Measuring Inbound Diffusion from Publicly Funded Research Organizations to Innovative Firms: A Statistical Perspective Frances Anderson Science, Innovation and Electronic Information Division (SIEID), Statistics Canada Federal Partners in Technology Transfer (FPTP) National Meeting, Halifax, June 12, 2007

Presentation Outline Overview of SIEID The Innovation Measurement Frameworks of the Oslo Manual Findings from SIEID Surveys Innovation 2005 Federal Science Expenditures and Personnel Survey: Intellectual Property Management Survey of Business Incubators 2005 The Issue of Impact

Science, Innovation and Electronic Information Division, Statistics Canada Science and Technology Research and development (R&D) Science and technology in government Innovation Commercialization Advanced technologies Business incubators Life Sciences Biotechnology Bioproducts Functional foods and nutraceuticals Emerging technologies Nanotechnologies Information Society Electronic commerce and technology Internet use by individuals Telecommunications, broadcasting and cable Knowledge Indicators Survey of Earned Doctorates Analysis of highly skilled personnel using Statcan databases (Census, National Graduate Survey…) Exploratory Data Analysis LEAP (Longitudinal Employment Analysis Program) projects

Oslo Manual 1997: The Firm as the Innovation Dynamo TRANSFER FACTORS Human, social and cultural factors influencing information transmission to firms and learning by them INNOVATION DYNAMO Dynamic factors shaping innovation in firms Source: OECD/EUROSTAT (1997), “Proposed Guidelines for Collecting and Interpreting Technological Innovation Data, p.32

OECD/EUROSTAT (2005), “Guidelines for Collecting and Interpreting Innovation Data”, p.34 Infrastructure and institutional framework The Firm Product innovations Process innovations Marketing innovations Organisational innovations Other firms Education and public research system Innovation policies Demand Oslo Manual 2005: The Innovation Measurement Framework

Oslo Manual 2005: Inbound Diffusion Three types of linkages can occur within the innovative system. The linkages are the mechanisms through which knowledge and technology flows from external organizations to the innovating firm: Open information sources provide openly available information that does not require the purchase of technology or intellectual property rights, or interactions with the source. Acquisition of knowledge and technology results from the purchase of external knowledge and capital goods (machinery, equipment, software) and services embodied with new knowledge or technology that do no involve interaction with the source. Innovation co-operation requires active co-operation with other firm or public research institutions on innovation activities (and may include purchases of knowledge and technology.) (OECD/EUROSTAT, p.76-88)

Transformation of Ideas into Innovative Products The Market Public S&T Organizations (universities, government labs, hospitals) Intellectual Property Assets Know-how Graduates Spin-off Firms Business Incubators Pre-market Funding (venture capital, government programs) Start-up Firms $ $ $ $ $ ??

Federal Government Intellectual Property (IP) Management Indicators, (Preliminary Estimates) 2004/2005 % change 1997/1998 to 2004/2005 Invention disclosures19347% Patent applications30833% Patents issued16930% Patents in force1,589-19% New licences231-42% Total licences1,49234% Royalties ($ million)$ % Source: Bordt (2006), “Federal S&T Commercializes”, Innovation Analysis Bulletin, Statistics Canada, Vol. 8, No. 2.

Business Incubators Definition of a business incubator “A business unit that specializes in providing space, advice and support designed to assist new and growing businesses to become established.” Business incubators can be a firm (for-profit or not-for-profit) part of a firm, part of a university or college, part of a federal, provincial or municipal government department or agency Survey carried out in 2005 and 83 business incubators were identified

Some Indicators of Business Incubators Number of client firms4,502 Full-time people employed by the client firms12,874 Part-time people employed by the client firms292 Number of clients that received SR&ED (Scientific Research and Experimental Development) tax credits 105 Funds from venture capitalists$50 million Industry of Client Groups Arts, entertainment and recreation; accommodation and food services25% Professional, scientific and technical services25% Source: Joseph, Bordt and Hamdani (2006), “Characteristics of Business Incubation in Canada, 2005”, SIEID Working Paper, Statistics Canada, no. 7.

Business Incubators and the Federal Government % business incubators surveyed were part of a federal, provincial or municipal department or agency 13% were co-located in (or adjacent to) a federal government laboratory Federal government was a key partner or stakeholder for 28% of business incubators Of the total funds ($45 million), 23% were from federal government grants Source: Joseph, Bordt and Hamdani (2006), “Characteristics of Business Incubation in Canada, 2005”, SIEID Working Paper, Statistics Canada, no. 7.

IMPACT “Canada’s federal government will increase its accountability to Canadians by: Improving its ability to measure and report on the impact of S&T expenditures. The government will improve its understanding of Canadian S&T developments and the impact of federally performed S&T, and will work with the OECD and other countries that will enable comparisons against international benchmarks of success.” Government of Canada (2007), Mobilizing Science and Technology to Canada’s Advantage, p.88.

Science and Technology Activities and Impacts: A Framework for a Statistical Information System (1998) S&T system is comprised of three types of activities Generation of S&T Knowledge Transmission of S&T Knowledge Use of S&T Knowledge Generic questions Activities (Who? What? Where? Why?) Linkages (How much? How connected?) Outcomes (What result?) Impact

Determinants of Innovation and Impact of Innovation Internal factors Firm strategy Business practices Personnel Decision-making processes External factors Geographical location Inbound diffusion Government funding Regulations Supply chain Outsourcing Innovation vs. non-innovator Type Intensity Novelty Firm Performance Productivity Growth Profitability Exports Survival Market share

Facilitated Access Econometric Study of Motives from Innovation Cooperation Firms’ innovation behaviour Public R&D support Firm characteristics and framework conditions Motives: Cost sharing Accessing knowledge Scaling up production Commercialization Source: Schmidt (2007), “Motive for Innovation Co-operation- Evidence from the Canadian Survey of Innovation”, Discussion paper no. 7, ZEW- Centre for European Economic Research, p.9.

Finding on Public Funding “We find some evidence that public funding increases the flow of knowledge within the national system of innovation. Innovators are more likely to co-operate in order to get access to external R&D and expertise if they receive public funding than if they do not receive public funding.” Source: Schmidt (2007), “Motive for Innovation Co-operation- Evidence from the Canadian Survey of Innovation”, Discussion paper no. 7, ZEW- Centre for European Economic Research, p.25.

SIEID Publications Industrial Research and Development Federal Science Activities XScience Bulletin Science Statistics Innovation Analysis Bulletin SIEID Working Papers Connectedness Series

Questions? Frances Anderson (613)