Chapter 4 - Industry Collaborative Measures
A competition in which industry lead or representative bodies can make bids for funding to develop strongly collaborative innovation initiatives in their sector. Partnerships would be required to involve one or more higher education institutions, an industry lead or network body and at least ten companies. Significant funding is available on a long-term basis subject to substantial co-funding. Schemes may fund new collaborative knowledge generation, exploitation training and networking activities. (Inspired by Collaborative Research Projects).
4.1 Introduction
In this Chapter we consider the value to the Scottish Innovation System of the development of Industry Collaborative Measures. These are similar in many ways to the Regional Collaborative Measures considered in Chapter 3 but would operate on an industry or sectoral basis rather than geographically. Again the intention is to strengthen networking within the industry by providing long term support to stimulate network development and the creation of collaborative projects.
The inspiration for this measure is taken from a successful competitive measure (the Collaborative Research Projects) which has been running in Flanders since 2001 and now supports 55 projects with a total value of around €14m. The purpose of these projects is the acquisition and clustering of technological knowledge and its conversion into practical innovation applications. A characteristic of the projects supported in Flanders is that the applications involve a relatively large group of companies (10 or more) with work being co-ordinated by an industry lead body such as a professional federation which is authorised to act on behalf of the group of firms. In the measure being suggested for Scotland we have also included the requirement that the partnership should also include a higher education establishment. This aims to address the specific weakness of higher education-industry linkages identified in the earlier study of the SIS.
Our assessment of the value of this type of initiative to the SIS proceeds in three stages relating first to the desk-based ex ante evaluation (Section 4.2), second to the feedback from our focus groups (Section 4.3) and third from our key informant interviews (Section 4.4). Section 4.5 summarises the key conclusions.
4.2 Ex Ante Evaluation
As indicated earlier there is some commonality between the Industry Collaborative Measures being discussed here and the Regional Collaborative Measures discussed in Chapter 3. Some similar considerations are therefore relevant. Again, a pre-requisite of the Industry Collaborative Measures is multi-actor engagement in the collaboration with this directly addressing weakness in the Scottish Innovation System in terms of linkages.
The sectoral-focus of the Industry Collaborative Measures may mean that innovation initiatives are more focussed than those addressed in the Regional Collaborative Measures. This may mean that research arising from the initiative will be applicable primarily to other firms in the sector, but outside the original network members. Care should be taken, however, to ensure that sectoral boundaries do not act as a barrier to cross-sectoral knowledge flows. In addition, a broad definition of sector may be appropriate as many businesses and their supply chains are not easily captured in traditional sectoral definitions. Some effort by the any Industry Collaborative networks to encourage inter-sectoral knowledge generation may therefore be important.
The requirement for at least 10 companies to be involved in each Industry Collaborative Measure will directly address the particular system weakness of networking between businesses in the SIS. The relatively small size of the Scottish economy may also pose problems in this respect, however, in terms of the ability of the economy to provide critical mass in some sectors - a point made by the focus groups in response to the Regional Collaborative Measures discussed earlier. A particular challenge in implementing the Industry Collaborative Measures may therefore be ensuring that funding is targeted across sectors to develop capability and not just to support sectors with existing innovation strengths and presence in international markets.
Long-term funding is also envisaged in the Industry Collaborative Measures and will be important in developing collaborative networks, as much of the activity of these networks tends to be informal and generic. As social networks develop over time so too does awareness of the strengths of different organisations, trust between potential research partners, and a willingness to engage in collaborative activity. In this regard, co-funding is important to ensure the commitment of network partners and that tangible and intangible benefits are arising from the collaboration.
Scotland has a strong history of industry or sector led interventions in the economy and innovation system, therefore care would be necessary in implementing any Industry Collaborative Measures not to conflict with existing measures, e.g. the ITI's or other industry-specific measures. More generally, it is likely that over time, research collaborations would emerge from any Industry Collaborative Measures. Depending on the stage of development of the technology these may be eligible for funding through SMART: SCOTLAND and/or SPUR / SPUR+. The ultimate aim of this type of measure is to stimulate greater collaboration between firms with links into industry lead bodies and the universities. In particular, where the focus of such networks are on knowledge generation then it would be expected that this would provide a stream of projects eligible for support to carry out feasibility studies or to develop new products and/or processes. Ensuring the participation of a university partner in the Industry Collaborations will be important in initiating collaborative research projects eligible for funding through SCORE or SEEKIT.
4.3 Focus Group Feedback
There was stronger support from the focus groups for this measure than for the notion of Regional Collaborative Measures with this being viewed as a longer-term version of the existing SEEKIT scheme. Similarities to the Nexus and Dialogue measures in place at Glasgow University were also noted. Perhaps surprisingly there was little concern about overlap between the notion of Industry Collaborative Measures and other existing innovation support schemes.
The key points identified by the focus groups were:
Doubts were expressed as to whether Scotland has industry bodies strong enough to develop and manage this type of consortium outside the traditional industries. It was generally felt that a consortium of 10 private sector members would be hard to manage and hard to get everyone to agree, and it could also exclude SMEs as overheads would be too large. The current oil and gas consortium was suggested as one existing group which does work in this way.
- Various attendees argued that intellectual property ( IP), in particular the issue of IP ownership, would create problems within consortia along with the fact that participating firms and HEIs could be potential competitors. Some participants said that firms would come together for collaboration on health and safety regulations, training etc. In general, attendees believed that a smaller number of companies might work together more usefully, i.e.
"They could jointly invest in a concept but they would have to be from different sectors with complementary skills sets and coinciding interests - for example, a hardware and a software company working on the same project."
- Developing links between HEIs and industry was considered to be a major strength of the Industry Collaborative Measure and in particular its influence on graduate retention. A Glasgow attendee summed it up thus:
"This scenario would put in significant funding for a sector of 10 companies (which would be made up with a good number of SMEs), and would be a good way for them to access research."
It was also pointed out that the only difference between the Industry Collaborative Measure and SEEKIT is that it is led by industry, rather than HEIs. Thus, this scenario could be launched as an extension of SEEKIT. The long-termism of this measure was considered to be crucial given that SEEKIT is short-term (only 2/3 years), and indeed it would be strategic, with large-scale investment for SMEs to work with HEIs (one estimate was £10-15 million over 10 years).
4.4 Feedback from Key Informant Interviews
As this measure is similar in some ways to that considered in Chapter 3 some of the comments made in respect of the Regional Collaborative Measures are also relevant here particularly those relating to competition, rural areas etc. In general terms there was, however, more support for the Industry Collaborative Measure. Specific comments were:
"… potentially interesting because it is clearly driven by the needs of industry …..Something like this is being done in life sciences in the West of Scotland".
"The broad aim of this is good - the problem is getting companies together to agree"
With informants seeing this type of scheme as particularly suitable to the cities or more populous areas with more difficulty in rural areas because of the lack of larger firms . Most of the difficulties anticipated with this type of measure were operational, and reflected first the scale and R&D orientation of Scottish firms:
"… it's a bit like a limited Framework programme, but just for Scotland. Can't get enough companies to interact with now, so it is unlikely to work".
"The public sector could help to catalyse this, but the only problem is whether you could get up to 10 firms to participate in it?".
"Again, this asks lots of questions about the capacity and competences of Scottish SMEs. What is needed is a policy of developing firm competences in general, not just innovation-related competences, which are amongst the hardest of all - by definition, because it is new, original, hasn't been tried by anyone and is accordingly high-risk. On this, collaboration with others might work, but might not. It probably wouldn't work unless the collaborators trusted each other and in Scotland most SMEs are 'egocentric', individualist, or just content to survive from one year to the next".
Another potential issue was seen as overlaps between the idea of Industry Collaborative Measures and other policy initiatives currently in place. In particular the ITI's were cited as working in similar territory and one informant likened this measure to earlier Foresight initiatives: "this wasn't a great success; theoretically this is something Scottish Enterprise and the sector groups etc should be doing".
4.5 Summary
Like the Regional Collaborative Measures discussed in Chapter 3 this measure is intended to address one of the key weaknesses of the SIS - the lack of connectivity. The ex ante appraisal raises essentially similar issues here related to critical mass and the need for long-term funding if this type of measure is to succeed. From the interviews and focus groups support for this type of measure was stronger than that for regional consortia. Some doubts still exist, however, about potential leadership and critical mass. There were also concerns here about potential overlaps with existing measures. Overall, there was guarded support for this type of initiative, perhaps as an extension of existing measures rather than as something wholly new.