1. Behavioural Additionality Luke Georghiou PREST, Manchester Business School, University of Manchester

2. Types of additionality Input additionality –Are resources given to a firm additional ie for each Euro in subsidy the firm spends at least 1 Euro more on target activity –Basis for State Aid regulation –Assumes clear input-output link and constant returns to scale Output additionality –Proportion of outputs which would not have been achieved without public support –Counterfactual scenario again depends upon assumptions about input-output linkages

3. Behavioural Additionality Difference in firm behaviour resulting from the intervention –Concept formulated mid-1990s to help explain consistent evaluation findings –Normally assumes that behaviour changed in desirable direction –Rooted in question of how support interacts with strategies and capabilities of firms –Emphasis on persistent changes –Close link to systems perspective on innovation

4. Firm strategic behaviour Dimensions of Strategy Building competences Sourcing technology Leader or follower Managing complementary assets Protecting IPR INTERVENTION Potential areas of Behavioural Effects Knowledge acquisition Human resources Capital investment Market position Manufacturing or service provision Corporate responsibility or sustainability

5. Measuring Behavioural Additionality Target population segmented –Large & relatively R&D intensive firms Grant small proportion of total spend Key issues strategic fit and degree of influence –Traditional SMEs and medium-sized firms Grant large in relation to R&D innovation spend but may be peripheral to business strategy Projects mainly development oriented

6. Measuring Behavioural Additionality (2) Technology-based start-up firms –Grants used to support central business strategy. –No separation of technology & business strategy –Minimal routines means open to external influence

7. Survey sequence Identify decision-making level to predict where behavioural effects will impact initially Profile technology and business strategies in relation to public support Identify overall pattern of public support for innovation Review its general effects on behaviour Focus on specific grant to assess detail of additionality and effects of different stages of support

8. Effects during grant cycle Awareness application Contract Monitoring Research Post-project support Failed/ non- applicants stimulated IPR & collaboration rules adopted Feedback Research direction or linkages changed Exploitation Route changed

9. Project fallacy Key problem of “project fallacy” in which policymaker assumes that a contract is equivalent to a project –In practice contracted work is often only part of a longer and broader company project Real deliverables ContractReal project Contract deliverables

10. Are behavioural effects as skewed as economic returns or are they the counterbalance? % of turnover accounted by % of firms in EUREKA Initiative

11. Beyond the research grant Which other types of innovation policy measure are likely to result in behavioural additionality? Are there different measurement issues? How do we aggregate or separate the effects of simultaneous policy influences on the firm?

12. Guarantee Mechanisms Indirect Measures iefiscal measures Direct Measures Risk Capital Supply Side Demand Side Support for public sector research Support for training and mobility Grants for industrial R&D Finance Services Information & brokerage support Networking measures Systemic policies Procurement Regulation - University funding - Laboratory funding Collaborative grants - Strategic programmes for industry - Support for contract research - Equipment sharing - Tailored courses for firms Entrepreneurs hip training - Subsidised secondments - Industrial research studentships - Support for recruitment of scientists - Grants for R&D - Collaborative grants - Reimbursable loans - Prizes to spend on RTD - Contact databases - Brokerage events - Advisory services - International technology watch - Patent databases - Support for clubs - Foresight programmes to build common Visions - Co-location - Cluster policies - Supply chain policies - R&D procurement - Public procurement of innovative goods - Support for private procurement - Use of regulations and standards to set innovation targets - Technology platforms to coordinate development of technology and related regulation and standards Framework conditions: Science base - Contract research - Human resources - IPR - State Aid Regulations Source: Georghiou et al Improving the Effectiveness of Direct Measures to Stimulate R&D, European Commission 2003

13. Example – evaluating foresight programmes Foresight Lobbying Evaluation Strategic studies Historic Commitments Budgets etc Company strategy Science & innovation policy NGO Strategy Implementation environment

14. Some outstanding issues Effects of broader national policy environment Characteristics of firms that make them more or less amenable to behavioural influences Extension to other innovation policies and policy mix issues –More realistic as behavioural effects normally cumulative Consideration of negative behavioural effects –Intentional and unintentional Assessment of long-term learning and persistence of effects Whether we can get beyond the case-study in measuring complex effects