling functions in technology generation and technology transfer, they can therefore be in contradiction with activities and principles that aim at serving a more application oriented clientele. Research results gained in the context of an academic community are mostly published and, thus, directed to the scientific community and to the general public. Hence, RTIs with a strong academic orientation tend to contribute to the innovation system as a whole and to serve pre-competitive phases of innovation preparation rather than processes of innovation in individual companies. KIBS also might show academic orientation to a certain extent, as they try to enhance their knowledge base and keep in touch with


45

progress in technological knowledge by contributing to the output of the scientific community. The indicator summarises variables which emphasise the academic nature of the output. It shows to which extent the need to be more market oriented affects academic outcome; however, it also shows how far KIBS try to strengthen their reputation by providing academic output. High scores are associated with university links and output mainly for the scientific community.

Policy orientation: Some RTIs serve government rather than industry. They produce reports for the general public or for government institutions. It can be assumed that for some RTIs the share of activities dedicated to this kind of function is greater than for others. Highly scoring organisations have links with Ministries, are to a large extent funded by institutional support or publicly financed projects and produce policy consulting as their main output.

International orientation: Globalisation and European integration promote international co-operation in markets for goods and services and also in research. RTIs have traditionally been rooted in NISs, therefore they usually are not oriented towards international markets or clients. In recent years, however, two phenomena drive RTIs towards international activities: the increasing international orientation of research activities of industry clients (partly induced by transnational merger activities) and the distribution of research funds via institutions at the European level. Those organisations that work for foreign markets will find it easier to remain competitive under increased market pressure. High scores mark organisations with strong international links10.

Functional dimension

Indicators for functional orientation concentrate on the organisations’ activities. They ask what the RTIs and KIBS ‘are doing’, whom they serve and what their main output is.

Research orientation: The functions of an RTI can concentrate on the provision of research results for the general public. These results are mainly dedicated at enhancing the existing stock of knowledge; application of this knowledge is a secondary function. In this case, the RTI will have a high share of academics in its workforce, produce output for scientific publications or provide basic research for innovation in firms. Research


46

orientation is also visible in the choice of co-operation partners in other research institutes or universities. High scores show a bias towards research output as against service functions to industry.

Service orientation: A hypothesis to be tested in this project is that RTIs will become more service oriented in order to sell their competencies in the market for innovation services. The indicator tries to document these processes by looking at funding structures, non-academic (service) staff and the composition of output. High scores express a high service element in the activities of the organisation.

Functional diversity: this indicator describes the degree of specialisation of organisations. A high functional diversity indicates that the RTIs or KIBS can serve many purposes and many clients, i.e., they contribute to more than one function in the innovation process, and deliver output to up-stream and downstream phases in the NIS. RTIs and KIBS with a wide range of types of output and of innovation functions will score higher here than those with a more concentrated set of core activities.

Functional dynamics: The indicator checks whether organisations are changing their functional orientation. Do RTIs and KIBS assume new functions? Do they think that certain functions will increase or decrease in importance in their service portfolio? High functional dynamics indicate significant changes in output mix over the period of observation (1995 to 1999 and 2002) and in the relevance attributed to innovation service functions.

Technological orientation: One of the characteristics that set RTIs of a specific type apart from others might be the degree of technology orientation in their output mix and service functions. From the hypothesis that the innovation process increasingly requires services other than technological R&D, it might be expected that RTIs move towards a lower technology orientation by assuming a wider range of management, training or marketing functions. High indicator scores hint at a decisive technology orientation.

A ‘toolset’ for the construction of indicators from raw data is given in Appendix 2. In the process of evaluation, and especially when trying to interpret indicators, some problems with the formulation of questions became evident. For instance, the 'international orientation' of the organisations was only measured using the share of foreign clients and customers, which in a number of cases must be misleading, as organisations having academic links with 10 This indicator does not measure academic linkages or individual co-operation of researchers (e.g., international co-authorship.


47

international partners were classified as ‘not internationally oriented, when they did not have ‘clients’ abroad. A modification of the questionnaire will thus be necessary, and the indicator at present only covers part of the international orientation. The following table shows the attribution of variables to indicators.

Table 12 Indicator

Variables

size

number of employees, budget

institutional dynamics

changes in: number of employees, budgets

KIBS orientation

budget mix, acquisition efforts

public/private orientation

funding, output mix (static and dynamic indicators)

academic orientation

links, funding, output mix

policy orientation


international orientation

branch offices, foreign sponsors

research orientation

share of academics, output mix, innovation functions, cooperation

service orientation

non-academic staff, links, funding, output details

functional diversity

output mix, innovation functions, co-operation

functional dynamics

innovation functions, output mix

technology orientation

output mix (details), innovation functions

tional links an organisation might have. The indicator 'institutional dynamics' could not be calculated for 'young' organisations as the reference data for 1995 is lacking, and there seems to be a substantial number of them, especially in the KIBS samples. The question concerning the ‘importance of service functions’ was obviously misunderstood by some respondents. Instead of stating the future importance of the service unction for their own business strategies or output, they gave their opinion about the development of the service in general. In future surveys the question should be re-formulated.

Thus, the construction of indicators shed light on possible and sensible revisions of the questionnaire. It turned out that the category ‘very high’ seldom occurred in the indicator scores. It was therefore merged with the ‘high’ scoring cases into one category ‘high’ (of course, this can also be an effect of a very low number of cases available for certain indicators and certain countries). Ideally, the methods of calculating the indicators should have been reformulated and margins as well as scoring schemes should have been adjusted in order to grasp variation in the cases more adequately. However, since all RISE teams worked


48

with the same toolset at different points in time, this kind of revision was not possible without putting the very tight time schedule into jeopardy. Therefore, we stuck to the harmonised indicators and decided to live with some rather ‘skewed’ results, i.e., indicators which place most cases in the ‘very low’ and ‘low’ categories only.

On the other hand, the composition of samples and the data that resulted for the set of questions in the survey were consistent with most of the indicator results. Indicator values were surprising at times, but not implausible, although some revisions in the indicator design as well as in the questionnaire might lead to more precise results (see chapter on methodological conclusions below!).

5.2

Institutional and functional orientation in RTIs and KIBS

Indicators were calculated by four countries, Germany, the Netherlands, Sweden and the UK. Some indicators could only be calculated in one or two countries, since the data quality did not allow to produce meaningful results. Norway presented a smaller set of similar indicators based on their survey material. Thus, the data were used to produce as much information as possible regarding the content of the individual indicators without being able to follow the formal procedures the other countries had agreed upon. In the case of Portugal it did not make much sense to work with the indicators, since due to the concentration on the biotech sector there would not have been enough variance to justify using a very formal evaluation scheme. A compilation of the results obtained by each of the four countries that worked with the indicators is given in Table 12. The number of cases included in each indicator varies from indicator to indicator in all countries, since in cases where the data were not complete often the indicator could not be calculated and the number of relevant cases was thus reduced (see Appendix 3 for information on sample sizes for indicators).

Due to the small number of cases in the Netherlands, Sweden and the UK, the presentation of categories in percentages overstates the actual importance of results in terms of significance for the NIS.


49

Table 13 Indicator results for four countries % of all respondents included in the indicator Indicator

Country

very low privat e

KIBS orientation

Institutional dynamics

Public orientation

Research orientation

International orientation

Academic orientation

Policy orientation

Service orientation

Technology orientation

Functional diversity

Functional dynamics

G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK G Neth Swe UK

48 11 0 25

38 75 82 55 14 12 25 61 55 23 75 93 82 75 86 61 4 0 0 13 3 4 15 19 8 0 0 0

low

public Privat e 37 48 0 56 29 38 23 0 58 0 1 14 0 0 66 29 42 33 9 5 0 0 53 38 26 33 3 14 0 0 39 19 0 0 7 0 0 0 1 43 0 0

33 19 0 6

0 18 14 35 57 33 50 18 24 15 14 4 9 18 7 26 54 14 13 30 24 8 37 22 4 82 0 33

medium

public privat e 23 29 47 0 17 0 0 73 19 42 33 43 14 5 0 21 52 37 67 33 19 84 0 35 47 58 44 34 57 11 13 14 19 5 22 42 33 21 22 81 29 47 75

15 52 35 31

43 7 4 10 25 48 20 14 14 46 7 4 5 7 3 13 29 57 26 35 21 12 37 33 20 14 46 52

high

public Privat e 27 19 32 100 19 29 38 4 76 67 45 33 26 50 10 14 21 0 49 24 16 50 13 14 16 22 30 19 68 63 20 14 16 11 37 52 58 33 18 29 32 25

4 19 65 38

19 0 0 0 4 11 5 7 7 15 4 0 5 0 0 0 14 29 61 22 52 76 11 26 68 4 54 14

public 12 5 21 9 42 25 0 5 0 0 11 38 69 50 3 0 0 0 10 53 0 50 0 0 0 0 9 10 21 25 27 38 79 67 13 15 21 44 0 0 21 0


50

KIBS orientation

Information on the sources of financing (industry vs. public funds, and contract-based vs. institutional funding) as well as on efforts for the acquisition of contracts in terms of labour expended deliver the input for this indicator. The data show the diversity of orientations between countries (see also Figure 3). Whereas in Germany and in the Netherlands the orientation of the organisations in the sample towards providing business oriented services is generally low, Sweden and the UK show more KIBS and RTIs with a medium or high KIBS or business service orientation. A clear distinction emerges between RTIs in Germany and the Netherlands, and their counterparts in Sweden and the UK. In the first two countries, RTIs are clearly not business oriented. In Sweden KIBS orientation of RTIs ranges from low to high with a slight tendency to the low and medium side; in the UK the business orientation of RTIs concentrates entirely in the medium range. Surprisingly, in Germany the business orientation seems to be higher in RTIs than in KIBS firms themselves; in Sweden and the UK the comparison between RTIs and KIBS comes closer to what might have been expected, here KIBS range at the higher end of the scores, with a distinct bias towards high business orientation in UK KIBS, and a more distributed scoring in Sweden, however with a clear skewness towards the higher end. The likelihood of a competitive relationship between RTIs and KIBS in business oriented functions therefore seems to be greatest in Germany, whereas there is a more distinct division of labour in Sweden and the UK.

In the UK high KIBS orientation is found as often in small as in medium sized and large KIBS firms. (The number of RTIs for whom this information can be gained is too low to make any meaningful statement). Relatively more large than small organisations show a high or very high KIBS orientation in Germany.

The Swedish report differentiates between RTIs and R&T firms (KIBS) that compete with the other group and those that do not compete. A slightly greater percentage of the not competing RTIs shows a low KIBS orientation than of the competing ones. Competing R&T firms (or KIBS firms) have a much higher incidence in the high score categories than their not competing counterparts. Thus, competition seems to drive RTIs and KIBS into greater business orientation.

KIBS or business orientation has been identified for Norwegian RTIs as ‘a high and/or increasing degree of single projects as share of their total income’. The indicator is thus not as


51

comprehensive as the one used by the other countries. Slightly more than 43% of RTIs had a medium business orientation (with higher shares in the technical than in the food-related group). 36% were categorised as ‘weakly’ and 20% as ‘highly’ business oriented.

Institutional dynamics11 Institutional dynamics, i.e., the growth perspectives of an organisation in terms of employment and budget volumes are low in German RTIs; in the KIBS sample many more respondents showed a medium and high score for this indicator. In the UK there is not much difference between RTIs and KIBS, but ‘very low’ dynamics occur quite often; on the other hand, a considerable number of organisations reach medium and high scores for the indicator. The Dutch contains many RTIs with ‘very low’ institutional dynamics but, at the same time, a large share of ‘medium’ and ‘highly’ dynamic cases. Due to difficulties to gain retrospective data on most institutional features that are at the core of the indicator, no information is available for Sweden. The majority of RTIs and KIBS (about 60%) in the UK show ‘medium’ or ‘very high’ institutional dynamics, ‘very low’ dynamics have been measured for 38% of RTIs and KIBS.

In the UK institutional dynamics is relatively greater in large organisations. This holds for RTIs as well as for KIBS. In Germany small organisations show more often than medium sized and much more often than the large ones high institutional dynamics. Almost 70% of the large units appear in the category ‘very low’ institutional dynamics. This corresponds with the trend in Germany to downsize large research institutes for reasons of efficiency and cost saving. In Sweden the difference between competing and not competing RTIs and KIBS is again considerable. 91% of the competing RTIs are in the categories ‘high and very high’, and only 17% of the non competing ones.

11

No graphic representation.


52

D1 Germany - KIBS Orientation

Netherlands - KIBS Orientation

50

50

40

40

30

30

%

%

20

20 10

10 0

very low

low

medium

high

RTI

37

23

27

12

KIBS

48

32

14

4

0 Netherlands RTI

very low

low

medium

high

48

29

19

5

Indicators

Indicators

Sweden - KIBS Orientation

UK - KIBS Orientation

60

60

50

50

40

40

% 30

% 30

20

20

10

10

0

very low

low 47

32

21

11

19

52

19

Sweden RTI Sweden KIBS

medium

Indicators

0

very low

low

medium

UK RTI

0

0

25

0

UK KIBS

0

0

32

59

high

high

Indicators


53

D2

Germany - Institutional Dynamics

Netherlands - Institutional Dynamics

60

45

50

40 35

40

30

% 30 %

20

25 20 15

10

10

0

very low

low

medium

high

Germany RTI

56

17

19

9

Germany KIBS

25

6

31

38

5 0 Netherlands RTI

very low

low

medium

high

29

0

29

42

Indicators

Indicators

UK- Institutional Dynamics 50 40 30 % 20 10 0

very low

low

medium

high

UK RTI

38

0

38

25

UK KIBS

38

0

43

19

Indicators


55

Public orientation

Public orientation, i.e., functions of RTIs and KIBS that are directed at the general public or at ‘clients’ in the ‘public’ or ‘government’ sphere, is surprisingly low in German as well as in Swedish RTIs and KIBS, with a slightly lower score for KIBS in both countries. In the Netherlands, most RTIs range in the medium category of public orientation. Only organisations in the UK correspond to a certain extent to our expectations: here KIBS are much more often found at the lower end of policy consulting activities, whereas RTIs tend more frequently to a medium intensity. For RTIs, thus, the Netherlands and the UK are similar and quite distinct from the other two countries.

Small RTIs and KIBS in Germany tend to show very low public orientation, whereas the larger ones are more frequently characterised by low public orientation, however, independently of size, public orientation never reaches ‘high’ or ‘very high’ scores. For KIBS in the UK there is no noticeable difference between large, medium and small units with respect to public orientation. In Sweden the ‘not competing’ vs. ‘competing’ dichotomy does not show any differences for this indicator for RTIs. Among the R&T firms none of the not competing firms reach ‘medium’ scores, whereas this is the case for 12% of the ones competing with RTIs. Obviously, competition with RTIs is allocated in fields that are in the public domain.

Research orientation

Research orientation is mostly low to medium for RTIs and KIBS in Germany and the UK. However, KIBS score significantly lower in the UK. Dutch RTIs are more often highly research oriented than their German or English counterparts. Swedish RTIs show by far the highest share of cases with high research orientation.

No difference exits in the UK between small, medium and large organisations with respect to research orientation. In Germany more small organisations show a low research orientation than medium and large ones. Due to synergy and scale effects, larger RTIs and


56

D3

Germany - Public Orientation

Netherlands - Public Orientation

80

80 70

60

60 50

% 40

% 40 30

20

20 0

very low

low

medium

high

Germany RTI

23

73

4

0

Germany KIBS

75

18

7

0

10 0

very low

low

medium

high

0

19

76

5

Netherlands RTI

Indicators

Indicators

Sweden - Public Orientation

UK - Public Orientation

100

70

80

60 50

60 %

%

40

40 30 20

20

10 0

very low

low

medium

high

Sweden RTI

58

42

0

0

Sweden KIBS

82

14

4

0

Indicators

0

very low

low

medium

high

UK RTI

0

33

67

0

UK KIBS

55

35

10

0

Indicators


57

KIBS can set aside more resources to dedicate to research activities. In Sweden, more of the RTIs that compete with KIBS show a high and very high research orientation, the majority of the not competing RTIs ranges in the medium category.

The Norwegian report has identified institutes with ‘weak, medium’ and ‘strong’ research orientation. The indicator is based on a ‘comparatively large share of researchers and a large share of activities oriented towards scientific publications’. It can thus be compared with the indicator described above. The research orientation is rather weak in Norwegian RTIs: 43% of all institutes (57% of the technical-industrial and 15% of the food-related institutions) are to be found in the category ‘weak’, and only 27% in the category ‘strong’ (14% technical and 46% food-related). Research orientation is, thus, considerably stronger in food-related than in technical institutes.


The indicator which captures ‘international business orientation’ by documenting contract research for foreign clients and foreign branch or representative offices, shows a ‘very low’ to ‘low’ internationalisation in all countries with only few distinctions: German KIBS and RTIs are the least internationally integrated. Whereas English RTIs also concentrate almost entirely on the domestic market, KIBS in this country are much more often working for foreign clients. One reason for this could be the size of the country, in comparison with, for example, Sweden and the Netherlands. This does not explain, however, the differences between the English KIBS on the one side and German and Swedish KIBS on the other. Here, differences in the attractiveness of the domestic customer base (i.e., the presence of a large clientele of flourishing manufacturing companies) in Germany and in the UK might be an explanation.


58

D4 Germany - Research Orientation

Netherlands - Research Orientation

60

40

50

35

40

30 25

% 30

% 20 20

15

10 0

10 5 very low

low

medium

high

Germany RTI

1

43

45

11

Germany KIBS

14

57

25

4

0 Netherlands RTI

very low

low

medium

high

14

14

33

38

Indicators

Indicators

Sweden - Research Orientation

%

UK - Research Orientation

70

70

60

60

50

50

40

%

40

30

30

20

20

10

10

0

very low

low

medium

0

high

very low

low

medium

high

Sweden RTI

0

5

26

69

UK RTI

0

33

67

0

Sweden KIBS

12

33

48

11

UK KIBS

25

35

10

0

Indicators

Indicators


59

D5

Germany - International Orientation

Netherlands - International Orientation

70

60

60 50

50 %

40

40

30

% 30

20

20

10 0

10

very low

low

medium

high

Germany RTI

66

21

10

3

Germany KIBS

61

18

14

7

0 Netherlands RTI

very low

low

medium

high

29

52

14

0

Indicators

Indicators

Sweden - Interantional Orientation

UK - International Orientation

60

70

50

60 50

40

40

% 30

% 30

20

20

10 0

10 0

very low

low

medium

high

very low

low

medium

Sweden RTI

42

37

21

0

UK RTI

33

67

0

0

Sweden KIBS

55

24

14

7

UK KIBS

23

15

46

15

Indicators

high

Indicators


61

More small than medium-sized and large RTIs and KIBS show a medium or high international orientation in the UK as well as in Germany. In Sweden organisations that compete with KIBS or RTIs more often show a medium or high international orientation, whereas the not competing ones remain mostly in the lower categories.


The indicator for academic orientation comprises links with universities, contributions to the scientific community and teaching/education functions. Countries with a large share of university linked institutes in their sample will therefore have a larger share of RTIs with academic orientation than the others.

Hence, the very high academic orientation in the Netherlands. The high scores in the case of English RTIs is somewhat deceptive, since the sub-sample for which the indicator has been calculated consists of only six cases, anyway – all six score in the medium and high ranks. German RTIs show most frequently a medium academic orientation, however with more than 40% of the institutes in the low and very low categories. For KIBS firms academic orientation is not a relevant feature.

German RTIs and KIBS tend to have a weaker academic orientation, if they are small organisations; relatively more of the larger entities show higher scores. The explanation for this is probably not far from that for the higher research orientation of larger organisations, i.e., the existence of synergy effects and economies of scale. The very low academic orientation in English KIBS is independent of size. This also holds for English RTIs.

Policy orientation

A large share of contract work for Ministries or a direct link or subordination to government institutions generates high scores for policy orientation. Policy orientation is generally quite low in the sample of the four countries considered here. Only RTIs in the UK


62

D6

Germany - Academic Orientation

Netherlands - Academic Orientation

80

60 50

60

40 % 40

% 30 20 0

20 10 very low

low

medium

high

Germany RTI

9

33

49

10

Germany KIBS

75

14

7

4

0

very low

low

medium

high

5

19

24

53

Netherlands RTI

Indicators

Indicators

UK - Academic Orientation

Seden - Academic Oientation 100

100

80

80 60

60

%

% 40

40

20

20

0

0

very low

low

medium

high

Sweden RTI

0

84

16

0

UK RTI

Sweden KIBS

93

4

4

0

UK KIBS

Indicators

very low

low

medium

high

0

0

50

50

82

9

5

5

Indicators


63

seem to engage to a larger extent in policy consulting. In all the other countries most RTIs remain in the range of low or very low scores. This reluctance is more pronounced for KIBS than for RTIs.

In Norway ‘policy orientation is recognised by important relations to universities and high and /or increasing public funding’. Technological institutes have a low to medium policy orientation, whereas food-related institutes tend to have a medium to strong policy orientation. Intensive co-operation of many technical institutes with universities goes along with very low shares of public funding. Food-related institutes have a higher share of public funding and also often relations with the academic world.

In the UK small RTIs and KIBS are more likely to be found in the low categories for policy orientation, and the larger ones might at least reach medium scores for this indicator. The same is true for Germany, however, differences between the two types of organisation are not large here. Differences between competing and not competing RTIs and KIBS in Sweden are not significant.

Service orientation

Service orientation focuses on those functions that are not R&D, but rather serve more downstream phases of the innovation process, such as implementation, maintenance, testing and prototyping. High scores indicate that RTIs and/or KIBS diversify their activities towards providing a more comprehensive service package to innovating firms.

Service orientation is relatively low in the Netherlands and in German KIBS firms, and much higher in Swedish and English RTIs and KIBS. Contrary to our intuition, in Germany some KIBS firms seem to be even less service oriented than RTIs (58% KIBS in the ‘low’ and ‘very low’ categories, against 38% RTIs); however, 14% of KIBS firms


64

Germany - Policy Orientation

Netherlands - Policy Orietentation

D7 80 50

60

40

% 40

30 % 20

20 0

10

very low

low

medium

high

Germany RTI

53

35

13

0

Germany KIBS

75

18

7

0

0

very low

low

medium

38

47

14

Netherlands RTI

Indicators

Indicators

Sweden - Policy Orientation

UK - Policy Orientation

100

70 60

80

50

60

40

%

%

40

30 20

20

10

0

very low

low

medium

high

Sweden RTI

26

58

16

0

Sweden KIBS

86

7

3

0

Indicators

0

very low

low

medium

high

UK RTI

33

44

13

0

UK KIBS

61

26

22

0

Indicators


65

also show a ‘high’ service orientation. In the UK more than 60% of KIBS firms show more often ‘high’, about a quarter ‘medium’ service orientation. English RTIs are found more often in the medium range (63%), and less often in the ‘high’ range (25%). RTIs with medium to high service orientation reflect the strategy of combining academic work with relevance for industry purposes in Germany which is manifest in the construction of Fraunhofer institutes. The low number of service oriented organisations in the Netherlands corresponds to their higher academic orientation and the strong presence of university institutes in the sample. In Sweden there is a slight difference between RTIs and KIBS with the latter belonging more often to the highest range of service orientation, and the former concentrating in the medium range. This leads to the conclusion that in service related innovation functions a substantial number of RTIs and KIBS in Sweden with ‘medium’ and ‘high’ service orientation (around 90% of the sample) face intensive competition, while in Germany the field where competition might be an important feature is only relevant for about 40% of RTIs and KIBS with a medium or high service orientation.

Service orientation is more often ‘medium’ or ‘high’ in competing than in not competing RTIs and KIBS in Sweden. Slightly more medium and large RTIs and KIBS show a medium or high service orientation than smaller ones in Germany. No size-related variation of the indicator could be found in the English results.


Some organisations’ output mix and the service functions that they offer, show that their functional orientation is technological rather than managerial or marketing oriented. There is no clear common pattern for technology orientation in the countries considered here. More than in other indicators, cases are distributed over the different intensity ranges. In Germany RTIs tend to have a lower technology orientation than KIBS, however, still more than a quarter of RTIs in the sample appear in the ‘high’ score category of the indicator. In the Netherlands, there is a bias towards medium and high scores, how ever, almost 40% of the sample are located in the ‘very low’ and ‘low’ categories. Swedish RTIs and KIBS differ slightly from the other two countries, since they show the most obvious technology orientation with more than three quarters of RTIs and more than half of KIBS in the highest category. More than two thirds of RTIs and three quarters of KIBS in the UK have a high technology orientation.


66

D8

Germany - Service Orientation

Netherlands - Service Orientation

60

60

50

50

40 40

% 30 % 30

20

20

10 0

10

very low

low

medium

high

Germany RTI

3

34

30

9

Germany KIBS

4

54

29

14

0 Netherlands RTI

very low

low

medium

high

14

57

19

19

Indicators

Indicators

Sweden - Service Orientation

UK - Service Orientation 80

70 60

60

50 %

40

% 40

30

20

20 10 0

0 very low

low

medium

high

Sweden RTI

0

11

68

21

Sweden KIBS

0

14

57

29

Indicators

very low

low

medium

high

RTI

0

13

63

25

KIBS

0

13

26

61

Indicators


67

Small and large KIBS in the UK have more often reached high and very high scores for technology orientation then medium sized firms. In Germany large firms are slightly more likely to have high or very high technology orientation than medium or small firms. Swedish RTIs that compete with KIBS tend to be more technology oriented than the not competing RTIs. The situation is more diverse for KIBS. Here almost 40% of the not competing firms are in the lower categories (13% ‘very low’, 27% ‘low’), and 60% in the high and very high range (38% and 25%), non in the ‘medium’ field. The KIBS that compete with RTIs stretch from ‘low’ (20%) over ‘medium’ (40%) to ‘high’ (27%) and ‘very high’ (13%).

In the Norwegian study technology orientation describes a ‘unit with low and/or shrinking shares of activities aimed at scientific publications, and with emphasis on practical developmental work in companies and/or supplying customers with module-based solutions’. The results again show a clear distinction between technical institutes and food-related institutes; while the former have a large share of cases with medium to strong technology orientation, the latter are more often to be found among the institutes with weak technology orientation.

Functional diversity

One of the RISE hypothesis is that with the changing nature of innovation and the new service requirements that accompany these changes, RTIs will be forced to diversify the services they offer their industrial clients. The indicator shows the degree of diversity in the output and the supply of service functions as well as the range of co-operation partners for RTIs and KIBS.

Most RTIs and KIBS are to be found in the middle range, however, German organisations tend more to the lower, Swedish and Dutch organisations to the higher end. More RTIs than KIBS show a high functional diversity in Germany as well as in Sweden. Interestingly, KIBS are much more often than RTIs to be found in the ‘very low’ category in both countries. In the UK, the situation differs from that in the other countries. Here, more KIBS firms show a high functional diversity than RTIs, and in both groups a substantial number of cases has high or very high scores for the indicator.


69

D9

Netherlands - Technology Orientation

Germany - Technology Orientation

40

40

35

30

30 25

% 20

% 20 15

10

10

0

5

very low

low

medium

high

Germany RTI

39

14

20

27

Germany KIBS

13

30

35

22

0 Netherlands RTI

very low

low

medium

high

19

19

14

38

Indicators

Indicators

Sweden - Technology Orientation

UK - Technology Orientatation

80

80

60

60

% 40

% 40

20

20

0

0 very low

low

medium

high

very low

low

medium

high

Sweden RTI

0

5

16

79

RTI

0

22

11

67

Sweden KIBS

3

24

21

52

KIBS

4

8

12

76

Indicators

Indicators


71

Not competing Swedish KIBS show a slightly greater tendency for functional diversity than the competing ones; the opposite is true for RTIs. High functional diversity is more often found in medium-sized and large German RTIs and KIBS than in the small ones. On the contrary, in the UK, the smaller RTIs and KIBS present more often ‘high’ and ‘very high’ scores than the medium and large ones.

Functional dynamics

This indicator is based on the hypothesis that the functional orientation of RTIs and KIBS is changing over time. It measures the degree at which organisations are subject to these changes. Most RTIs in Germany and the Netherlands scored ‘low’ or ‘very low’ for functional dynamics. In Germany this is also true for KIBS. In Sweden, however, only RTIs are mainly to be found in the lower categories, while KIBS show ‘medium’ and even more often ‘high’ functional dynamics. Functional dynamics is predominantly low in RTIs in the UK, and mainly ‘medium’ in KIBS firms.

No relation between size and functional dynamics has emerged form the German data. N the UK, indicator values are slightly higher for large and medium-sized than for small KIBS. Competing KIBS firm in Sweden rank more often in the ’medium’ and ‘high’ fields than the not competing ones. The same is true for RTIs, although at a slightly lower level.


72

Germany - Functional Diverstiy

D10

Netherlands - Functional Diversity

50

60

40

50

30

40

20

% 30

10

20

%

0

10

very low

low

medium

high

Germany RTI

7

42

37

13

Germany KIBS

15

37

37

11

0 Netherlands RTI

very low

low

medium

high

0

33

52

15

Indicators

Indicators

Sweden - Functional Diversity

UK - Functional Diversity

60

80

50

60

40 % 30

% 40

20

20

10 0

0 very low

low

medium

high

Sweden RTI

0

21

58

21

Sweden KIBS

19

22

33

26

Indicators

very low

low

medium

high

RTI

0

22

33

44

KIBS

8

4

20

68

Indicators


73

Germany - Funcitional Dynamics

D11

Netherlands - Functional Dynamics

100

45

80

40 35

60

30

% %

40

25 20 15

20

10

0

very low

low

medium

high

Germany RTI

1

81

18

0

Germany KIBS

0

82

14

4

5 0 Netherlands RTI

very low

low

medium

high

43

29

29

0

Indicators

Indicators

Sweden - Functional Dynamics

UK - Functional Dynamics

60

80

50

60

40

% 40

% 30 20

20

10

0

0

very low

low

medium

high

Sweden RTI

0

47

32

21

Sweden KIBS

0

0

46

54

Indicators

very

low

mediu

high

RTI

0

75

25

0

KIBS

0

33

52

14

Indicators


75

5.3

Correlation between indicators

All teams attempted to group organisations in their samples according to the scores for functional and institutional indicators using statistical cluster methods. However, these attempts did not lead to significant results. Thus, a less formal way was adopted by using simple cross tabulation of indicators, which gives some more evidence concerning RISE hypotheses. Since some indicators show a considerable amount of overlapping, only a few will be analysed in this chapter. For example, policy orientation and public orientation as well as academic orientation and research orientation cover similar phenomena and can be treated by choosing just one indicator. The central hypotheses are based on the existence of trajectories that go from mainly publicly funded institutions to mainly contract and industry funded institutions in one dimension and from basic research mainly for the scientific community to innovation related services in the other dimension. This leads to the following assumptions:

•

the more KIBS oriented organisations are, the less research oriented

•

the more KIBS oriented organisations are, the more service and technology oriented

•

the more KIBS oriented organisations are, the more internationally oriented

•

the more research oriented organisations are, the less service and technology oriented

The necessary information for cross-tabulation was available for three countries. (Sweden, Germany and – incompletely - the UK). The differences in sample sizes, institutional backgrounds and emerging profiles make an aggregated analysis of all three countries inadequate. However, the results show important variations between countries.

a)

KIBS orientation and research orientation

To support the hypotheses that a high KIBS orientation usually goes along with a low research orientation, a significant number of cases should be found in the upper right and the lower left boxes of the following tables. An agglomeration of cases in the central areas would indicate that a considerable number of organisations combine high KIBS orientation with high research orientation.


76

Sweden Research orientation

KIBS orientation Very low

Low

Medium

High

Very low

1

1

Low

2

4

4

Very high

Medium

2

5

8

1

1

High

1

4

5

2

1

2

1

Medium

High

Very high

Very high n=45

Germany Research orientation


Low

Very low

4

1

Low

30

13

13

4

1

Medium

15

14

15

8

2

High

1

5

4

1

1

Medium

High

Very high

Very low

1

3

Low

4

6

Medium

1

3

High

2

1

Very high n=132

UK Research orientation


Low

Very high n=20

In Sweden only one quarter of the cases supports our hypotheses, three quarters seem to belong to a category of organisations that combine both orientations without having a strong profile in any of the two directions. 17% are allocated in the medium range for both indicators. A low or medium KIBS orientation is combined with all degrees of research orientation for a very large number of RTIs and KIBS. On the other hand, a medium and high research orientation matches with all parameter values for KIBS orientation for an equally


77

large number of organisations. Thus, no clear pattern emerges from the combination of the indicators.

The German data show an even less conclusive result. Here only 8% of the cases are allocated in the expected cells, 36% present low and very low KIBS as well as research orientation. ‘low’, ‘medium’ and ‘high’ research orientation are combined with all categories of the KIBS indicator, however, with a bias towards the lower scores.

In the UK almost half of the cases match the high KIBS/low research orientation hypothesis. However, 70% of the sample show ‘low’ or ‘very low’ research orientation, combined with medium or high KIBS orientation. Only in one case (5% of the sample) ‘medium’ KIBS orientation links with ‘medium’ research orientation. Therefore, this result seems to be due mainly to the generally low research activities in the English organisations.

Results from the Norwegian survey which are based on a different methodology, show that in about one fifth of the cases strong/weak research orientation goes along with weak/strong KIBS orientation. Quite often, weak research orientation is combined with weak and/or medium business orientation. In only about ten % of the cases, medium research orientation is combined with medium KIBS orientation. Thus, no convincing pattern emerges from the data.

b)

KIBS orientation and service orientation

Organisations which receive a substantial part of their funds from industry contracts and projects for public and non-government institutions are expected to show a high share of services in their output and a strong presence in innovation services delivered to firms. Hence one would expect an agglomeration of cases in the upper left and the lower right cells of the tables as well as on the diagonal axis . (A certain amount of auto-correlation is inherent in the following tables, since both indicators contain information on budget shares from industry contracts). This combination has not been analysed for the UK, hence there are only two countries to be compared in this case.


78

Sweden Service orientation


Low

Medium

High

1

3

1

10

9

4

3

7

2

Very high

Very low Low Medium

3

High

2

Very high n=45

Germany Service orientation


Low

Medium

Very low

18

8

4

Low

19

17

12

2

Medium

9

6

12

9

3

4

2

4

2

1

High

High

Very high

Very high n=132

Again, Swedish RTIs and KIBS do not follow the expected pattern, i.e., only 4% of the sample show the combination of high KIBS and service orientation or low scores in both indicators. However, more than a quarter appear in matching categories, which seems to be consistent with the hypothesis. The picture is confused by the fact that ‘medium’ service orientation goes along with all categories of KIBS orientation.

German RTIs and KIBS show the same strong matching along the diagonal fields (37%), but also in the cells that most adequately support our hypothesis. However, there is a considerable agglomeration in the low score fields for both indicators. The asymmetry of the high and low score frequencies shows that the type of RTIs and KIBS in the sample focus on activities within the research and policy community rather than on market related activities.


79

c)

KIBS orientation and technology orientation

It has been assumed that organisations with a high KIBS orientation are likely to also be quite technology oriented. Since most of RTIs and KIBS in the samples are working in technology or science related fields, and the indicator variables are not very strong in approximating ‘technology’, the correlation is not expected to be strong in this case. Data were only available for Germany and Sweden for the two indicators. The relevant cells are those in the upper left and lower right corners as well as the central (‘medium/medium’) box.

Sweden Technology orientation


Low

Very low Low

High

Very high

2

2

1 1

Medium High

Medium

2

Very high n=37

3

4

2

2

5 4

4 4

1

Germany Technology orientation


Low

Medium

High

Very high

Very low

22

11

5

1

Low

9

5

5

1

Medium

9

7

8

2

1

High

8

7

10

4

1

Very high

2

3

4

5

2

n=132

About 30% of the Swedish sample fall in the category of organisations that support the hypothesis. However, there is also a lot of variation in the rest of the cases so that no clear trend can be observed.


80

In Germany, again, the low KIBS orientation of a large part of the sample influences the cross-tabulation results. Hence, 35% of the cases show the expected pattern of low KIBS and low technology orientation, and only 10% fall in the ‘high/high’ category (6% combine ‘medium’ scores for both indicators).

d)

KIBS orientation and international orientation

The traditional geographical scope of RTIs and of most service firms focuses on the domestic market. Clients are either found in the national policy system or in the range of local companies. With the internationalisation of R&D activities and of service markets, but also as a result of a stronger orientation towards industry clients, a diversification into international markets might be expected. However, data for the internationalisation indicator have already shown that only a few RTIs and KIBS have already realised a significant international presence. Data are only available for Germany and the UK.

UK International orientation


Low

Medium

Very low

2

Low

2

High

Very high

1

Medium

6

High

2

Very high n=13

Germany International orientation

KIBS orientation

Very low

Low

Medium

High

Very low

41

22

18

5

Low

6

8

8

5

Medium

3

1

5

2

3

2

1

1

1

High

Very high

Very high n= 132


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The UK sample shows indicator values that hint at a support the hypothesis; in about 60% of the cases high KIBS orientation goes along with medium or high international orientation. However, the very small sample does not allow to draw bold conclusions for the UK as a whole.

In Germany the already familiar picture of low KIBS scores is combined with an equally skewed allocation of organisations in the lower categories, as far as international orientation is concerned. Insofar, it is not surprising that the majority of cases is found in the ‘very low’ and ‘low’ cells of each indicator (58%). High KIBS orientation is also combined with low and very low international orientation in 10 cases (8%), an indication that the weak international integration is also an important phenomenon in the more business oriented organisations.

e)

Research orientation and service orientation

The hypothesis which guides this chapter is based on the perception that RTIs either concentrate on the more research and academically oriented functions and are, thus, far away from the more application and implementation oriented services for industry clients. Hence, we expect to find a large number of cases in the lower right and upper left cells.

Sweden Service orientation

Research orientation Very low

Low

Medium

High

Very high

Low

1

1

4

1

Medium

2

8

7

10

1

2

4

4

3

Very low

High Very high n=48


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Germany Service orientation


Very low

Low

Medium

High

19

10

1

Low

4

23

19

4

Medium

1

13

18

7

6

7

High

Very high

Very high n=132

The Swedish data do not confirm the hypothesis. Here only 6% of the respondents fall in the expected categories. Organisations with low, medium and high service orientation stretch over all categories of research orientation. On the other hand, medium service orientation matches with low, medium and high research orientation.

The German table is characterised by a concentration of cases in the ‘low’ and 'medium’ ranges for both indicators. Thus, the cells that support the hypothesis remain almost empty: only 8 % of the RTIs and KIBS combine low service orientation with high research orientation or vice versa. A large number of organisations combine low and medium research orientation with medium or low service orientation (55%). Considerably less cases are to be found in the medium and high categories (24%). Hence, a high research orientation seems to be hard to combine with a high service orientation.

f)

Research orientation and technology orientation

Since the generation of technology is supposed to belong to the more downstream R&D areas, whereas research orientation focuses on the upstream side of R&D, it can be assumed that organisations with a high technology orientation will not at the same time show a high research orientation. However, a strong research orientation might also endow an organisation with the necessary knowledge to provide high quality technology services. Again, only data from Sweden and Germany were available for this part of the analysis.


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Sweden Technology orientation


Low

Very low Low

Medium

High

Very high

1 3

2

4

Medium

3

3

3

High

4

5

9

1

Very high

2

2

3

2

n=47

Germany Technology orientation


Very low Low

3

Medium High Very high n=132

2

Low

Medium

High

25

13

1

8

6

3

13

11

3

9

16

3

6

8

2

Very high

More than 30% of the RTIs and KIBS in Sweden are allocated in the high and very high scores for both indicators, i.e., they combine excellency in research with a strong technology orientation. If the medium categories are included, almost 60% of the sample combines both orientations. Hence, a good combination seems to match at least a medium to high research expertise with a medium or high technology competence.

The results of the correlation analysis shows that the crude division of organisations in highly specialised categories does not meet the picture presented in the surveys. In order to be competitive in innovation service markets or in R&D evaluation procedures, RTIs as well as KIBS have to combine service, research and technological competencies. In every country there are some cases of organisations with a highly specialised profile, however, the very


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nature of the organisations that supply innovation services seems to imply a broader set of relevant qualifications and competencies. The Norwegian technology policy aimed at this combination of high expertise in research as well a in technology generation. However, the survey results for this country do not show promising results in this direction. Only about 17% of the institutes show a strong or medium research as well as a strong or medium technology orientation. About one third are strong in one indicator and weak in the other.

6

Country summaries

The individual country studies contain a much wider variety of information on the development of innovation services, RTIs and KIBS12. In order to complement this report with some country specific detail, summaries of individual reports will be presented in this chapter.

Germany

The following results are derived from the survey which is at the centre of the empirical work in this workpackage, but also on case studies and on the institutional analysis of the German innovation system (see Rickert 1999) as well as on a specific cluster study, concerned with innovation in the automotive supplier sector (see Preissl 1999). The material derived from these sources shows that the national innovation system is characterised by a large variety of institutional forms of innovation service providers with specific patterns of interaction.

The survey data and the case studies, give evidence to support the thesis that innovation functions adopted in innovating firms (demand perspective) and innovation services/service products (supply perspective), cover fields of activity that are much wider than just the performance of traditional R&D tasks.

The relevant services – if not supplied in-house by the specialised departments of the innovating company - are provided by a multitude of organisations that combine different

12

See WP2 counrty reports on the RISE server.


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institutional and functional features and employ different modes of interaction with their clients/customers as well as with other co-operation partners.

The patterns of interaction between the different organisations range from extremely competitive to strongly co-operative, sometimes these patterns change over time or during different stages of innovative activities.

The material derived from the postal survey, case studies and a specific cluster study shows that the German national innovation system is characterised by a large variety of institutional forms of innovation service providers with specific patterns of interaction. Out of the 132 postal survey respondents 28 are KIBS and 104 are RTIs (49 public organisations and 55 semi-public or publicly supported organisations). 33.3% of these organisations rank as small, 39.4% are medium-sized and another 27.3% of the respondents are large.13 Concerning size the difference between the two categories of private versus public and semi-public organisations (KIBS vs. RTIs) is most obvious. More than a third of the respondents are linked to a research society such as the Leibnitz-Gesellschaft, the Max-Planck-Gesellschaft and the Fraunhofer-Gesellschaft. Other entities are linked to universities, to a ministry, other institutions or to business enterprises. While nearly all private organisations generate their financing mainly from projects for the industry, the public and semi-public organisations heavily rely on public funding and generate major proportions of their financing based on government contract research.

Innovating companies more and more rely on the possibility of outsourcing innovationrelated functions which previously were performed in-house. This, of course, only holds true for innovation-related activities not directly linked to the core competencies of the respective companies. Factors contributing to the outsourcing tendencies are ongoing specialisation due to the steady splitting-up of previously coherent areas of knowledge and technology and the merging of previously independent and non-interrelated technology areas. Additional drivers are the opportunities resulting from the rapid development of information and communication technologies and the emergence of differentiated markets for innovation-related service activities, partly due to de-regulation measures in a number of relevant fields in the major industrial countries.

13

Small: up to 50 employees, budget of DM 0.1 to 7 million; medium-sized: 51 to 200 employees, budget of DM 7.1 to 25 million; large: over two hundred employees, budget of over DM 7 million.


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The postal survey data and the case studies give evidence to support the thesis that innovation functions adopted in innovating firms (demand perspective) and innovation services or service products (supply perspective), cover fields of activity that are much wider than just the performance of traditional R&D tasks – and that the institutional perspective in analysing innovation-related services should be complemented by a functional one.

However, private, public and semi-public innovation service providers differ with respect to a number of service functions. Public and semi-public RTIs are much more involved in basic research leading to innovation, than their private competitors (KIBS). On the other hand, the survey data reveal that private innovation service providers are much more active in the application of new knowledge and technology within innovating companies and especially in marketing-related service functions. In general there are only minor differences concerning the judgements of the respondents from RTIs and KIBS on the relevance of certain innovation-related service functions expected for the future. The respondents consider the delivery and assessment of innovationrelated information as the service function most important in the years to come, followed by the market introduction of new products or processes and product and process development. This might reflect the RTIs’ and KIBS’ growing awareness of the fact that not only the innovating companies as their customers, but also the RTIs and KIBS themselves have to adjust to market dynamics. It seems, that these and other services are equally relevant for most of the innovative activities in companies – independently of the localisation of the respective innovation process on the continuum from basic research to market introduction. In many areas of activity, competition between RTIs and KIBS will become even more intense during the years to come.

The relevant services – if not supplied in-house - are provided by a multitude of organisations that combine different institutional and functional features and employ different modes of interaction with their clients as well as with other co-operation partners. The patterns of interaction between the different organisations range from extremely competitive to strongly co-operative, sometimes these patterns change over time or during different stages of innovative activities. RTIs and KIBS co-operate with their clients or other partners mostly via joint projects, working groups and transfer of skilled personnel. 40% of all respondents claimed to have mainly long-term co-operation agreements with their partners. On average 33% of the respondents reported on the predominance of singular cases of co-operation, while 11% of the respondents have unlimited co-operation agreements (either explicit of implicit).


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Interestingly, both RTIs and KIBS, expect to devote more resources (time and finance) to acquisition activities in the future. This again indicates that competition in their fields of activity gets harder and that there is a growing awareness also among RTIs that they have to react to market demand or have to sell their services more aggressively. The increasing involvement of traditional publicly funded or supported RTIs in competitive, market-oriented activities is also a result of financial restrictions due to budget cuts and fiercer competition for government contracts. Another reason are demands for more business orientation, ‘flexibility’ and contribution of the research organisations’ activities to the competitiveness of the national economy, again reflected by the modes of financing the RTIs’ activities.

A significant difference between private innovation service providers on the one hand, and public or semi-public organisations on the other, was detected with regard to five out of the 12 indicators applied. Private innovation service providers can easily be distinguished from their public or semi-public competitors on the basis of their size, the institutional dynamics, public/private orientation and their academic as well as research orientation. It is important to note that the percentage of private innovation service suppliers with medium, high and very high institutional dynamics is much higher than the respective percentage figures for RTIs.

The empirical findings outlined above lead to a number of general conclusions. First, the paradigm of technology transfer as a major bottleneck and area of concern for R&D policy makers, seems to be rather outdated now. The model of the service economy, in contrast to this, seems to offer a new perspective on science and technology policy. It is much more suitable, when it comes to business enterprises’ innovation activities and innovation-related

policy initiatives.

The Netherlands The majority of the RTIs in the Dutch sample is public. These mainly concern university related research schools and institutes. A more balanced picture would have appeared, if all the TNO and former DLO institutes had returned the questionnaire. Regarding the number of employees and turnover most of the non-academic organisations show very high figures. An exception is the academic medical centre of Leiden University (Leids Universitair Medisch Centrum) with 500 employees (full-time equivalents). RIVM, Gastec, the TNO institutes and former DLO institutes


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have also the highest turnover figures of the sample, ranging between Euro 30 million and Euro 55 million (RIVM exceeds even Euro 150 million).

Regarding the funding sources we can identify one main development. FKIBSt of all the share of public funding decreased slightly since 1995, and this decrease is expected to continue towards a level of approximately 43% of the total budget in 2002. An increase in the share of private funding (from approximately 13% in 1995 to 21% in 2002) by performing contract research for industry is expected to leverage the effect of decreasing public funding. The other sources of funding, i.e. contract research for non-profit organisations and for government, seem to stay more or less at the same level.

Regarding the overall funding a slight increase in national funding can be identified between 1995 and 1999, but this share is expected to reach the same level in 2002 as in 1995 of approximately 72%. These figures seem to illustrate an expected increase in internationalisation and marketorientation in the forthcoming years for most of the RTIs (see also the sections on ‘competition’, ‘competitive advantage’ and ‘acquisition activities’).

The picture that evolves from the service function data on what kind of services are being provided in the innovation process and the relative importance of these apparently fits the traditional RTI scenery. The most frequently mentioned functions are the more academic and technical ones, including performing basic research and development activities For most of the functions and their importance the development anticipated in future years is mainly rising. This can be viewed as remarkable as one of the assumptions of the RISE project has been that new service functions in the innovation process will win importance vis-à-vis the traditional ones. But especially these traditional ‘services’, e.g. basic research, product development and prototyping/testing, are the most relevant and strongly rising services.

At the regional and national level just a few competitors exist for Dutch RTIs. As contrasted with the international competitive arena, where the majority of the respondents identify over 10 direct competitors. Among every category of competitors the number of identified competitors is usually less than 5. The intensity of competition rises as the RTIs are moving up from the regional towards the international competitive arena. It is most severe between RTIs and universities and between RTIs and non-profit organisations: medium to high. Competition with commercial service providers and industry is mostly regarded as having a low intensity.

The average of the proportion of working time spent on acquisition is approximately 9,5%. One exception is a university-linked research group that spends 40% of total working time on


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acquisition of contracts and is even anticipating a future rise! The majority of the respondents expect a rise in the near future of the RTIs acquisition activities. Additional comments by respondents regard the changing dynamics of the ‘research market’: declining government financing, increasing search for commercial funding, internationalisation of the RTIs’ research activities, new foreign competitors in the Netherlands, privatisation of RTIs etc. In combination with these comments, the results seems to confirm the actual process of rising market-orientation of most RTIs from a low basis.

Sweden

Compared with KIBS-firms the output of the RTIs is to a much larger share concerned with scientific activities and contributions. The output of KIBS-firms primarily concerns projects for industry. Such projects are also important to the institutes. The comparison of the content of industry projects show that institutes and firms to a large extent carry out the same kind of activities in these projects, i.e. the output profiles in relation to industry projects overlaps. Another finding is that the services of the institutes and firms to a large extent overlap when related to innovation functions. This overlap is located to the “up-stream” research and development functions of the innovation process. Only a few institutes and firms provided “down-stream” services related to near-market functions of the innovation process.

The findings of overlapping service profiles lead to the hypothesis that Swedish industrial research institutes are not moving into the realms of service firms, but that KIBS-firms are moving into the traditional areas of research institutes, i.e. research and technological functions of the innovation process. However, the study does not show if services related to one function, e.g. research, have the same content and quality when supplied by institutes and firms respectively. That a service is related to the research function does not necessarily mean that the provider of the service is performing research.

The identified overlaps in output and functional service profiles indicate the fields of services where industrial research institutes and KIBS-firms may compete. A rather large share of the institutes also stated that they compete with KIBS-firms and many regard the competition to be strong. Also a large share of the firms competes with research institutes, but most of them regard the competition to be weak. However, we do not know which of the activities and functions that are under competitive pressure. We do not know which services


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(output/functions) that are under competitive pressure and the size of those parts within the total activities of each institute. Also we do not know how large a share of the institutes activities that are exposed to competition and whether the competitive relation concerns some particular type of client, e.g. SMEs. However, the study indicates that competition is taking place in research and technology areas and not in activities related to near-market functions of the innovation process.

The differences of profiles between institutes that compete with KIBS-firms and those that do not and between firms that compete with institutes and those that do not are rather small in most aspects studied. This indicates that it is not the content of activities and services that determine, if industrial research institutes compete with KIBS-firms. A hypothesis is that what determines the existence of competition is simply the existence of institutes and firms within the same field or innovation cluster. If both kinds of service providers exist then they also compete at least to some degree. Thus the relation between industrial research institutes and KIBS-firms should be analysed in the context of innovation clusters. In such a setting it is possible to determine the existence or non-existence of industrial research institutes and KIBS-firms.

The study has generated some other methodological conclusions. Some of the questions in the questionnaire are too coarse: specified output and functional categories conceal crucial differences in the content of activities and of services related to innovation functions. It is also questionable to treat the institutes (and the firms) as one group since they differ largely in activity and functional profiles.

Norway The size of the science-based research institute sector in Norway is quite immense, compared to the size of the economy. About 9.600 persons – or one out of each 200 Norwegian employee - are working in one of the 38 Norwegian institutes14. The last ten years, Europe has experienced a profound growth in private technology-based business service consultancies. These services are technological, they are external sources to innovating companies, they are often knowledge-intensive and they are development- or research oriented. These services have in other words much in common with science-based research

14

Employment statistics 1998, source: National employment register, SSB/STEP Group


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institutes. This paper explores how Norwegian science-based research institutes position themselves to enter this new competition.

A major result is that competition from private industry is much less strong than we expected, and that competition from other academic or semi-academic institutions, like universities or research institutes are stronger than from private industry. Only 10 percent of the institute units report that they experience medium or strong competition from private firms or laboratories. A very small share of the total sample reports strong competition from private industry units; 2 percent.

We assume that major competition from private knowledge suppliers is on gaining single projects, and that increased competition may reduce institute income from projects over time. We found that one third of the surveyed units had not experienced any change in project income at all the last five years, while slightly less than half of the respondents said they had experienced little or substantial increase. Only eleven - or each fifth institute unit - reported to have experienced reduced project income as share of total budgets over the last five years. In other words, more institute units report increase in projects than decrease. It must be noted, however, that stable or increased project income may also be a result of changes funding structure form public authorities.

One reason for the relatively low competition may be that the institutes hold a high academic profile. We have seen that there is an overall trend in share of employees with PhD increasing faster than the overall activity measured in researcher man-year and income. Many units report that their major competitors are universities and research institutes. To enlighten the role of academia further, we investigate ‘research orientation’ as one of several research institute functions, to see how institutes position and orient themselves today. A problem is that research institutes are not a homogenous group. In the survey, therefor, we distinguish between ‘technical-industrial units’, ‘food-related units’ and ‘other units’. We found that food-related institute units have more defined orientations than technical-industrial units have: They have a medium to strong research orientation, a medium to strong policy orientation, a weak technological orientation and a weak/medium business orientation; in other words, they carry many signs of basic academic research institutes. The technicalindustrial units, however, do not seem to have been able to position them equally clear; they appear in a more hybrid form, lost between being pure applied researching units,


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technological consultants and basic researcher units. The only orientation they appear to be clearly defined in is the technological one.

Portugal The Portuguese science and technology system went through some changes in the last two decades. A structure based on universities and government laboratories expanded and diversified through the creation of relatively autonomous (and partly self-funded) university research centres and the setting up of a number "technology transfer" organisations, leading to the set-up of an "layered" institutional model, in which organisations located closer to industry are supposed to act as an “interface” to those conducting knowledge production activities. This process was driven by a combination of factors: the need for compensating for cuts in public research funding; a growing interest among new generations of researchers on applying their accumulated knowledge and political pressures towards a greater economic impact of investments made in research.

Two major differences in the configuration of this new type of research organisations regards a greater emphasis on self-funding and a greater industry-orientation. Institutions with a semiprivate status (combining private and public shareholders) and whose income was supposed to derive largely from technology-based service activities, namely industry-oriented ones, became more frequent. However, they remained greatly dependent on public funds, if not on direct government funding, at least on contracts in the context of government programmes. These features are particularly evident in biotechnology, where a substantial part of the RTOs was established already within the new framework. This move towards a greater privatisation of the R&T infrastructure was not necessarily paralleled by an increase in the market for R&T and other innovation services in the biotechnology field. This situation brought problems to organisations required to be partially or totally self-funding, which some attempted to solve by resorting to other sources of income: contracts with public organisations; use of government mechanisms to support RTO/firm R&T projects; greater focus on performance of pre-competitive research supported by national and European RTD programmes. In this context, more research oriented organisations had to conciliate the often contradictory objectives of scientific achievement and effective response to industry needs; while organisations focused on "technology


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transfer", more limited in the range of alternative sources, often experienced serious financial difficulties.

The market constraints also precluded expansion of the number of private suppliers of R&T and other innovation services in biotechnology. The closer approximation to KIBS are new biotechnology firms (NBFs), mostly research spin-offs, that offer technological services, as well as a mix of technological and specialised business consultancy (on market opportunities, strategic positioning, IPR issues, commercialisation strategies), often as a cash-raising or market-opening side business. A parallel role is played by a small group of highly qualified value-added resellers of (mostly imported) equipment and systems, which assist companies in the identification and implementation of the process technologies more adequate for their needs. However, the recent launch of a couple of firms that offer a service of intermediation in technology transfer and/or firm creation, may indicate that the market is registering some expansion. The activities performed by RTOs were object of a more in-depth analysis through a survey conducted in the beginning of 2000. Although questionnaires were mailed for the whole range of organisations operating in the field, the responses were strongly biased towards the upstream area, the sample being mostly composed of university centres and units of government laboratories. One of the outcomes of the survey was the functional profiling of the respondent RTOs. Four functional profiles were built and further characterised on the basis of questionnaire data on organisational demographics, strategy and partnerships. One interesting conclusion is that the profiled RTOs can be mapped in a "continuum" as follows:

Group 1

Downstream functions

Group 2

Group 3

Group 4

Balance downstream / upstream

Non-technical/Implement. Mix Non-technical / R&T Activities with industry Balance + Production / + Diffusion Knowledge

Mainly R&T

No service functions No service functions No activities w/industry

+ Production of Knowledge


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This confirms the presence of a range of organisations with different types of focus, while the parallel distribution of the various attributes along the continuum, is consistent with the idea that more downstream functions and less emphasis on exclusively R&T services is associated with a lower emphasis of production knowledge, the pattern changing as we move upstream in functions and in organisational orientation. However, the analysis also uncovered some of the distortions of the Portuguese system: the majority of RTOs emphasise production of knowledge over diffusion, even in groups focusing on downstream functions; public funding is always more important than private funding, although contract funding is usually more important than direct government funding; income from services for industry (when it exists) is very low; relationships with RTOs are more important than these with firms (majority of cases); there is a low incidence of incentives to establish relationships with industry and a low patenting record.

The profiling exercise also enabled a better understanding of RTOs behaviour regarding the options opened to research organisations in a policy context characterised by an emphasis on two (potentially conflictual) objectives scientific quality and industry orientation - and in a economic context characterised by low industrial involvement in biotechnology.

One profile encompasses a group of organisations definitively oriented to knowledge production, getting only occasionally (if ever) involved with industry. Two others are composed of "mid-range" institutions, located in an intermediate position and attempting to harmonise the two objectives. One of these focus more decisively on the production of knowledge, putting some efforts in fulfilling the scientific quality objective, but also trying to keep some industry oriented activity, although it concentrates on provision of R&T services. The other is more decisively industry oriented in strategic terms and has a more intense pattern of relationships with industry, the constituent RTOs going beyond the sole provision of R&T services and offering a range of other functions (although there is still a prevalence of knowledge production activities). Finally, there is one profile whose elements concentrate on downstream functions, appearing to be well connected with industry. However, knowledge production still prevails over diffusion in a substantial proportion of RTOs and only half of them associate actual activity with industry with a strategic industrial orientation. This is a puzzling group, which may testify to the contradictions of RTOs that attempt to focus on the support of more downstream stages of the innovation process.


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The fact that "technology transfer" organisations were almost completely absent from the sample precluded us to address their activities. However additional evidence from studies about these organisations, as well as from interviews with RTO managers and partners in collaborative RTO-firm projects, allowed us to draw an image of organisations striving to find their space and, with a few notable exceptions, not being very successful. In fact, most "technology transfer" organisations appear to experience difficulties in fulfilling their role in the institutional model, due to problems of competencies and resources, the lack of adequate strategies and a deficient integration in the innovation system, which leaves the field of downstream innovation and "competence improvement" services insufficiently covered. This is corroborated by a variety of sources, who refer to the scarcity of people or organisations with the necessary skills to assist researchers and/or firms in the conduction of the process of transformation of knowledge on marketable products or efficient processes and on in-house competencies. However, parallel evidence from a couple of cases of working associations between research centres and "interface" organisations shows that despite true contextual difficulties it is possible - with persistence and adequate human resource policies and governance mechanisms - to take steps towards a great industrial interest and participation in biotechnology application.

The research suggests that, instead of an effective division of labour and an extensive interaction between the various elements of the system, we find a predominance of originally research-oriented RTOs which end-up trying to cover a wider range of functions, not always in the most efficient way; while these RTOs that opted for focusing decisively on upstream scientific activities are unlikely to see their results become useful for industry; and while only a few among these RTOs expected to offer services (technical or non-technical) associated with implementation of innovation are performing their role. Additionally, there is no evidence supporting the view that private suppliers - e.g. KIBS firms - are extensively replacing or complementing RTOs in the latter area. We can therefore speak of a gap in the system, which is located downstream, between applied research and innovation. The presence of this gap and the fact that existing organisations and mechanisms of governance are inadequately addressing it, is an indication that there is a deficiency in terms of the provision of innovation services. A mix of demand and supply problems is behind the gap. There is, obviously, a basic demand problem associated with the low awareness of biotechnology among potential users and the limited technological competencies and innovation orientation of a substantial proportion of the clients for R&T and other innovation services in this field. But there is also an associated supply problem, which can be described as an incapacity of


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supply side organisations to contribute to increase the technological awareness and absorptive capacity of industrial firms and therefore to increase technological demand. A pertinent question is whether some of the missing functions would be more efficiently performed by private actors, who have, over public ones, the advantage of being prepared to share the risks associated with the adoption of a new technology and have the pressing need to achieve results. However, the limited demand is obviously an obstacle for entry by this type of actors, given the risks involved. So far, only a small number of NBFs and a few consultants act at this level (and the first often because the services provided are a complementary cash-raising activity). However, some recent cases of collaboration between NBFs and RTOs in intermediation and technology transfer are starting to show that maybe a combination - or even an hybridisation - between profit and non-profit organisations can be a more appropriate instrument to address this situation. This leads us to suggest that new mechanisms may be required to improve this type of connections and promote complementarity of efforts.

United Kingdom The UK RISE survey, ‘Profiling Research and Technology Services in the UK’, which was sent out in May 2000. The objective of the RiSE survey was to profile organisations that supply services to innovating companies. The UK survey sampled four institution categories: business service firms and not for profit firms (private organisation types) and Government laboratories and universities (public organisation types). The sample is too small to provide any extrapolation to the larger UK service provider population. However, we surveyed a sufficient number of AIRTO members (22% of all AIRTO members responded). Significant findings are discussed below. No organisation category works significantly with both industry and the scientific community expect, perhaps, universities. Total hours devoted to industry work grew from 10% in 1995 to 35% in 1999 while work with the scientific community fell from 30% to 17% of total hours during the same period. Industry funding, however, only increased by 1% during this time. Private type organisations work primarily with industry and, to a lesser extent, Government policy makers.


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Non-commercial collaborations were important to public organisation types but not to business service firms. Commercial collaborations were important to all four-organisation categories. Spot contracts are not important to any organisation category indicating that the nature of delivering research and technology services cannot be bought in ready made formats. Examples of highly important non-commercial collaborations include: • Universities and Government labs collaborate on pre-competitive projects • Universities attend conferences with other universities. • NFP firms work on pre-competitive projects with large manufacturers and SMEs Highly important commercial collaboration types include: • University contracts with large manufacturers and SMEs. • NFP firms contracts between large manufacturers and other NFP firms. • Business service firm contracts with SMEs and large manufacturers Collectively, public and private organisation types offer the full gambit of innovation services. Services offered by private type organisations were clustered around developmental, post-research functions. Over 50% of NFP firms ranked the same five service functions highly important. Business service firms ranked only one significant important service function (i.e. product development services). Government labs and universities ranked basic research highly important. Neither public nor private organisation types engaged in the more market-oriented innovation services. Government Labs and NFP firms anticipate demand to increase for two services while firms expect demand to increase for three services. Demand was expected to increase for implementing innovation services for universities, NFP firms and firms. Government labs and universities reported that basic research would increase in the future while firms expect acquiring information services to grow.


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Organisations were grouped into three service categories based on the range of services offered: • Technical development service providers include feasibility studies, project management and the construction of prototype services. • Information service providers include information gathering and collection services, documentation (such as patenting services) and, to a lesser extent, introduction to the market place services. • Organisational change service providers include process and organisational change services and management consultancy services. All organisation categories ranked large manufacturers and SMEs low as competitors in services. Not for profit organisations were ranked medium to highly important as a competitor by three of the four organisation categories. All four-organisation categories reported highly important the following competitive advantages: expertise in R&D and technology, working relations with clients, and quality of work. Marketing and research in management scored low to medium significance by all respondents. The project considered a set of institutional and functional typologies to characterise key orientations. The profiles were formulated using various weighted variables based on the survey questions. The share of organisations demonstrating high institutional orientations is presented in Table 1. Table 2 presents the share of organisations showing high functional orientation. Table 1. High and very high orientation institutional profiles Share of high and very high orientation for each organisation type

Institutional dynamics Public 25% Private 19%

Kibs 55% 68%

Public 25% 0%

International 0% 11.8%

Public and private organisations demonstrated similar institutional orientations for institutional dynamics and kibsification (moving towards business service characteristics). Public and private organisations showed very similar service orientation and to a lesser extent


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functional diversity and technology orientation. Not surprisingly, public type organisations were publicly oriented than private types (although a significant number were not publicly oriented). Table 2. High and very high orientation functional profiles Share of high and very high orientation for each organisation type

Research Public Private

Service orientation 67% 76% 5% 77%

Functional diversity 44% 69%

Functional dynamics 0% 15%

Technology orientation 66% 78%

Questions remain about how far we can use the results to shed any light on even a small portion of the UK innovation system. The supply of explicit services that support innovation processes may or may not be a significant part of the largwe innovation system; our findings only characterise organisations.

7

Conclusions

7.1

RTIs, KIBS and innovation systems

In the following the results of this report will be presented in three dimensions: the structural and operational development of RTIs in different countries, the relationship between KIBS and RTIs, a functional perspective on RTIs and KIBS as innovation service providers. Finally, consequences for innovation policy will be outlined.

1) The features shared by all RTIs in the different country samples are: the combination of public and commercial sources of funding and the combination of academic research with applied research and other innovation related activities. Whether public or private funds, academic or service oriented activities prevail, depends on institutional factors. However, these factors show considerable variance between countries.

In the Netherlands, university-based institutes and a few large institutes that are considered “of national importance” dominate the picture. Hence, academic orientation is high, whereas

e:\preissl\rise\wp2\RISE-sept-00 100

service and KIBS orientation are comparatively low. Germany shows a variety of semi-public and public as well as university-affiliated institutes. A distinctive feature is the organisation of RTIs in large research societies. This configuration guarantees a relatively high institutional and financial stability for RTIs of this type. In the UK RTIs have been privatised and become KIBS – like research and technology organisations (RTOs) with a high service orientation. However, institutes that remained public or semi-public tend to have high academic and research orientation and higher business and service orientation than their counterparts in other countries. Swedish RTIs are semi-public and have a stron business orientation, and a rather low academic and research orientation. The Norwegian configuration of RTIs is dominated by one very large semi-public organisation. Most RTIs are semi-public, however, they show a relatively low share of public funding on the average. There are considerable differences between the two main groups, food-related RTIs on the one hand and technical industrial ones on the other. In Portugal RTIs in the biotech sector are semipublic, however with a high public involvement and a slow opening towards industrial markets.

2) A common characteristic of all RTIs is a decreasing share of public funding in their budgets and, consequently, an increase in industry contracts. Differences between countries occur with respect to the intensity of the phenomenon and the impact of this development on output and functional orientation.

Germany and the Netherlands show the most pronounced cut in public funding (between 6 and 7 % from 1995-2002). Accordingly, both countries expect industry contracts to become much more important. A trend from publicly supported to more market related orientation can also be seen in an increase in the share of foreign contracts in RTIs budgets. This trend is quite pronounced in Germany and Sweden, and more subdued in the UK. The Netherlands and Portugal show an opposite trend of falling foreign shares in their revenue between 1995 and 1999.

The changes in funding structures are reflected in output configurations. Decreasing public funds resulted in a relative fall in contributions to the scientific community and to public education in all countries (except the UK). Policy consulting fell sharply in the UK (from 1995 to 1999) and remained unchanged in the other countries.


3) Changing sources for funding and the corresponding shifts in output have led to an intensification of competition between KIBS and RTIs.

The diversification of innovation services provided by RTIs takes place with varying speed and intensity in different countries. It is stimulated by increasing demand for more comprehensive innovation services clients in industry and by claims for a greater relevance of publicly supported institutes for industrial innovation. Processes of increasing business orientation or ‘Kibsification‘ have be initialised institutionally through the privatisation of public or semi-public RTIs (as in the UK), through a diversification of service offers of RTIs within the same institutional context (Sweden, Netherlands) or through the generation of private spin-offs from RTIs (Germany, Portugal). The functional orientation of RTIs differs less from that of KIBS in the UK than in other countries. Swedish RTIs have also moved towards KIBS in instiutional and functional terms, but have maintained a strong research orientation at the same time. In Germany shifts towards a greater service and business orientation of RTIs are only marginal. This is to a large extent due to strict legal limits to changing the statutory basis of RTIs. The spin-offs from RTIs that are supposed to overcome the regulatory restrictions that RTIs face, are offering complemenatry services to those of the RTI they originate from.

KIBS are increasingly applying for contracts from public entities, and thus enter a field where they face competition with RTIs. This marks a diversification in KIBS markets and a change in the service needs of public institutions. Obviously, also in policy consulting, service markets and the specific form of output they offer become more important.

4) The move of RTIs to a greater business and market orientation only affects those services that can be directly appropriated by a certain (private or public) client. Services which address the general public, like the diffusion and publication of research results or contributions to the education and training system still remain under the public domain of RTIs. KIBS firms only engage in these latter services as far as they can use them as a marketing tool.


In each country, RTIs face the problem of expanding industry related services and of maintaining a high level of competence with respect to basic research at the same time. In addition, in some fields acknowledgement in the scientific community seems to depend on experience in the practgical application of research results in industry. The relative weight given to academic/research related activities on the one hand and business/service oriented activities on the other depends on the instiutional characteristics of RTIs in each country. The need to combine the generation of new knowledge in open-ended research scenarios with targetted research that promotes innovation in industry, will continue to shape RTI configurations. Thus, from the perspective of NISs, greater business orientation of RTIs leads to the question of where to allocate the academic research that is required to keep up high levels of competence in the economy as a whole. Different solutions seem to have emerged in the countries considered in this report. The ‘German solution‘ relies on a limitation of market oriented activities of RTIs and their delegation to KIBS spin-offs, without, however, giving up synergy effects from combining basic with applied research. At the other end of the spectrum, the ‘English solution‘ results in a clearer division of labour between market oriented privatised RTIs (RTOs) and basic research in public institutions. The contributions of KIBS firms to the generation and diffusion of knowledge concentrate on conference presentations rather than publications, because the purpose of these contributions is to establish a strong presence in the public instead of gaining reputation in the scientific community.

5) The innovation services provided by RTIs and KIBS go well beyond traditional R&D services. RTIs are slightly more often found in the up-stream segments of innovation processes (research, product/process devfelopment), KIBS in down-stream functions (testing, implementation, marketing). For RTIs the diversification into new service functions is motivated by the demand for comprehensive service packages as a condition for gaining industry contracts rather than by strategic considerations regarding service portfolios.

In Sweden and the UK, KIBS and RTIs are much closer with respect to the service functions they supply than in Germany and the Netherlands, where the division of labour is still more pronounced. Competition between KIBS and RTIs is likley to be fiercer in service functions that are provided by a large share of both RTIs and KIBS firms. Although, RTIs clearly dominate basic research in general, there seems to be quite intense competition in this


function between RTIs and KIBS in Sweden and the UK, but not in Germany. In Germany and Sweden competition is predominantly stimulated by KIBS firms that venture into the traditional domains of RTIs, whereas in the UK, it is characterised by an expansion of RTIs into business management activities.

6) Innovation policy faces the challenge to support the supply of efficient packages of innovation services to industry and to enhance and improve the stock of knowledge available and accessible for the public in quantitative and qualitative terms. Efficiency of knowledge creation, diffusion and application will play a central role in the provision and distribution of public research funds. Institutional reforms in the statutes and operating rules of publicly supported RTIs mark the attempt of innovation policy to increase the efficiency of knowledge supply (also for reasons of budget control) and to render RTIs more flexible with respect to service demands from industry. In this sense, institutional change will support the shift of functional profiles towards more comprehensive service packages. However, hybrid organisations that combine knowledge generation, diffusion and down-stream innovation services seem to guarantee the exploitation of synergy effects better than highly specialised institutions. Innovations policies reflect this concern, but are still essentially shaped by country-specific NIS configurations and historically developed institutional solutions in research policy.

7.2

Methodology

Sample selection The organisation of sample selection in a two tier system with functional criteria and an identification form institutional lists is at the same time one of the strong as well as one of the weak points of the methodology adopted here. It allowed to cover the whole variety of institutional forms of innovation service providers and thus does not limit the functional analysis by selecting only a limited set of institutionally described actors. On the other hand, the identification of RTIs and relevant KIBS firms proved to be difficult, and questions as to whether o include software firms or university chairs were completely left to the individual teams that decided on the basis of the functional criterion. This procedure resulted in a very


diverse configuration of samples that already reflects the functional division of labour in NISs. This proved to be rather problematic, since the country surveys could not be integrated, the structure and institutional diversity of the samples already determined the result to a certain extent (e.g., inevitably high academic orientation in samples with a high share of university institutes). The sample sizes were also quite heterogeneous; while in some countries it proved difficult to identify a substantial number of RTIs (Sweden, Netherlands) in others, there was a large number of cases that required random sampling (Germany). These differences are partly due to the size of countries, partly to the configuration of NISs. A representative evaluation of data (based for example, on population size or R&D expenditure) in one data set comprising four countries would have led to a further up-weighting of the German sample and a down-weighting of those of the smaller countries. The results would thus have been dominated by the German case. Attempts to construct such a respresentative four country data set also showed that a lot of the variation which lies in country-specific results would have disappeared and the picture would have been extremely difficult to interpret.

RTIs have usually been identified via lists provided by Ministries or associations. The identification of KIBS proved more difficult, because no company registers exist for service companies in most countries. Firms had to be identified through registers provided by industry associations or assembled from different official or non-official sources.

Concluding from these strengths and weaknesses, it seems that a sample selection on the basis of functional criteria is more difficult to handle, but provides a lot of additional insights. However, it is of limited value for international comparisons. In order to make this functional approach useful for further projects, a greater effort should be made to reduce heterogeneity of the samples.

Sample coverage The low response rates and the limited number of cases in gross samples for some countries, limited the use of complex statistical evaluation procedures. In the cases in which only part of the sample population answered the relevant question, the number of cases in each subsample (derived by dividing the sample between RTIs and KIBS) often was too low to make a sensible statement, let alone claim validity for the country as a whole. Therefore, the


surveys have undoubtedly the character of pilot studies serving to test the methodology of functional mapping. The results are thus to be seen as indicative.

Unfortunately, KIBS firms could only be included in three countries, hence the original purpose of the RISE project to observe the relationship between RTIs and KIBS could only be fulfilled to a limited extent. However, this did not affect the test of a functional analysis of RTIs in the other countries.

The Portuguese sample is biased by its concentration on the biotechnology sector, hence some of the results will be specific to this sector and not comparable with those of the samples which cover the economy as a whole. In Portugal KIBS were not part of the survey, however, information on their relevance for the biotech sector and their activities was gained from other sources.

The Norwegian survey did not follow the sample selection criteria adopted by the other RISE teams. Therefore, the cases have been identified exclusively on an institutional basis, no KIBS were included. Some questions that have been asked in the RISE-specific surveys do not appear at all the questionnaire, others are formulated differently. Hence, the Norwegian results can only be compared at a qualitative level.

Survey method Postal questionnaires seemed to be the right instrument to compile the data. However, in the German survey a large number of respondents used the possibility to phone the research team and ask for explanations on how to deal with certain questions. In the future, response rates might be improved by sending out the questionnaire again to reluctant participants, by telephone inquiries about reasons for non-response, and by increasing motivation through an on-line answering scheme. Low response rates for KIBS were attributed by some teams to the fact that one questionnaire was used for both, RTIs and KIBS, and that this questionnaire was shaped predominantly for a ‘typical’ RTI, and KIBS-related formulations were printed after RTI-specific questions, and thus difficult to identify at first glance for KIBS respondents. For future surveys of this kind, separate questionnaires should be used. The concentration on one type of innovation service provider will allow to be more focused with respect to the


operationlisation of a functional approach and to further elaborate it with respect to other not industry-related functions.

The questionnaire The coverage of institutional as well as functional features and the necessary background information on activities and economic context led to a complex questionnaire which – according to feedback from respondents but also in the research teams’ own perception was too long. A concentration on core variables and essential indicators to describe configurations of budget, output, size and kind of organisation on the one side, and functional orientation on the other should be sufficient. Some teams considered open questions asking for budget, turnover or number of employees as problematic, since respondents are reluctant to reveal this kind of information; giving an interval for these figures might be a better option. In contrast to this, the determination of the fields of activity of RTIs and KIBS should be based on an open question, since respondents did not find it easy to relate their fields of activity to the given topics. Another problem was the degree of freedom that country teams had to adapt the questionnaire to national peculiarities. However, most teams stuck to the default questionnaire with only minor modifications, mostly in the specification of sets of given answers.

Some questions should be reformulated:

Q2

Status of the organisation: should be specified according to ownership or legal construction;

Q7

Research specialisation: to be formulated as an open question;

Q8

Sources of funding: non-governmental institutional funding (by foundations, industry associations etc.) should be included

Q9

Output: a question concerning output created in co-operation with international researchers should be added;

Q10

Detailed output categories: block 2 (Education and Training) and block 3 (Projects for Industry) to be reconsidered;


Q14

Service functions: functions should be listed in greater detail.

In order to arrive at categories that better match the situation of respondents, more in-depth analyses of individual cases is necessary. Part of the efforts to improve survey methods and the survey questionnaire should be dedicated to the study of the demand side (e.g., by doing interviews in innovating firms to gain a more adequate list of innovation service functions).

Indicators and typologies

Broadly speaking, the indicators have proved to describe the different levels of orientation reasonably well. However, modifications will be necessary to arrive at a more precise measurement of the relevant phenomena. For example, it turned out that the changes that we expected to happen between 1995 and 1999, were exaggerated; as a result, many cases were attributed ‘very low’ or ‘low’ indicator values. This is not a problem in comparative analysis, but a reformulation of the indicator designs could provide more differentiated results. The adoption of the proposed method led to the identification of RTI/KIBS types according to functional and institutional criteria. A much wider set of hypothesis might be tested with this approach, however data quality and time constraints limited the generation of meaningful results in the present case. Fine tuning of indicators and further refinement of the use of functional variables for typologies might be promising improvements in the methodology presented here.


References Commission of the European Communities (1997): Second Report on Science and Technology Indicators 1997, GD XII, Brussels. Braadland, Egil / Fraas, Morten (2000): Norwegian science-based research institutes – between research and consultancy. Results from a survey. denHertog, Pim / Kern, Sander / Leyten, Jos / Limpens, Imke / Whalley Jason (1999): RISE Country Report. The Netherlands, November. Edquist, C. (1997): Systems of Innovation, technologies, institutions and organizations, Pinter, London. Farina, Claudio / Preißl, Brigitte (2000): Research and Technology Organisations in National Systems of Innovations. In: DIW Discussion Papers, No. 221, Berlin. Farina, Claudio / Solimene, Laura: RISE-WP2 - The Italian National Innovation System. Fontes, Margarida (1999): RISE-WP6 - 1st Year Country Report - Portugal. Fontes, Margarida / Pádua, Muriel / Carvalho, Rui (2000): WP2 Report – Portugal. Hales, Mike / Readman, Jeff (1999): RISE-WP2 - Overview of RTOs in the national research system - UK, 11 March. Hales, Mike / Readman, Jeff (1999): Mapping and measuring RTOs and research and technology services in the UK national innovation system, November. Hauknes, Johan / Näs, Svein Olav, Solum, Nils Henrik / Orstavik, Finn (1999): The Norwegian System of Innovation. An institutional approach. Jacob, Merle / Hellström, Thomas / Adler, Niclas / Norrgren, Fleming (2000): From sponsorship to partnership in academy-industry relations. In: R&D Management 30,3, pp. 255 - 262. Kern, Sander (2000): WP2 country report: The Netherlands. Laredo, Philippe (1999): The Development of a Reproducible Method for the Characterisation of a Large Set of Research Collectives, - A Test on Human Genetics Research in Europe, TSER Project No. SOEI – CT96 –1036, Main report (see Senker et al. 1999). Levin, R.C. / Cohen, W.M. / Mowery, D.C. (1987): Appropriating the Returns from Industrial R&D. In: Brookings Papers on Economic Acitivy, 3, pp. 783 - 820. Leyten, Jos / Limpens, Imke (1999): System of Innovations: a dynamic perspective, September. Markusson, Nils / Norgen, Lennart (2000): RISE-WP2 - Innovation-related Service Provision in Sweden. A study of the relation between industrial research institutes and firms providing innovation-related services.


Miles, I. / Kastrinos, N. / Flanagan, K. / Bilderbeek, R. / denHertog, P. / Huntink, W. / Bouman, M. (1994): Knowledge-Intensive Business Services: Their Roles as Users, Carriers and Sources of Innovation, PREST December. Nelson, R. R. (1993): National Innovation Systems, a comparative analysis, Oxford Univ. Press, Oxford. Norgren, Lennart (1999): RISE-WP2 - The Swedish Innovation System. Norgren, Lennart (1999): RISE-WP2 - RTOs in the Swedish Innovation System. Preissl, Brigitte (1998): Knowledge-Intensive Business Services and Innovation in Germany, DIW - SI4S Report No. 5, January. Senker, J. / Balázs, K. / Higgins, T. / Munoz E. / Santesmases, M. / Espinosa de los Monteros, J. / Potì, B. / Reale, E. / di Marchi, M. / Scarda, A. / Sandström, U. / Schimank, U. / Winnes, M. / Skoie, H. / Thorsteindottir, H. (1999): European Comparison of Public Research Systems, TSER Project No. SOEI – CT96 –1036, Final report. Windrum, Paul / Tomlinson, Mark (1999): Knowledge-intensive Services and International Competitiveness: A four Country Comparison. In: Technology Analysis & Strategic Management, 11,3, pp. 391 - 408. Readman, Jeff, The supply of research, technology and innovation services in the UK. Finding from the UK national survey, ‘Profiling Research and Technology Services in the UK’, Brighton. Revermann, C. / Schmidt. E.M. (1999): Erfassung und Messung von Forschungs- und Entwicklungsaktivitäten im Dienstleistungssektor, Abschlußbericht, RWI – Wissenschaftsstatistik im Stifterverband für die Deutsche Wissenschaft, Dezember. Rickert, Christian: Technology Transfer in the German Innovation System. Strambach, Simone (1997): Knowledge-intensive services and innovation in Germany - Final Report, Stuttgart, July. University of Stuttgart - Institute of Geography. Wood, Peter (1997): The strategic role of knowledge-intensive services for the transmission and application of technical and management innovation (KISINN), Thematic Network - Interim Report 1, June.


RISE - WP 2 Questionnaire

The Contribution of Research Institutes and KIBS firms to Innovation Systems

I. Organisation 1.

When has your research establishment been set up in its present form?

2. Is your establishment • • • • • 3.

private public semi-public registered association a foundation

How many employees work in the establishment? 1995

1998

1999

Scientists/Engineers Technicians Other

4.

What was your organisation’s total budget / turnover (i.e., institutional grants, contractual research and other turnover) in

budget/turnover in mill. DM o o o

1995 1998 1999


5.

Is the establishment institutionally linked to

o a university o any other public research establishment o other institutions (which ones? Please give details) o a company o a research society (e.g., the Fraunhofer-Gesellschaft) Which one?................... o a ministry o

6.

independent / does not apply

Does your establishment have branch offices/ representative agencies/ representatives in your own country and/or abroad?

o o o

No Yes, in .............., Yes, abroad,

How many: _____ How many: _____

II.

Research Areas

7.

Please identify your key areas of activity from the list below.

Scientific Research Infrastructural Measures and Spatial Planning Environmental Protection Protection and Promotion of Human Health Energy Production and Distribution and its Rational Use Agricultural Productivity and Technology Industrial Production and Technology industry focus Societal Structures and Relations Space Research Non-Target Oriented Research Other Areas of Civilian Research Defence


III. Financing 8.

Please state the budget share allocated to each of the following areas (in %): Budget share, in % 1995

1998

1999

2002 (Estimated)

Institutional public financing Contracts from government institutions (incl. Public research support on a project basis) Projects for other non-commercial institutions (e.g., foundations) Projects for private industry Total

100%

100%

100%

100%

100%

100%

100%

Domestic contractors Foreign contractors (incl. EU) Total

100%

IV. Output 9.

Please estimate the share of the work performed by your establishment for each of the following types of output. Output

Share, in %

(main groups) 1995

1998

1999

2002 (Estimated )

1. Contributions to discussion within the scientific community 2. Public Education/Training 3. Studies for Industry 4. Projects for public bodies or Policy consulting


10. Please list the relative importance of the following output types within each of the individual main groups (on the basis of the work expended on each area). Output Detailed Types

Current Importance none

low

medium

high

1. Contributions to discussion within the scientific community Magazine/book publications Research reports for the public Conference contributions Other (please specify) ....

2. Public Education/Training Internships, Diploma/Masters theses Doctoral and post-doctoral qualifications Other degrees (please specify) ...

3. Projects for industry 1) Technology consulting/technology transfer (e.g., information, selection and introduction of new technologies, development of standards) Construction and testing of new products and processes (e.g., design, testing, prototypes) Optimisation of processes (e.g., Business Engineering, fault analysis Management consulting (e.g., organisational consulting, project management) Operational services (maintenance, software support) Certification Other (please specify) ...

4. Projects for public bodies (policy consulting) Research reports, programme formulation Programme support/implementation Programme evaluation Other (please specify)

1) including services for public sector and non-profit organisations (public administration, health sector, universities)


11. How many patents has your organisation registered? o o

12.

1995 1999

In which form do you deliver services relevant for innovation to your customers

o

o o

transfer of know-how to the customer (consulting, training, techn. transfer) problem solving for the customer joint problem solving with customers

13. Do you work together with companies in innovation processes?

o o

V.

Yes No

=> Please go to Question 14. => Please go to Question 15.

Support of companies in the innovation process

14. The phases listed in the table below describe the process from basic research to product or process innovation in a company. Please state the services your establishment offers to companies in the innovation process, the five most importantservices, as measured on the basis of company demand, and the type of development you anticipate in the future.


Functions in the innovation process

Service is Five most being important offered services

Development anticipated in future years falling

unchange d

rising

1. Basic research Procurement 2. Acquisition and study of necessary information 3. Feasibility studies 4. Product development/procedural development 5. Planning, project management, personnel management 6. Construction of Prototype 7. Testing 8. Implementation of innovation in the innovating company 9. Documentation and certification (patenting, registration) 10. Introduction into the marketplace Other (please specify) ...


VI. Interaction with co-operation partners 15. Please provide information on your co-operation partners and on the forms of cooperation. Partners in the cooperation process

Current Importance High

Medium

Forms of co-operation Low

Joint projects

Working groups, seminars

Personnel transfer*

Universities Technical/colleges Non-profit research institutes Service companies specialised in research Manufacturing companies - including SMEs Other ...

* Internships, temporary research and work placements of more than two weeks’ duration.

16. How stable are relationships? Partners in the cooperation process

open ended contract

long-term contract

several individual contracts

spot contract

Universities Technical/colleges Non-profit research institutes Service companies specialised in research Manufacturing companies - including SMEs Other ...


17. How do you establish contact with contractors and cooperation partners? (Please tick all that apply)

o o

known from previous co-operation arranged by associations / through technology agencies, etc. o announcements in publications calls/announcements o on clients’ initiative o other listings

o o

o

Internet/database r esearch o own initiative recommendations o replies to other means, i.e., _______________

VII. Conditions of Competition 18. How many competitors compete directly for your core business

(a)

o o o

(b) among o o o o

in your region in the Federal Republic of Germany internationally?

non-profit research establishments universities commercial services companies manufacturing companies with research facilities?

(c) In your opinion, how intensive is competition

o o o among o o o o

in your region in the Federal Republic of Germany internationally?

non-profit research establishments universities commercial services companies manufacturing companies with research facilities?

19. What are the competitive advantages of your establishment? (please tick)

o o o o o o o

Institute’s research area or specialisation Institute’s working methods Demands on confidentiality Previous experience Cost advantages Quality of work Other


20. What percentage of the working time of researchers (engineers) in your establishment is spent on acquisition of contracts (on the average)

Average share:

Do you expect a rise or fall in these expenditures?

o o o

rise no change fall

21. Are there any trends/changes in your establishment that you consider important and that have not been mentioned here? Please describe them briefly.

Thank you for your co-operation. In the event that we may have any further questions, please provide us with your name and the address of your establishment in the space below.

We would be interested in receiving a summary of your research results. o o

Yes No


Appendix 2 Indicators and typologies

1.

Outline of the method

In the following, a procedure is documented that uses a combination of simple indicators to produce typologies of RTOs /KIBS along institutional and functional dimensions. The method has been tested with German survey data and has then been extended to other survey results. The aim is to provide synthesised information on the relationship between institutional settings and the functional orientation of RTOs/KIBS15. The set of indicators comprises: institutional dimension -

size institutional dynamics public/private orientation academic orientation policy orientation international orientation

functional dimension research orientation service orientation functional diversity functional dynamics technological orientation

Each indicator contains information from a set of variables. This information has been standardised using scores for supposed intensity scales so that quantitative and qualitative phenomena can be aggregated. The main task was to keep the scoring consistent and meaningful in the sense of the indicator aimed at. The intensities of ‘public orientation, research orientation’, etc.’ are then used as features that constitute ‘types’ of organisations. After a first examination of the data, indicators were constructed by attributing scores for the information given in the questionnaire,; this was done by a simple 0 (minimum value) to 2 (maximum value) scale. Details for each variable / indicator are given below. Table 1 attributes variables and questions in the survey questionnaire to the indicators (see next page). 15 Many thanks to our data evaluation colleague Anja Dresenkamp, who did a great job in testing the indicators and contributed substantially to improve them..


Table 1 Composition of indicators

Indicator

variables

questions

Size

number of employees, budget

3, 4

Institutional dynamics

changes in: number of employees, budgets,

3, 4,

KIBS orientation

budget mix, acquisition efforts

8, 20

public/private orientation

funding, output mix (static and dynamic indicators)

8, 9



5, 8, 9

policy orientation


5, 8, 9

international orientation

branch offices, foreign sponsors

research orientation

share of academics, output mix, innovation functions, co-operation

3, 9, 14, 15

service orientation

non-academic staff, links, funding, output details

3, 5, 8, 10, 14

functional diversity

output mix, innovation functions, cooperation,

Functional dynamics

innovation functions, output mix

14, 8


output mix (details), innovation functions

10, 14

2.

6, 8

9, 14, 15

Detailed description

(Q = question in the questionnaire)

A Institutional dimension Size Budget and employment Q3 and Q4 classification according to number of employees and budget volume in 1999 in three categories small, medium, large. (see resulting distribution – to be presented in Milan)


Institutional dynamics This indicator describes the intensity of change in an institution, based on growth and changes in output and orientation. High scores are given for growing organisations and for organisations whose output and budget change towards service (KIBS) orientation. number of employees Q3 growing between 1995 and 1999 threshold: 3% p.a. (+/- 0.5) scores: growing (3% and more) stable (0-2.5%) declining budget Q4 growing between 1995 and 1999 threshold: 5% p.a. (+/- 0.5) scores: growing (5% and more) stable (0 – 4.5%) declining

2.0 1.0 0

2.0 1.0 0

Institutional dynamics maximum scores: 4.0 minimum scores: 0


KIBS orientation This indicator shows how far organisations move towards characteristics of private service firms. budget mix Q8 (KIBS orientation) (the indicator measures the degree of institutional change towards ‘KIBSification’) growing share of c+d between 1995 and 1999 scores: moderate growth (< 10%) 1.5 growth (10 - < 15%) 1.75 substantial growth (>15%) 2.0 growing share of d between 1995 and 1999 scores: moderate growth ((< 10%) 1.5 growth (10 - < 15%) 1.75 substantial growth (>15%) 2.0 expected growth share of c+d between 1999 and 2002 scores: moderate growth ((< 10%) growth (10 - < 15%) substantial growth (>15%) expected growth share of d between 1999 and 2002 scores: moderate growth ( < 10%) growth ( 10 - < 15%) 15%) 1.5 growing share of f between 1995 and 1999 scores: moderate (0 - < 3%) slight ( 3 – < 6%) considerable ( 6 - < 10%) substantial (> 10%)

1 1.25 1.5

1 1.25

substantial growth (>

1.0 1.5 1.75 2.0

expected growth of share of f 1999 - 2000 scores: moderate (0 - < 3%) slight ( 3 – < 6%) considerable ( 6 - < 10%) substantial (> 10%)

0.5 0.7 0.85 1.0

acquisition efforts Q20 scores: low (0 – 5%) 0.5 relatively low (6 - 10%) medium (11-20%) relatively high (21-30%) high ((> 30%) expected decline stability growth

1.0 1.5 1.8 2.0 -0.5 0 1.0

KIBS orientation maximum scores: minimum scores:

12.0 0


Public orientation The indicator measures the degree of ‘publicness’ of the respondent (highest scores for entirely public organisations)

(a,b,c,d,e,f refer to the categories given in the questionnaire for each question, i.e., ‘a’ stands for ‘institutional public financing’, ‘f’ for ‘foreign contractors’) funding (static indicator) Q8 share of categories a, b, and c in 1999 scores: 60 < a < 100 30 < a < 60 10 < a 30 %

0 0.5 0.75 1.0

expected growth of a+b+d between 1999 and 2002 scores: negative - < +10% 0 10 - < 20 % 0.5 20 - < 30 % 0.75 > 30 % 1.0

Public orientation maximum scores: minimum scores:

9.8 0


Academic orientation existing links Q5 scores:

university 1.5 public RTO 1.5 polytechnics 1.5 research societies: Fraunhofer 0.5 Max-Planck 1.5 Helmholtz 0.4 WGL Leibnitz 0.7 firm 0 Ministry 0 Funding (static indicator) 1999 Q8 share of category a scores: 60 < a < 100 2.0 30 < a < 60 1.5 10 < a 15% 2.0 output mix (static indicator), Q9 shares of output in 1999 scores: 80 < a+b < 100 2.0 60 < a+b < 80 1.6 40 < a+b < 60 1.0 20 < a+b < 40 0.6 10 < a+b < 20 0.4 a+b < 10 0 output mix (dynamic indicator), Q9 growth of a+b between 1995 and 1999 scores: 0 - < 10% 0.5 10- < 20% 0.75 > 20% 1.0 expected growth of a+b between 1999 and 2002 scores: 0 - < 5% 0.5 5- < 10% 0.75 > 10% 1.0

academic orientation maximum scores: minimum scores:

9.5 0


Policy orientation existing links scores: university

0.3

public RTO polytechnics research societies: Fraunhofer Max-Planck Helmholtz WGL Leibnitz firm Ministry

1.0 0.3 0.8 0.8 0.8 0.8 0 2.0

funding (static indicator) Q8 share of category b 1999 scores: 60 < b < 100 30 < b < 60 10 < b 15%

0 0.5 1.0 1.5 1.75 2.0

output mix (static indicator) Q9 share of category d in 1999 scores: 80 < d < 100 60 < d < 80 40 < d < 60 20 < d < 40 10 < d < 20 d < 10

2.0 1.6 1.0 0.6 0.4 0

output mix (dynamic indicator) Q9 growth of d between 1995 and 1999 scores: 0 - < 10% 10- < 20% > 20%

0.5 0.75 1.0

Policy orientation maximum scores: minimum scores:

9.0 0



branch offices abroad Q6 scores: no yes one 2 or three more than 3

0 1.0 1.6 2.0

financing from foreign contractors (static indictor) Q8 share of f in budget in 1999 scores: over 80 % 2.0 50 - 79 % 1.8 30 - 49% 1.5 20 - 29% 1.0 10 - 19% 0.8 0 - 10% 0.4 0 0 financing from foreign contractors (dynamic indictor) Q8 growth of share of f between 1995 and 1999 scores: negative growth 0 stability 0.3 0 – 5% 1.0 6 –10% 1.5 11-15% 1.75 > 15% 2.0 expected growth of share of foreign contractors scores: 0 - < 3% 0.25 3 - < 5% 0.5 5 - < 10% 0.75 > 10% 1.0

International orientation maximum scores: 7.0 minimum scores: 0


B Functional dimension Research orientation Share of academics Q3 share of scientists / engineers in 1999 scores: 0 - < 5% 5 -