| No.20/2005
Research Findings |
Enterprise and Lifelong Learning Research Programme |
Scottish Business Attitudes to Research, Development and Innovation
DTZ Pieda Consulting
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The Scottish Executive commissioned a study that would enhance the understanding of motivating factors and constraints facing Scottish businesses in relation to R&D activity and would assist in tailoring support so that it is directly addressing identified needs. The survey was based around a literature review, a large scale survey of companies, and case studies of 30 companies. It was decided not to limit the survey to companies undertaking R&D alone as one of the main purposes of this study was to focus on the issues as they affect Scotland. The research was tailored to reflect the structure of the Scottish economy and significant areas of activity. This meant it was appropriate to use a wider definition of R&D to include innovative activity. |
Main Findings
- Seventy-six percent of companies in Scotland do some form of R&D.
- The main characteristics of innovative companies are that they are under 11 years old, are in advanced manufacturing / research & experimental development, and are in domestic ownership. Foreign owned manufacturers appear less likely to locate their R&D in Scotland. They are generally involved in lower level product development. Thus it is important to locate R&D near to production facilities.
- The main difficulties faced by those undertaking R&D include accessing external funds (88%), recruiting skilled staff (75%), and financial risk (50%).
- Fifteen percent of non-R&D companies have previous R&D experience. Eighty eight percent of non-R&D companies had never been involved in R&D and three quarters have no intention of ever doing so.
- Small non-R&D companies could be encouraged into innovative behaviour with assistance.
- Companies that see Scotland as a good R&D base are young companies, those who are involved in research and experimental development and advanced manufacturing.
- Scotland is considered a good R&D location when there is an availability of local skills and where there is access to government support.
- There is a wealth of companies in Scotland either undertaking R&D or keen to do so. We have world class university departments that support major clusters for example in biotechnology and electronics that spawn high level blue sky research which has the potential to be a great asset to the Scottish economy.
Companies doing R&D innovation
The main characteristics of innovative companies in the study are:
Under 11 years in advanced manufacturing / research & experimental development domestic ownership
Those companies undertaking R&D/ innovation at present tend to be developing new products to increase their market share. Most of these companies see R&D as vital to the future business performance. The main difficulties faced include:
Accessing external funds (88%)
Recruiting skilled staff (75%)
Financial risk (50%)
Non-R&D companies
Fifteen percent of non-R&D companies have previous R&D experience. Results suggest that that when a company has taken the step to innovate once it is more likely to do so again.
Eighty eight percent of non-R&D companies had never been involved in R&D and three quarters have no intention of ever doing so. The main reason for this was that the nature of their product did not require expenditure on R&D.
There is a group of companies with no experience of R&D but are open to becoming involved in the future. These companies suggested the following as factors that might encourage them to do so:
Government grants (75%)
Improved financial position of the company (75%)
Tax incentives (65%)
Recruitment of appropriate skills (60%)
Advice and training (55%)
This suggests that some non-R&D companies may be persuaded to innovate if they are given advice and support to both improve the financial position of the company and on areas where innovation may prove profitable.
How can non-R&D companies be encouraged into R&D and innovative behaviour?
The survey results suggest that small non-R&D companies could be encouraged into innovative behaviour by assistance to:
Improve the performance of the business _ through business information and advice training _ many non-R&D companies appear not to have the expertise required to undertake
R&D / innovative behaviour marketing advice related to research effort
How can R&D firms be encouraged to spend more on this activity?
Finance is a major constraint for many companies in undertaking R&D. One quarter of small companies in the survey suggested that they could benefit from loans, information and encouragement to forge links with universities. The case study companies with no previous links with universities expressed an interest to do so.
There is potential for a directory of expertise and interest in practical R&D / innovation within universities that small companies could access in order to encourage them to make a move towards forming links with academia.
Table 1 shows the level of R&D / innovative experience of companies in both the survey and case studies and the potential actions that could be taken improve the level of innovative behaviour in Scotland.
This study has shown that there is a wealth of companies in Scotland either undertaking R&D or keen to do so. We have world class university departments that support major clusters for example in biotechnology and electronics that spawn high level blue sky research which has the potential to be a great asset to the Scottish economy. However, within other companies, particularly in advanced manufacturing, undertaking R&D and maintaining a competitive edge not only keeps Scottish companies competitive but also retains practical expertise in the country. If skilled workers are not retained in this country then the potential for increasing R&D is diminished.
How can companies be encouraged to locate their R&D in Scotland?
Companies that see Scotland as a good location for R&D are:
Those in research & experimental development and advanced manufacturing young companies.
Where there is an availability of local skills (which can be a consequence of successful clusters) access to government support.
Scotland has a good science and technical workforce in Scottish Enterprise's priority high-tech clusters, such as electronics and biotechnology. There are high quality graduates and strong departments for collaboration within the Scottish university sector. The Scottish Executive needs to market the success of these clusters and of local skills.
Foreign owned manufacturers appear less likely to locate their R&D in Scotland. These companies are generally involved in lower level product development and suggest that it is important to locate R&D near to production facilities.
Table 1
R&D Experience of Companies (survey and case studies) and the Prioritising of Assistance
R&D Experience | Actions to Improve |
No R&D experience / no future intentions | Not a priority as for most the product / service does not require R&D / innovation |
No R&D Experience / open to future R&D Sporadic R&D | Priority as by getting involved in R&D / innovation once there is a good chance they will do so again Many are traditional manufacturers An action plan approach to R&D may be the best way forward for these companies Companies need assistance to identify areas where R&D might be possible and profitable Advice & Information on technical opportunities Training General support to improve the financial position of the business |
Continuous R&D in Scotland | Focus on young, small high growth companies Business support Financial support |
Continuous R&D outwith Scotland | Focus on key clusters |
Market success and local skills |
This document (and other Research Findings and Reports) and information about social research in the Scottish Executive may be viewed on the Internet at: http://www.scotland.gov.uk/socialresearch The site carries up-to-date information about social and policy research commissioned and published on behalf of the Scottish Executive. Subjects covered include transport, housing, social inclusion, rural affairs, children and young people, education, social work, community care, local government, civil justice, crime and criminal justice, regeneration, planning and women's issues. The site also allows access to information about the Scottish Household Survey. |