Evaluation of the Collaborative Research and …webarchive.nationalarchives.gov.uk/20130221185318/http:/www... · Technology Strategy Board Evaluation of the Collaborative Research

Technology Strategy Board

Evaluation of the Collaborative Research and Development Programmes

Final Report

A final report prepared by

PACEC for

the Technology Strategy Board

PACEC Public and Corporate

Economic Consultants

www.pacec.co.uk

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September 2011

T11/069

PACEC Contents

Evaluation of the Collaborative Research and Development Programmes

Contents Executive Summary ........................................................................................................................ ii

X1 Aims of the evaluation ........................................................................................................ ii

X2 Rationale for CR&D ............................................................................................................ ii

X3 Evaluation methodology .....................................................................................................iii

X4 Progress Towards Aims and Objectives ........................................................................... iv

1 Introduction ............................................................................................................................. 1

1.1 Aims of the evaluation ........................................................................................................ 1

1.2 Rationale for CR&D ............................................................................................................ 2

1.3 Evaluation methodology ..................................................................................................... 4

1.4 Analysis of the research results ......................................................................................... 5

1.5 Structure of the report ........................................................................................................ 6

2 Characterisation of Projects ................................................................................................... 7

2.1 Introduction ......................................................................................................................... 7

2.2 Management information ................................................................................................... 7

3 Project Participants ............................................................................................................... 15

3.1 Project details ................................................................................................................... 15

3.2 Company background ...................................................................................................... 17

3.3 Further collaboration ........................................................................................................ 25

4 Objectives of Project Partners .............................................................................................. 26

5 Intermediate Changes to Attitudes and Behaviour ............................................................... 36

6 Business Performance and Economic Impacts .................................................................... 50

6.1 Business performance impacts ........................................................................................ 50

6.2 Economic impacts ............................................................................................................ 57

7 Wider Effects ........................................................................................................................ 63

7.1 Wider impacts on strategic partners ................................................................................. 63

7.2 Wider impacts of project partners .................................................................................... 63

8 Additionality of the projects ................................................................................................... 67

9 Assessment of the scheme .................................................................................................. 70

10 Key Findings ......................................................................................................................... 75

PACEC The Evaluation Team

Evaluation of the Collaborative Research and Development Programmes Page i

The Evaluation Team

This report has been prepared by PACEC on behalf of the Technology Strategy Board.

The PACEC project team included:

Rod Spires Project Director

Nic Boyns Project Manager

Matt Rooke Principal Consultant

Stephanie Wright Senior Consultant

Professor Alan Hughes, Director of the Centre for Business Research at the University of

Cambridge and Director of the Innovation Research Centre provided advice and assistance with

the analysis.

The Steering Group on the project included David Evans, Guy Ricketts, Julie Soutter and

Will Barton from the Technology Strategy Board, and Margaret Dennis from BIS.

Our thanks are extended to the technologists and other staff at the Technology Strategy Board,

the academic and business partners funded by CR&D grants and the wider stakeholders that

were consulted, including EPSRC, BIS, innovation and technology businesses and the Regional

Development Agencies (RDAs).

PACEC Executive Summary

Evaluation of the Collaborative Research and Development Programmes Page ii

Executive Summary

This executive summary sets out the aims of the evaluation and the conclusions

arising from the research reflecting these aims.

X1 Aims of the evaluation

X1.1 PACEC was commissioned by the Technology Strategy Board (TSB) in October 2010

to carry out an evaluation of the Collaborative Research and Development (CR&D)

Programme1. The aim of this evaluation is to assess the economic impact of CR&D,

its outputs, outcomes and economic impact, the wider benefits and the lessons that

can be learnt for developing similar programmes in the future. The specific aims of

the CR&D evaluation, in summary, are:

● To define a set of outcome metrics which provide a useful measure of the full benefits of the programme and are consistent with the Government’s expectations of Return on Investment (ROI) evaluation and targets

● To understand and quantify the direct and wider benefits that the programme has delivered from 2004 to 2011

● To ascertain the above at several layers of the hierarchy, including programme, project and sector levels through to partner types (i.e. businesses and academics) and national/international impacts

● To ascertain whether the potential impact has increased with the introduction of the challenge-led agenda to complement the technology inspired areas

● To ascertain whether an increase in support of smaller projects provides greater or lesser benefit

● To ascertain and quantify the benefits of using CR&D in conjunction with other instruments to deliver strategic and tactical objectives

● To ascertain the influence and impact of aligned partners and funding

● To ascertain the overall strategic value of CR&D in the role of the Technology Strategy Board and in support for innovation in the UK economy

● To identify and recommend where/how the CR&D can most effectively be used

X2 Rationale for CR&D

X2.1 CR&D forms part of a wider knowledge transfer and innovation support system and

within it brings together key partners from Higher Education Institutions (HEIs) and

businesses through their interaction focused on projects and the CR&D competitions

when held. The interactions are underpinned by the resources from other funders

including the Research Councils, the RDAs and other funding agencies and

government departments.

1 The team included Professor Anan Hughes, Director of the Centre for Business Research at the

University of Cambridge and Director of the Innovation Research Centre, who provided advice

and assisted with the analysis.


Evaluation of the Collaborative Research and Development Programmes Page iii

X2.2 Within this context the aims of this group of CR&D projects, which have evolved since

its introduction in 2004, have been to:

● Encourage greater collaboration between businesses and academia

● Support projects which were likely to result in additional innovation, improve capability and had exploitation potential reflecting the business case.

X2.3 The market failure rationale is based on the premise that there is a funding gap owing

to the perceived risk and potential returns on R&D projects for businesses,

academics and financiers (potentially with excessive risk aversion) and a lack of

information on sources of finance coupled with a lack of understanding of business

capabilities to manage R&D and exploit it successfully.

X2.4 For the purposes of this evaluation the projects supported were grouped under two

headings – “enabling technology” and “market driven”. These corresponded to the

categories used by the then Department of Trade and Industry when the first projects

were started and, for the latter group, focus on particular sectors where projects

would be applied2.

X2.5 The enabling technologies are:

● Bioscience

● Electronics, Photonics and Electrical Systems

● High Value Manufacturing

● Information and Communications Technology

● Advanced Materials and Micro and Nanotechnologies

X2.6 The market application led sectors are:

● Creative Industries

● Environmental Sustainability

● Energy Generation and Supply

● Medicines and Healthcare

● Transport (Aerospace, Low Carbon Vehicles, Intelligent Transport Systems)

X3 Evaluation methodology

X3.1 In order to achieve the aims of the evaluation an integrated and customised research

programme was undertaken.

● An inception meeting. This was held to clarify the evaluation aims and the overall methodology, identify the background reports and the contact information for partners in projects and stakeholders.

2 This categorisation predates the Technology Strategy Board’s later focus on challenge led and

technology capability areas and there is little or no read across to the present categories used by

Technology Strategy Board.


Evaluation of the Collaborative Research and Development Programmes Page iv

As part of the inception stage there were discussions with the Technology Strategy Board technologists who worked on the CR&D project appraisals and implementation

● A desk study, particularly focusing on the programme rationale and the management information for CR&D, focusing on the number of projects, the partners in each, the timing of awards and grant expenditure

● Interviews with wider stakeholders to help inform the design stage and their role in CR&D

● A survey and interviews with 336 CR&D participants for projects approved in the period 2004 to 2009 (i.e. achieved interviews with 259 businesses and 81 academics) that participated in 167 projects. There were follow-up interviews with partners in 30 projects

● Interviews with a comparison group of 205 CR&D unsupported bidders

X3.2 Analysis was undertaken using the PACEC in-house survey analysis system primarily

using an enhanced SPSS system. This consisted primarily of univariate analysis and

cross tabulations of data, which are shown as tables, charts and diagrams in the

report and the chapters which follow.

X4 Progress Towards Aims and Objectives

X4.1 This section draws on the results of the evaluation research to address the specific

aims of the evaluation set out above. Hence it marshals the evidence to answer the

questions.

To define a set of outcome metrics which provide a useful measure of the full benefits of the programme and are consistent with the Government’s expectations of Return on Investment (ROI) evaluation and targets.

● include economic measures such as Gross Value Added (GVA) and jobs, but also wider attitudinal, behavioural and spillover benefits including environmental and social benefits

● take into account the Green Book (HM Treasury’s guide to investment) and the original business case for CR&D

● assess additionality – i.e. the additional value of the Technology Strategy Board’s CR&D investment in relation to the outputs and behavioural changes

X4.2 The outcome metrics for the evaluation were defined with the Steering Group

reflecting the aims and objectives of CR&D and the guidelines on evaluations, in

particular the Green Book. The measures included outputs and outcomes as well as

wider effects to help ensure that the fullest possible impact of CR&D was identified.

The main metrics were as follows:

● Employment including the number of actual and likely full time equivalent (FTE) gross and net additional jobs created and safeguarded

● Gross value added (GVA) expressed as £s gross and net additional that were actual and were likely to result

● Changes in attitudes and behaviour measured by the percentage of CR&D supported partners who expressed a view in interview on the positive impact of their projects in relation to the following factors:

- Contributed to the costs of projects


Evaluation of the Collaborative Research and Development Programmes Page v

- Helped share the risk of investment

- Strengthened collaborative activity: businesses / academics

- Provided access to technical and R&D skills

- Led to leading edge research

- Improved technical understanding and knowledge

- Improved attitudes to collaboration

- Allowed the technical feasibility of ideas to be assessed

- Allowed the application of technologies to take place

- Developed products and processes

- Produced social impacts

- Produced environmental impacts, such as more efficient use of energy and reduced carbon emissions

- Improved Technology Readiness Levels (TRLs)

- Resulted in products or services that were likely to reach the market

- Resulted in intellectual property and patents

- Levered in finance to enable products to be exploited

- Improved the image and reputation of partners

- Increased the value of businesses

- Increased employment

- Increased turnover

- Allowed businesses to enter new markets

- Increased publications and dissemination

- Resulted in impacts on customers, suppliers and competitors

- Dissemination of outputs

- Additionality of projects

- Satisfied partners

To understand and quantify the direct and wider benefits that the programme has delivered from 2004 to 2011

X4.3 CR&D is likely to generate a total of 13,350 net additional full time equivalent (FTE)

jobs. Of these, 8,900 jobs arise directly from CR&D with a further 4,450 arising from

the wider supply chain jobs and linkages. The cost per net additional job is £32,000

(or £36,000 in 2010 prices)3. CR&D is likely to generate net additional GVA of

£2.9bn. For each £1 of CR&D grant, there will be an increase in GVA of £6.71 (or

£5.75 in 2010 prices). There are likely to be additional impacts as the CR&D

technologies and knowledge is transferred as partners leave their projects or the

technology in the public domain feeds into other products, services and processes.

3 In the evaluation on Grants for R&D carried out by PACEC using a similar approach to the

CR&D evaluation, the net additional cost per job was £32k (in 2008 prices) and that for each £1 of

GRD there was an increase in GVA of £9.00. Evaluation of Grants for R&D and Smart (BIS.

2009). This shows that while CR&D was similar to GRD/Smart in terms of the relatively low cost

per job (£36k, compared with £32k), CR&D’s high level of GVA return on investment (£5.75) was

not as high as that achieved by GRD/Smart (£9.00).


Evaluation of the Collaborative Research and Development Programmes Page vi

X4.4 Project participants identified the following as the main actual and likely attitudinal

and behavioural impacts arising from the projects (the percentages refer to the

proportion of those interviewed who identified the impact during interview):

● Contributed to the costs of projects. 90% of partners

● Helped share the risk of investment (85%)

● Strengthened collaborative activity with businesses (84%)

● Provided access to technical advice and R&D skills (67%) and academics (73%)

● Led to leading edge research (59%)

● Improved innovation, R&D skills and processes (92%)

● Improved the technical knowledge and understanding (84%)

● Improved attitudes to collaboration (84%)

● Allowed the application of technologies to be explored (93%)

● Allowed the technical feasibility of ideas to be assessed (83%)

● Developed products (70%) and processes (57%)

● Social impacts e.g. access to information/knowledge (78%)

● Beneficial environmental impacts, e.g. more efficient use of energy and reduced carbon emissions (71%)

● Technology Readiness Levels (TRLs): changes over the project period:

- Work on basic principles 30% to two per cent

- Work on operation one per cent to 20%.

● Products or services are likely to reach the market (83%)

● Intellectual property and patents registration (35%)

● Further finance obtained for exploitation (32%)

● Improved their image and reputation (79%)

● Increased value of businesses (62%)

● Increased employment (56%)

● Entered new markets (53%)

● Increased turnover (53%)

● Increase in publications and dissemination (42%)

● Wider project effects for customers of partners (48%), suppliers (17%) or competitors (13%)

● Wide dissemination of outputs: widely (69%)

● The additionality of projects: definitely / probably not gone ahead anyway (86%)

● Partners satisfied: wholly / largely (70%)

X4.5 The main wider effects (apart from benefits to the supply chain as a result of

purchases and the jobs that resulted) were on the customers of the CR&D partners.

The strongest impacts on customers, identified by 60% of partners, were on the

technology available to them, primarily in products and on innovation. Knowledge

was also disseminated and, in the main, to international audiences.


Evaluation of the Collaborative Research and Development Programmes Page vii

To ascertain the above at several layers of the hierarchy, including programme, project and sector levels through to partner types (i.e. businesses and academics) and national/international impacts

X4.6 The results indicated that there was broadly the same level of impact (as measured

by cost per job or GVA) for the enabling technology and market led categories

identified at paragraph X2.4 above). While there is considerable variation between

the individual sectors, caution should be applied to drawing any firm conclusions due

to the relatively small sample sizes and due to the extreme Pareto effect where less

than a fifth of the projects (five per cent) produce more than four fifths (87%) of the

impacts.

X4.7 The fact that business performance effects in academic partners (£0.90 GVA per £

spent) are almost a tenth of those in businesses (£8.13) reflects the different roles

that academic and business partners play in projects. However, the benefit of

academic involvement is clearly demonstrated by the fact that the overall business

impacts in projects with two or more academic partners (£9.67) are more than double

those in projects with no academics (£4.22).

To ascertain whether an increase in support of smaller projects provides greater or lesser benefit

X4.8 The evaluation considered the relative impacts of smaller and larger projects by the

size and value of the grant and the number of partners in each project. The research

shows that:

● There is some evidence that grants over £750k give rise to smaller business performance effects (£2.34 of GVA per £ spent) than either grants under £250k (£10.96) or medium sized grants, between £250 and £749k (£10.01)

● There is some evidence that the optimal number of partners is 4 or 5, since these projects gave rise to greater business performance effects (£8.91 GVA per £ spent) than either those with only 2 or 3 partners (£4.81) or those with 6 or more partners (£6.57)

To ascertain and quantify the benefits of using CR&D in conjunction with other instruments to deliver strategic and tactical objectives

To ascertain the influence and impact of aligned partners and funding

X4.9 Some 14% of project partners had sought and, in the main, obtained additional

funding from public sector partners. The main instruments were RDA funding for

innovation, grants for R&D, and Research Council funding. However, it is not

possible to assess and quantify the extent to which these instruments brought

additional benefits to CR&D use. The percentages of partners using an individual

additional source of funding is relatively small (i.e. six per cent for GRD as the main

additional instrument used). Hence the additional impact is likely to have been

relatively small.

X4.10 CR&D is jointly funded with partners at a national and regional level who, over the

period of the projects selected for the evaluation, contributed some 6.5% of total


Evaluation of the Collaborative Research and Development Programmes Page viii

direct funding and worked with CR&D staff to develop the strategy, judge applications

for funding and monitor projects (i.e. contributions in kind). This is likely to have an

influence on the impacts. On a straightforward attribution ratio related to the share of

funding, some 6.5% of the benefits could be the result of partners funding.

To ascertain the overall strategic value of CR&D in the role of the Technology Strategy Board and in support for innovation in the UK economy

● including examining the rationale for CR&D as per the original business case, the current validity, and whether the original business case objectives have been met.

● including the additionality achieved by CR&D funding

X4.11 The positive impacts of CR&D on the UK economy (e.g. jobs and GVA) help the

Technology Strategy Board achieve its aims and underpins its role. CR&D

encourages collaborative partnerships where they may not otherwise have occurred.

CR&D has created opportunities for businesses and academic partners by providing

finance which they would not otherwise have obtained. It has stimulated additional

UK business and academic collaboration through the project partnership

arrangements. CR&D has brought innovative business and academic partners

together to allow them to find technological solutions to issues, and develop and

exploit products and services.

X4.12 Hence the original business case for CR&D and the rationale are shown to be valid,

based on the evaluation evidence underpinned by the additional impacts

demonstrated.

To identify and recommend where/how the CR&D can most effectively be used

● for example by business sector, size of business, type of collaboration, size of grant and through synergies with other programmes

● identify the critical factors in creating successful projects / programmes

● identify conclusions and lessons for future CR&D application

X4.13 This research suggests that the most effective way in which CR&D can be used is:

● Through grants of up to £750k

● Through projects ideally of 5 to 6 partners

● Through projects with at least one academic partner

● In conjunction with other research and innovation programmes focused on business support and collaboration

● Retaining a balance between the enabling and market driven projects

● Continuing to give partners the opportunity to collaborate, share costs and risks and develop knowledge and skills for innovation

X4.14 Some points raised by small numbers of participants were:

● To simplify the application and the monitoring process and outputs required


Evaluation of the Collaborative Research and Development Programmes Page ix

● Improve the industry and sector knowledge of the project liaison / monitoring officers

● Increase and encourage the opportunities for networking outwith the project partners and consider a brokering facility in the scheme

● Keep the level and amount of grant under review to ensure that partner requirements were met and the resources were available to support the research, prototyping and production stages of the projects, i.e. exploitation

● Ensure that the grant is paid quickly, especially for the smaller businesses where cashflow was critical in the current funding and economic environment

X4.15 Other suggestions made by strategic partners were to consult more on policy

changes and competition launches, streamline and shorten the application process

and ensure that the monitoring approach and guidance was more consistent.

X4.16 The implications of the evaluation evidence are that the economic impacts of CR&D

could be enhanced with the positive selection of funders bids and partners where the

impacts are more likely to occur and by making advice / support available at and

prior to the exploitation stage to take outputs to market (by the aims and capabilities

of partners and types of projects). Wider dissemination and positive engagement

could help to draw on other sources of funding, especially risk funding. Stronger

impacts, on balance, are more likely to arise from the medium to smaller grants and

the medium to larger business and academic partnerships.

X4.17 In terms of future evaluations of CR&D it is suggested that the partner contact details

are kept up to date as partners leave or join, that impact and learning issues are

covered in monitoring / post completion questionnaires to allow some of the impacts

to be tracked (including information on softer and harder impacts and further

investment), and that consideration is given to a longitudinal evaluation approach

including some regular interviews with project partners, especially because it takes

time for some of the impacts to feed through. This would allow a dialogue to be

developed with the partners and current issues to be picked up. Finally, more

systematic and methodologically consistent evaluations across the Technology

Strategy Board innovation programmes would allow benchmarking evidence to be

collected and comparisons made as to their relative performance and the extent to

which they meet Technology Strategy Board objectives, combined with the

requirement for any adjustments.

PACEC Introduction

Evaluation of the Collaborative Research and Development Programmes Page 1

1 Introduction

1.1 Aims of the evaluation

1.1.1 PACEC were commissioned by the Technology Strategy Board (TSB) in October

2010 to carry out an evaluation of the Collaborative Research and Development

(CR&D) Programme4. The aim of this evaluation is to assess the economic impact of

CR&D, its outputs, outcomes and economic impact, the wider benefits and lessons

that can be learnt for developing similar programmes in the future.

1.1.2 The specific aims of the CR&D evaluation are:

● To define a set of outcome metrics which provide a useful measure of the full benefits of the programme and are consistent with the Government’s expectations of Return on Investment (ROI) evaluation and targets

- include economic measures such as Gross Value Added (GVA) and jobs, but also wider attitudinal, behavioural and spillover benefits including environmental and social benefits

- take into account the Green Book (HM Treasury’s guide to investment) and the original business case for CR&D

- assess additionality – i.e. the additional value of the Technology Strategy Board’s CR&D investment in relation to the outputs and behavioural changes

● To understand and quantify the direct and wider benefits that the programme has delivered from 2004 to 2011

● To ascertain the above at several layers of the hierarchy, including programme, project and sector levels through to partner types (i.e. businesses and academics) and national/international impacts

● To ascertain whether the potential impact has increased with the introduction of the challenge-led agenda to complement the technology inspired areas

● To ascertain whether an increase in support of smaller projects provides greater or lesser benefit

● To ascertain and quantify the benefits of using CR&D in conjunction with other instruments to deliver strategic and tactical objectives

● To ascertain the influence and impact of aligned partners and funding

● To ascertain the overall strategic value of CR&D in the role of the Technology Strategy Board and in support for innovation in the UK economy

- including examining the rationale for CR&D as per the original business case, the current validity, and whether the original business case objectives have been met

- including the additionality achieved by CR&D funding

● To identify and recommend where/how the CR&D can most effectively be used

- for example by business sector, size of business, type of collaboration, size of grant and through synergies with other programmes

4 The team included Professor Anan Hughes, Director of the Centre for Business Research at the

University of Cambridge and Director of the Innovation Research Centre, who provided advice

and assisted with the analysis.

PACEC Introduction


- identify the critical factors in creating successful projects / programmes

- identify conclusions and lessons for future CR&D application

1.2 Rationale for CR&D

1.2.1 CR&D forms part of a wider knowledge transfer and innovation support system and

by encouraging collaboration. It brings together key partners from HEIs and

businesses with a focus on projects when the CR&D competitions when held. The

interactions are underpinned by the resources from other funders including the

Research Councils, the RDAs and other funding agencies and government

departments. The innovation system, as such, extends to the network of wider

collaborators, suppliers, customers and competitors of business and those who

benefit from the diffusion and wider dissemination of information. The funding of

collaboration brings about changes in attitudes, culture, behaviour towards innovation

(through improved skills and practices for collaboration) and innovation with the

subsequent exploitation of ideas, products/services and processes. From the

increased collaboration there are potential business performance benefits (e.g. jobs,

sales, profitability and growth) reflecting the improved competitiveness of partners

(particularly businesses) which ultimately bring about net economic and social

benefits for the UK economy.

1.2.2 The logic chain for CR&D in Figure 1.1 below illustrates the rationale (reflecting

market failures and aims), the theory of change, the inputs (expenditure on CR&D),

targets, and projects (with partners). It outlines the outputs (or intermediate benefits)

that result as changes in the attitudes and the behaviour and the R&D / innovation

practices of partners. These help underpin and determine the outcomes, i.e. the

improved business performance effects, the wider spillover effects, including

environmental benefits (from technology / innovation) and social benefits from

networks, exchanges of information, and greater communication. The economic

impacts result through changes in employment, the quality of jobs, incomes and

Gross Value Added (GVA) to the national economy. The logic chain also includes

efficiency and return on investment measures for CR&D (i.e. cost effectiveness and

cost benefit ratios) and provides for lessons learnt to assist with policy development.

PACEC Introduction


Figure 1.1 TSB. CR&D Logic Chain and Economic Impacts

Policy Rationale

-Market failure: funding gap owing to the perceived risk (potentially with

excessive risk aversion) and potential returns on R&D projects for

businesses, academic partners and financiers and a lack of information on

sources of finance, coupled with a lack of understanding of business

capabilities to manage and exploit R&D successfully

-The TSB Strategy. Connect and catalyse and ensure the UK is a global

leader in innovation and magnet for innovative businesses treating societal

and economic challenges as opportunities for innovative solutions to increase

economic growth and the quality of life

Economic Impacts

-Economic benefits for the UK

-Net increase in employment

turnover and Gross Value Added

-Cost effectiveness / costs and

benefits

-Lessons and improvements in

R&D outputs and capacity

Wider Spillover Effects

-Environmental benefits from innovation technology

-Social benefits from interactions, communications, exchanges

-Complementary links with other organisations providing

funding for innovation and R&D and leverage of additional

resources to support the innovation process

-Encouragement of funders to underwrite and support

innovation and commercialisation

Outcomes

-Enhanced

technology

-Product /

process

innovations

-Improved

business, and

academic

performance

(revenue,

leverage,

turnover,

employment)

Theory of Change

CR&D funding helps

ensure businesses and

HE can undertake R&D

to explore the

technology issues and

commercial feasibility of

innovative ideas, and

develop prototypes and

products/services for the

market.

Inputs

Total funding on

CR&D for

feasibility and

larger scale

research and

development

projects including

leverage of

additional finance

Projects

Finance to support

competitions /

challenge led CR&D

to enhance research

in key field, resulting

in increased

collaboration,

technical

knowledge, ipr,

products, services

and process.

Outputs

-Clarification of

technical issues

-Feasibility of ideas

-Technical

knowledge

-Prototypes

-Products /

services

Policy Rationale

-Market failure: funding gap owing to the perceived risk (potentially with

excessive risk aversion) and potential returns on R&D projects for

businesses, academic partners and financiers and a lack of information on

sources of finance, coupled with a lack of understanding of business

capabilities to manage and exploit R&D successfully

-The TSB Strategy. Connect and catalyse and ensure the UK is a global

leader in innovation and magnet for innovative businesses treating societal

and economic challenges as opportunities for innovative solutions to increase

economic growth and the quality of life

Economic Impacts

-Economic benefits for the UK

-Net increase in employment

turnover and Gross Value Added

-Cost effectiveness / costs and

benefits

-Lessons and improvements in

R&D outputs and capacity

Wider Spillover Effects

-Environmental benefits from innovation technology

-Social benefits from interactions, communications, exchanges

-Complementary links with other organisations providing

funding for innovation and R&D and leverage of additional

resources to support the innovation process

-Encouragement of funders to underwrite and support

innovation and commercialisation

Outcomes

-Enhanced

technology

-Product /

process

innovations

-Improved

business, and

academic

performance

(revenue,

leverage,

turnover,

employment)

Theory of Change

CR&D funding helps

ensure businesses and

HE can undertake R&D

to explore the

technology issues and

commercial feasibility of

innovative ideas, and

develop prototypes and

products/services for the

market.

Inputs

Total funding on

CR&D for

feasibility and

larger scale

research and

development

projects including

leverage of

additional finance

Projects

Finance to support

competitions /

challenge led CR&D

to enhance research

in key field, resulting

in increased

collaboration,

technical

knowledge, ipr,

products, services

and process.

Outputs

-Clarification of

technical issues

-Feasibility of ideas

-Technical

knowledge

-Prototypes

-Products /

services

1.2.3 For the purposes of this evaluation the projects supported were grouped under two

headings – “enabling technology” and “market driven”. These corresponded to the

categories used by the then DTI when the first projects were started and for the latter

group focus on particular sectors where projects would be applied5.

1.2.4 The enabling technologies are:

● Bioscience

● Electronics, Photonics and Electrical Systems

● High Value Manufacturing

● Information and Communications Technology

● Advanced Materials and Micro and Nanotechnologies

1.2.5 The market application led sectors are:

● Creative Industries

● Environmental Sustainability

● Energy Generation and Supply

5 This categorisation predates the Technology Strategy Board’s later focus on challenge led and

technology capability areas and there is little or no read across to the present categories used by

the Technology Strategy Board.

PACEC Introduction


● Medicines and Healthcare

● Transport (Aerospace, Low Carbon Vehicles, Intelligent Transport Systems)

1.3 Evaluation methodology

1.3.1 In order to achieve the aims of the evaluation, an integrated and customised research

programme was undertaken which involved a desk study of CR&D reports, interviews

with CR&D staff and funding partners and stakeholders, and survey research with the

participants in a sample of CR&D projects (as well as a survey of unsuccessful

bidders to form a comparison group).

1.3.2 The guiding principles of the research were to ensure that:

● A representative cross-section of CR&D projects and participants in them was obtained together with a sufficient number of interviews to provide confidence in the information obtained

● The achieved sample of projects was broadly representative by:

- Different types of project partners (i.e. businesses and academic)

- Challenge led and technology inspired projects

- Smaller/medium and larger projects by value

- CR&D projects that have been used with other instruments / support

- Feasibility and major projects

- Projects that had been completed for two years

- The time period from 2004 to early 2009 for projects

● Interviews were held with the most appropriate participants in the CR&D projects

● The views of different participants could be compared and contrasted on similar issues in order to triangulate and confirm / corroborate the research results

● The research provided both “harder” quantitative information (through the scale of the research and percentages of respondents expressing views) and “softer” qualitative information, for example reflecting attitudinal and behavioural changes and impacts that result from participating in CR&D

1.3.3 The research programme comprised the following linked tasks:

● The inception meeting. This was held to clarify the evaluation aims and the overall methodology, identify the background reports and the contact information for partners in projects and stakeholders

As part of the inception stage there were discussions with the TSB technologists who worked on the CR&D project appraisals and implementation

● A desk study, particularly focusing on the programme rationale and the management information for CR&D, focusing on the number of projects, the partners in each, the timing of awards and grant expenditure

● Interviews with wider stakeholders to help inform the design stage and their role in CR&D

● A survey and interviews with 336 CR&D participants for projects approved in the period 2004 to 2009 (i.e. achieved interviews with 256 businesses and 80 academics). The interviews were conducted with a representative sample of partners using a structured questionnaire which was designed with the

PACEC Introduction


Steering Group and piloted before the full fieldwork. A representative sample of follow up Interviews with 30 participants was carried out to obtain more detailed information on the nature of impacts

● Interviews with a comparison group of 206 CR&D unsupported bidders. Again a representative sample was selected and interviews held using a structured questionnaire which was designed with the Steering Group and piloted before the full fieldwork

1.4 Analysis of the research results

1.4.1 The quantified analysis of CR&D is in three parts:

a Analysis of all projects and participants in CR&D, based on the management information supplied by Technology Strategy Board.

b Analysis of the 336 respondents to the participants’ survey. This was weighted to ensure that it was representative by ten sectors (five market application led sectors, and the five enabling technologies) and by type of participant (academic and business). This process of weighting slightly increases the margins of error of the survey estimates from 5.3% to 5.8% (a margin of error associated with 282 un-weighted responses). The Effective Sample Size (ESS) of 282 in cases where all respondents answered a question is shown at the foot of each table.

c Analysis of 206 respondents to the non-participants’ survey. This was weighted to ensure that it had the same characteristics as the participants’ survey. Again, the process of weighting increases the margin of error on the survey estimates, in this case from seven per cent to 10% (a margin of error associated with 91 un-weighted responses). The Effective Sample Size (ESS) of 91 in cases where all respondents answered a question is shown at the foot of each table.

1.4.2 Analysis was undertaken using the PACEC in-house survey analysis system primarily

using an enhanced SPSS system. This consisted primarily of univariate analysis6

and cross tabulations of data which are shown as tables, in the chapters which follow.

Presentationally, the following conventions are observed:

● A number is shown in bold where, taking into account the margin of error due to sampling, we are 95% certain that it is different from the number in the left hand total column (using a Chi-Squared statistical test)

● Numbers in columns are shaded where the difference between those in that particular column and those not in that column is at least 10 (yellow), 25 (orange) or 50 (red) percentage points

1.4.3 The approach to estimating the total net impacts reflects HMT and BIS guidance and

is as follows:

6 Multivariate analysis was undertaken, but no significant effects on impacts were found apart

from size, where having organisations with fewer than 200 staff were more likely to experience a

significant impact in their products and processes.

PACEC Introduction


Figure 1.2 Estimating the net impacts of CR&D

Gross attributable impacts

(i.e. changes in GVA & employment as a result of CR&D)

Less

Deadweight – counterfactual

(i.e. changes that would have happened anyway)

Equals

Gross additional impact

(i.e. effects attributable to the CR&D)

Less

Displacement

(i.e. increases in GVA/employment at the expense of competitors)

Equals

Net additional effects

(or total measurable annual economic impacts without linkages and multipliers)

Plus

Linkages and multipliers

(i.e. effects due to purchases by businesses and their staff )

Equals

Full net additional effects

(or total measurable annual economic impacts)

Multiplied by

Average duration

(in the case of GVA, how many years the effect lasts)

Equals

Cumulative net effect

(i.e. total cumulative measurable economic impact)

Source: PACEC

1.5 Structure of the report

1.5.1 Following this introduction, the following chapter characterises the CR&D projects.

Chapter 3 reports on the project participants, Chapter 4 examines the objectives of

project partners. Chapter 5 sets out the intermediate impacts on the attitudes and

behaviour of CR&D funded partners and Chapter 6 examines the business

performance impacts of CR&D and its economic impacts, including cost

effectiveness. Chapter 7 examines the wider effects. Chapter 8 examines the

additionality of CR&D, Chapter 9 presents the views on how participants assess the

scheme and potential improvements, and Chapter 10 summarises the conclusions

from each chapter.

1.5.2 The appendices show the scope of the interviews and some of the detailed results.

PACEC Characterisation of Projects


2 Characterisation of Projects

2.1 Introduction

2.1.1 This chapter summarises the management information provided by the Technology

Strategy Board. It characterises the projects by a range of variables including size

and sector of grant. This information is useful in describing the population of projects,

and ensuring that our survey results are representative of the population. The

information will also be useful in analysing the survey results to examine and test

relationships between different types of projects and their relative outcomes and

levels of success.

2.2 Management information

2.2.1 The project-characterising variables which were made available to us via the

Technology Strategy Board management information are as follows:

● Size of grant

● Sector (enabling technology, market-led, and subsectors of these)

● Size of largest single grant of each project, as a share of all grants for that project

● Number of project partners

● Number of academic project partners

● Duration of project (months)

● Grant amount as a percentage of project costs (as a proxy for stage of R&D)

2.2.2 The tables in the remainder of this chapter set out an analysis of these variables in

terms of the number of projects and the total project funding in each category (for

example, high value manufacturing has 43 projects and £28M in grant funding).

2.2.3 Data provided from the Technology Strategy Board management information system

show a total of 253 enabling technology projects qualified for, and received, different

levels of grants. In terms of their numerical strength, the dominant sectors were

advanced materials and micro and nanotechnologies (77 projects or 30% of total

number of projects) and electronics, photonics and electrical systems (70 projects or

28%). The high value manufacturing sector accounted for 43 projects (17%), the

information and communications technology sector had 34 projects (13%), and the

bioscience sector, 29 projects (11%). See Table 2.1.

2.2.4 Table 2.2 shows that the 253 projects received a total £134 million in grants. In terms

of the total amount of grants received, projects in the advanced materials and micro

and nanotechnologies sector were dominant again, and had a 28% share of the grant

funding. They were followed, in order, by the high value manufacturing (21% of grant

funding), electronics, photonics and electrical systems (21%), information and

communications technology (18%) and bioscience (12%) sectors. The table also

shows that 70% of the projects qualified for either large (£500-999k) or very large



(£1m+) grants. However, in terms of the size of funds, it was projects involving high

value manufacturing that were the recipients of the largest grants. They accounted for

more than a third (34%) of very large grants.

Table 2.1 Number of enabling technology projects by sector

Number of enabling technology projects

by grant size /£

Sector Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

High Value Manufacturing 43 12 10 13 8

Electronics, Photonics and Electrical Systems 70 21 25 22 2

Information and Communications Technology 34 5 8 14 7

Advanced Materials and Micro and Nanotechnologies 77 18 25 28 6

Bioscience 29 7 15 1 6

Total 253 63 83 78 29

Source: TSB management information, analysis by PACEC

Table 2.2 Expenditure on enabling technology projects by sector

Expenditure on enabling technology projects /£m

by grant size /£

Sector Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

High Value Manufacturing 28 2 3 9 14

Electronics, Photonics and Electrical Systems 29 3 9 15 2

Information and Communications Technology 24 1 3 10 10

Advanced Materials and Micro and Nanotechnologies 38 3 9 18 7

Bioscience 16 1 6 1 8

Total 134 10 30 53 41


2.2.5 The number of projects that had generated products (or services) with market

application (i.e. recipient market-led projects) was smaller than the enabling

technology projects. A total of 143 projects were in this category. In numerical terms,

around a third of the market application projects (52 projects or 36%) were in the

energy generation and supply sector. More than a quarter (31%) were involved in

environmental sustainability projects while one in nine (11%) were in transport, one in

seven (13%) in creative industries, and around one in ten (eight per cent) in

medicines and healthcare sector. See Table 2.3.



Table 2.3 Number of market-application projects by sector

Number of market application projects

by grant size /£

Sector Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

Medicines and Healthcare 11 1 4 6 0

Environmental Sustainability 45 13 18 12 2

Transport (Aerospace, Low Carbon Vehicles, Intelligent Transport Systems) 16 1 5 5 5

Creative Industries 19 19 0 0 0

Energy Generation and Supply 52 24 13 10 5

Total 143 58 40 33 12


2.2.6 The market application projects received a total of £61 million in grants. The energy

generation and supply projects accounted for around a third (35%) of the total grant

expenditure, followed closely by those involved with environmental sustainability

(32%). Transport projects accounted for around a fifth (22%), and medicines and

healthcare, nine per cent. Projects in the creative industries received on average

smaller grants. Although they made up more than 13% of the market-application

projects, they received two per cent of the total amount of grants given to this sector.

In terms of the size of grants, the largest beneficiaries were projects involving

transportation and energy generation and supply, which accounted for almost half of

the very large grants (£1m+).

Table 2.4 Expenditure on market-application projects by sector

Expenditure on market application projects /£m

by grant size /£

Sector Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

Medicines and Healthcare 6 0 1 4 0

Environmental Sustainability 20 2 7 8 2

Transport (Aerospace, Low Carbon Vehicles, Intelligent Transport Systems) 13 0 2 4 7

Creative Industries 1 1 0 0 0

Energy Generation and Supply 21 4 5 6 6

Total 61 7 15 23 16


2.2.7 The Technology Strategy Board management information system provided summary

data for all the projects qualifying for a grant. The 396 technology enabling and

market application projects received a combined total of £195 million in grants. Table

2.5 splits the projects into categories in order to investigate the difference between

projects with a single dominant partner receiving the majority of the funding, and

those where funds were more evenly split between more partners. The table shows

the size of the largest grant awarded to one of the project partners as a share of the



total amount received by the project. In around one in seven projects (15%), more

than 80% of the disbursed funds went to a single partner. For around a quarter

(24%) of the projects, the largest single grant was less than 40% of the total amount

of funding disbursed.

Table 2.5 Number of projects by the share of funding taken up by the largest grant

Number of projects

by grant size /£

Size of largest grant / total grants Total

Small (<250k)

Medium (250-499k)

Large (500-999k)

V Large (1m+)

Less than 40% 96 6 30 41 19

40-59% 156 46 56 41 13

60-74% 85 35 21 23 6

80%+ 59 34 16 6 3

Total 396 121 123 111 41


2.2.8 Table 2.6 shows how much of the total expenditure on projects was allocated to each

type of funding distribution – that is, those with one partner receiving more than 80%

of the funding, those where the largest grant was less than 40% of the total, and so

on. The figures show that a third of the total amount of grants went to projects where

the largest partner grant was less than 40% of the total funding. Slightly more than a

third went to projects with the largest partner receiving between 40-59% of funding;

around a fifth (21%) to those with a partner receiving 60-74% of funding; and one in

ten (nine per cent), to those with a partner receiving 80% or more of funding. It is

notable that larger projects were less likely to have a single partner receiving 80% of

the funding and were more likely to have a wider and/or more even distribution

between partners where the largest grant was less than 40% of the total.

Table 2.6 Expenditure on projects by the share of funding taken up by the largest grant

Expenditure on projects /£m

by grant size /£

Size of largest grant / total grants Total

Small (<250k)

Medium (250-499k)

Large (500-999k)

V Large (1m+)

Less than 40% 65 1 11 27 25

40-59% 72 6 20 28 17

60-74% 41 5 8 16 12

80%+ 18 4 6 4 4

Total 195 17 45 75 57


2.2.9 Collaborative research and development forms part of the wider transfer and

innovation system and within it brings together key partners from higher education

institutions and businesses that interact on different projects. The Technology

Strategy Board management information system provided data which showed the



level of collaboration on the 396 projects. As can be seen from Table 2.7, one in six

projects (18%) was a collaboration involving two partners. Just over a fifth (23%)

involved three partners, and a similar proportion (20%) involved four partners.

Approximately one-fifth (19%) involved five or six partners, and an identical proportion

was a collaboration with seven or more partners.

Table 2.7 Number of projects by number of partners per project

Number of projects

by grant size /£

Number of partners Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

2 72 (18%) 42 16 11 3

3 90 (23%) 38 26 21 5

4 80 (20%) 18 30 28 4

5,6 77 (19%) 13 32 23 9

7+ 77 (19%) 10 19 28 20

Total 396 121 123 111 41


2.2.10 There was a linear relationship between the number of partners on each project and

the amount of grants disbursed to the project, with larger grants going to projects with

more partners. Thus, for example, projects involving only two partners received about

a tenth of the £195 million disbursed. By comparison, the projects with seven or more

partners received around a third of the total amount of grant disbursed. See Table

2.8.

Table 2.8 Expenditure on projects by number of partners per project


by grant size /£

Number of partners Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

2 22 6 6 7 4

3 35 5 9 14 7

4 38 3 11 19 6

5,6 42 2 12 16 12

7+ 58 1 8 19 29

Total 195 17 45 75 57


2.2.11 Table 2.9 shows that more than two-thirds of the projects (69%) were collaborative

ventures involving one or more academic partners. Indeed, around half of the 396

projects were collaborations with a single academic partner. The table also shows

that projects involving academic partners tended, on the whole, to receive larger

grants.



Table 2.9 Number of projects by number of academic partners per project

Number of projects

by grant size /£

Number of academic partners Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

None 121 (31%) 60 35 17 9

One 195 (49%) 56 70 60 9

More than one 80 (20%) 5 18 34 23

Total 396 121 123 111 41


2.2.12 In terms of the amount of grant disbursed, Table 2.10 shows that projects involving

academic partners accounted for almost four-fifths (78%) of the total going to all

projects. The pattern observed earlier (in Table 2.9), of the award of larger grants to

projects involving academic partners, is seen demonstrated more clearly here. It is

particularly noticeable that projects with more than one academic partners accounted

for three-fifths of the largest recipients (i.e. more than £1 million).

Table 2.10 Expenditure on projects by number of academic partners per project


by grant size /£

Number of academic partners Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

None 44 7 13 11 12

One 85 9 25 40 11

More than one 66 1 7 25 34

Total 195 17 45 75 57


2.2.13 The majority of the projects have been operating for at least two years. Table 2.11

shows that more than two out of five (44%) have been established for three years or

more. Here, too, there appeared to be a near-linear relationship between the duration

of the project and the size of grant received; such that the older the project, the larger

the size of the grant.



Table 2.11 Number of projects by duration of projects in months

Number of projects

by grant size /£

Duration /month Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

1-23 60 (15%) 44 11 5 0

24 54 (14%) 28 16 10 0

25-35 108 (27%) 31 45 27 5

36 63 (16%) 9 19 23 12

>36 111 (28%) 9 32 46 24

Total 396 121 123 111 41


2.2.14 Table 2.12 shows the expenditure on the projects, according to how long each has

been established. The table confirms the earlier observation of a direct relationship

between the age of the project and the amount of grant received. More than 60% of

the £195 million went to projects that were three years or older. By comparison,

projects that were two years or younger received less than a fifth (14%) of the grants

awarded.

Table 2.12 Expenditure on projects by duration of projects in months


by grant size /£

Duration /month Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

1-23 10 (5%) 4 4 3 0

24 17 (9%) 4 6 7 0

25-35 46 (24%) 5 16 18 6

36 41 (21%) 2 7 16 16

>36 80 (41%) 2 12 32 35

Total 195 17 45 75 57


2.2.15 Lastly, in this section, the Technology Strategy Board management information

system provided data about the contribution that grants made towards projects costs.

As can be seen from Table 2.13, the grants received made significant contributions

towards the costs associated with the projects. Indeed, two-thirds of the projects

(67% or 264 projects) had half or more of their costs covered by the grant they

received.



Table 2.13 Number of projects by Grant as share of project costs

Number of projects

by grant size /£

Grant as share of project costs Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

Under 40% 69 (17%) 34 19 11 5

40-49% 63 (16%) 18 23 16 6

50% 163 (41%) 48 54 43 18

51-74% 91 (23%) 20 22 38 11

75%+ 10 (3%) 1 5 3 1

Total 396 121 123 111 41


2.2.16 Table 2.14 shows more clearly that 40% of the total amount of grant disbursed, was

won by projects in which grants formed half (50%) of the share of project costs. More

than a quarter (27%) of total grants, accounted for between 50% and 75% of the

share of the costs associated with the projects.

Table 2.14 Expenditure on projects by Grant as share of project costs


by grant size /£

Grant as share of project costs Total Small

(<250k) Medium

(250-499k) Large (500-

999k) V Large (1m+)

Under 40% 29 4 7 8 10

40-49% 31 3 8 11 8

50% 78 7 20 29 22

51-74% 52 3 8 25 15

75%+ 6 0 2 2 1

Total 195 17 45 76 57


PACEC Project Participants


3 Project Participants

PACEC undertook survey research with participants in a sample of successful

collaborative research and development projects, as well as unsuccessful bidders,

who formed a comparison group. Following the initial interviews, in-depth follow-up

case study interviews were also conducted with a subset of the successful bidders to

further examine the issues. This chapter presents the evidence from the survey

research. The description of the survey results follows the main topic areas covered

by the questionnaire.

3.1 Project details

3.1.1 PACEC completed interviews with respondents from a sample of more than 300

projects, which resulted in 336 useable responses. This section provides details

about the projects included in the survey. Responses are weighted to be

representative of the population by the ten sectors (five market application led

sectors, and the five enabling technologies) and by type of participant (academic and

business).

3.1.2 Almost three-quarters of the respondents (73%) indicated that the lead partner was

the main initiator of the project. See Table 3.1.

Table 3.1 The main initiator of the project was the lead partner

Percentage of all respondents (by Competition and Sector)

Recipient

All

Recipient Enable Tech

Recipient Market

Led Recipient Business

Recipient Academic

Non Recipient

All

Yes 73 75 70 75 66 79

No 22 19 28 20 29 9

Don’t know 5 6 3 5 5 12

Number of respondents (ESS*) 281 171 114 215 67 90

Source: PACEC CR&D survey (Q1A) – see section 1.4 for explanation of ESS, Bolding and Shading

3.1.3 By far the largest input of the respondent organisations to their projects was the

application of research. The contribution of almost three out of every five

organisations (59%) to the project was in the form of applied research. The other

input of note was product development, with one in six respondents citing this. Basic

research accounted for around a tenth of the overall input from the respondent

organisations. The disaggregated data, which is presented in Table 3.2, shows that,

not surprisingly, there was significant disparity between the academic and non-

academic organisations in their contribution of applied research to projects, with

academic recipients (78%) one-and-a-half times more likely than business recipients

(53%), to make such input to the collaborative partnership. On the other hand,

business recipients were more likely than academic recipients to contribute

significantly more towards product development.



Table 3.2 The nature of input to the collaborative partnership


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Basic research 9 10 9 8 15 10

Applied research 59 63 51 53 78 55

Product development 16 14 21 21 1 16

Commercialisation 2 1 2 2 0 4

Other 14 12 17 16 6 14

Number of respondents (ESS) 282 171 114 215 67 91

Source: PACEC CR&D survey (Q2) – see section 1.4 for explanation of ESS, Bolding and Shading

3.1.4 The case study interviewees were asked whether they had collaborated with their

partners prior to the competition, or if participation in the competition had led to

collaboration. In 41% of cases, collaboration led to competition entry; in 34% of

cases, competition led to collaboration. 16% of case study interviewees stated that

there was a mixture of pre- and post-competition collaboration, and nine per cent did

not recall. Statistically significant differences between pre-and post-competition

collaborators will be commented upon in the text below.

3.1.5 The survey explored relationships between the project partners. Table 3.3 shows that

the overwhelming majority of the respondents described the level of collaboration

between the partners as either significant (45%) or high (36%). With one in seven

respondents (16%) describing the level of collaboration as moderate, it is notable that

only few (three per cent) indicated that collaboration was low. Success in winning a

grant was also associated with good partnership. Responses from the control group

which had not received funding indicated weak collaboration with partners. Around

half of non-recipients (48%) suggested there was very low level collaboration

between the partners on their projects, and around two-fifths (39%), that the level (of

collaboration) was only moderate.

Table 3.3 Level of collaboration between the partners


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Significant 45 47 42 44 50 4

High 36 35 38 37 35 9

Moderate 16 15 17 17 12 39

Low 3 3 2 3 3 48



3.1.6 The case study interviewees were asked the ways in which partners had

collaborated. The most common forms of collaboration were sharing technical/R&D

skills (88% of respondents) and performing agreed tasks (81%), with sharing of



research and equipment also undertaken by 75% of respondents. Sharing of

commercialisation skills was less common, but was still reported by over half (56%) of

case study interviewees.

3.1.7 Among these forms of collaboration, the most important to success was seen as

sharing technical/R&D skills. This was reported as being critical to success by 63%

of case study respondents. There was a significant difference of opinion between

pre- and post- competition collaborators; only 36% of case study interviewees that

had entered the competition pre-collaboration viewed the sharing of technical and

R&D skills as critical to success, as against 69% of post-competition collaborators.

3.1.8 88% of case study firms viewed the relationship between the lead partner and other

partners in the project as “very good”, and the remainder viewed it as “good”.

3.2 Company background

3.2.1 Around half (51%) of the participating organisations described their status at the time

the project started, as independent businesses with no subsidiaries. Just over a fifth

(22%) were academic or higher education institutions. Fewer than one in ten (seven

per cent in each case) indicated they were either an independent business with

subsidiaries, a subsidiary of a UK owned business, or a subsidiary of an overseas

owned business. However, there was hardly any difference between the recipients

and non-recipients included in the survey, with regard to their status or ownership.

See Table 3.4.

Table 3.4 Status of partner organisation at the time the project started


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Independent business with no subsidiaries 51 49 56 65 0 47

Independent business with subsidiaries 7 8 5 9 0 5

Subsidiary of a UK owned business 8 7 9 10 0 6

Subsidiary of an overseas owned business 7 6 8 9 0 10

Joint venture 1 1 0 1 0 0

Associated company 1 1 0 1 0 2

Not trading / not yet a business 5 4 6 6 0 9

Academic institution 22 24 17 0 100 22


Source: PACEC CR&D survey (b4A1) – see section 1.4 for explanation of ESS, Bolding and Shading

3.2.2 There was only a slight change in the status of the respondent organisations at the

time of the survey, compared with the start of the project. The most notable change

was in the proportion of businesses with no subsidiaries, which had fallen slightly,

from 51% to 45%. But there was a corresponding increase in the number of



organisations indicating they were a subsidiary of overseas owned business (from

seven per cent at the start of the project to 11% currently). The changes in the status

of the other ownership types were marginal, and were reflected generally across both

competition (recipient business and academic) and sector (enabling technology or

market led). See Table 3.5.

Table 3.5 Current status of partner organisation


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Independent business with no subsidiaries 45 43 49 57 0 47

Independent business with subsidiaries 8 9 7 11 0 5

Subsidiary of a UK owned business 7 6 8 9 0 6

Subsidiary of an overseas owned business 11 10 13 14 0 10

Joint venture 1 1 0 1 0 0

Associated company 1 2 0 2 0 2

Not trading / not yet a business 5 5 6 7 0 9



Source: PACEC CR&D survey (b4A2) – see section 1.4 for explanation of ESS, Bolding and Shading

3.2.3 The majority of the recipient organisations at the start of the project were SMEs.

Around a fifth (19%) of them were micro businesses with fewer than ten employees.

One in seven (15%) employed 10-24 people, and more than a quarter (29%),

between 25 and 199 people. However, more than a third (35%) were large

organisations with more than 200 employees. There were significant differences in

the size between the sector and competition types. Organisations engaged in

enabling technology projects (39%) were more likely than those engaged in market

led projects (28%) to be large; and so were recipient academic institutions (55%),

compared with recipient businesses (30%). There was little difference, in terms of

size, between the recipient and non-recipient organisations. See Table 3.6.



Table 3.6 Employment in the partner business/dept at the start of the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

None 0 0 0 0 0 0

1-4 11 10 14 11 11 13

5-9 8 6 14 10 3 8

10-24 15 17 13 19 4 19

25-199 29 28 32 30 27 23

200+ 35 39 28 30 55 38


Source: PACEC CR&D survey (Q5A1) – see section 1.4 for explanation of ESS, Bolding and Shading

3.2.4 Very few of the participating organisations (four per cent) indicated that they did not

have any employees engaged in research and development (R&D) at the start of the

project. It is interesting to note from Table 3.7 that the smaller organisations had

higher proportions of employees engaged in R&D. For example, almost two-fifths of

the organisations indicating they had R&D staff were micro businesses with 1-4

employees. The rest of all the recipient organisations employed near-identical

proportions of R&D staff. The disaggregated data show further that recipient market

led organisations (48%) were more likely than enabling technology ones (30%) to

employ R&D staff. With regard to sector, the larger recipient academic organisations

were more likely than their recipient business counterparts to have employees

engaged in R&D.

Table 3.7 R&D employment at the start of the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

None 4 4 4 5 0 10

1-4 36 30 48 37 33 44

5-9 15 14 15 18 4 18

10-24 15 18 10 17 11 5

25-199 15 18 10 12 28 8

200+ 14 16 11 11 24 15



3.2.5 More than half of the businesses (55%) started trading before 2000, and around a

fifth (21%), after that date. The remaining 24% were academic institutions. As can be

seen from Table 3.8, recipient market led businesses were much younger than those

engaged with enabling technology. On the whole, the non-recipient businesses (the

comparison group) were older than the recipient businesses.



Table 3.8 Date business started trading


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Pre 2000 business 55 57 52 73 0 63

Post 2000 business 21 16 30 27 0 12



Source: PACEC CR&D survey (B6group) – see section 1.4 for explanation of ESS, Bolding and Shading

3.2.6 Table 3.9 shows the main areas of business the recipients were engaged in. Just

over two-fifths (42%) were involved in different types of production, including

extraction, manufacturing and engineering. More than a quarter (30%) were engaged

mainly in R&D activities, and a little under a fifth (18%) provided mainly business

services. Just over one in ten (11%) were in education. The disaggregated data show

that the recipient market led organisations were more likely than enabling technology

ones to be in production. Perhaps not surprisingly, the recipient academic

organisations were significantly more likely than recipient businesses to be involved

mainly in R&D. The full range of activities of the recipient businesses are shown in

Table 3.10 (below).

Table 3.9 Main product or service of organisation (summary)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Production 42 37 51 53 1 41

R&D 30 33 23 24 50 36

Education 11 12 9 1 48 2

Services 18 18 17 22 1 21


Source: PACEC CR&D survey (B7group) – see section 1.4 for explanation of ESS, Bolding and Shading



Table 3.10 Main product or service of organisation (detail)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Extraction (Oil, Gas) 3 1 5 3 0 1

Man: food, drink, tobacco 0 0 0 0 0 1

Man: textiles, leather, shoes, clothing 3 2 5 4 0 4

Man: wood, paper; Publishing 0 0 0 0 0 0

Chemical manufacture 6 4 9 7 1 11

Metals & mechanical engineering 5 4 6 6 0 6

Man: office machinery 0 0 1 0 0 0

Man: electrical machinery 6 6 6 8 0 1

Man: comms equip (radio, TV) 1 1 0 1 0 0

Man: instruments (medical & other) 5 6 4 7 0 2

Man: transport 3 3 3 4 0 1

Man: Other (furniture, games, recycle) 5 5 5 7 0 5

Electricity, gas, water, waste 3 1 5 3 0 1

Construction 2 2 2 3 0 6

Wholesale & Retail 1 0 1 1 0 2

Transport, storage, comms 1 1 1 1 0 2

Property, renting 1 0 1 1 0 0

Computing 4 4 6 6 0 2

R&D 30 33 23 24 50 36

Business services 10 11 9 13 1 10

Public admin, defence 1 1 1 1 0 3

Education 11 12 9 1 48 2

Health, care 0 0 0 0 0 0

Personal services 0 0 0 0 0 2


Source: PACEC CR&D survey (B7A) – see section 1.4 for explanation of ESS, Bolding and Shading

3.2.7 The survey explored the origins of the recipient organisations. As can be seen in

Table 3.11, one in five businesses were either a spin-off from an existing business

(nine per cent) or a spin out from a university or college (four per cent), or the result

of a merger or acquisition of an existing business (four per cent), or a management

buy-out (three per cent).

3.2.8 Table 3.12 shows the national geographical origins of recipient businesses. The

overwhelming majority of the recipients were located in England. Only a handful of

the recipients were from Scotland (six per cent), Wales and Northern Ireland (one per

cent each). There was, at the same time, some variation in the geographical spread

of recipients across the English regions. Around a quarter of all the recipient

businesses (26%) were from the Midlands, and a fifth (20%) were from the South

East region. Approximately one in ten recipients each came from London (11%), the



North West (11%) and the Eastern (nine per cent) regions. The North East (three per

cent) had the fewest recipients, followed by Yorkshire & the Humber (five per cent),

and the South West (seven per cent).

Table 3.11 Origin of the organisation


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Spin-off from an existing business 7 7 6 9 0 1

Merger / purchase of existing firm 3 3 3 4 0 0

Management buy-out / buy-in 2 2 2 3 0 0

Spin out from a university / college 3 3 4 4 0 1

Other completely new start-up 53 51 58 69 0 67

Other business 9 8 10 11 0 7



Source: PACEC CR&D survey (B7B) – see section 1.4 for explanation of ESS, Bolding and Shading

Table 3.12 Location of the collaborating part of the business/HEI


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

South East 20 21 18 20 18 12

Eastern 9 13 3 11 2 11

Greater London 11 11 11 11 13 11

South West 7 7 7 8 2 9

West Midlands 11 10 12 10 15 19

East Midlands 15 15 16 14 20 17

Yorkshire & the Humber 5 4 8 5 7 4

North West 11 9 16 12 9 10

North East 3 4 3 3 7 1

Wales 1 1 0 1 0 0

Scotland 6 5 6 6 6 6

N Ireland 1 1 0 0 2 0



3.2.9 The survey further explored the wider geographical coverage of the recipient

businesses. As can be seen from Table 3.13, the majority of the recipients operate

very locally, with just under two-thirds (65%) indicating they had sites in their region

only. However, it is also notable that just over one in five (21%) were truly

international businesses, and had global operations well beyond the UK and Europe.



Table 3.13 Geographical coverage of the organisation


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

This region/country only 65 64 66 54 100 65

Across England 3 2 5 4 0 2

Across UK 6 6 6 8 0 7

Across Europe 5 5 4 6 0 1

Global 21 22 19 27 0 25


Source: PACEC CR&D survey (B9) – see section 1.4 for explanation of ESS, Bolding and Shading

3.2.10 The survey research continued to build up a profile of the recipient businesses by

exploring their overall growth objectives both at the time the project started and at the

time of the interviews. Table 3.14 shows that at the start of the project, the majority of

the recipients (68%) were looking to grow only moderately. Just under one in five

(17%), though, were more ambitious, and were looking to grow significantly. One in

ten (10%) expected to stay the same, at least in the short term. It is notable that none

of the recipients expected to grow any smaller than what they were at the start of the

project.

Table 3.14 Overall growth objectives of the business / HEI department at the time the project started


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Grow smaller 0 0 0 0 0 2

Stay same size 10 13 6 10 11 14

Grow moderately 68 65 73 68 69 73

Grow significantly 17 16 19 19 3 7

Not applicable 5 6 2 3 17 4


Source: PACEC CR&D survey (B10A1) – see section 1.4 for explanation of ESS, Bolding and Shading

3.2.11 Table 3.15 shows that the relative positions of the recipients had altered only slightly

at the time of the survey. The sizeable majority, of just under two-thirds (62%,

compared with 68% at the start), still expected to grow moderately, while

approximately one fifth (19%, compared with 17% at the start) had much higher

ambitions, and expected to grow significantly. One in seven (14%, compared with

10%), now wanted to stay the same size. The disaggregated data show some

changes in the relative positions of different types of recipients. It is notable in

particular that recipient enabling technology businesses (17%) were significantly

more likely than market led ones (seven per cent) to now expect to stay the same

size. Recipient business organisations (22%) were also more likely than recipient

academic institutions (four per cent) to express the desire to grow significantly.



Table 3.15 Current overall growth objectives of the business / HEI department


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Grow smaller 0 0 1 0 0 0

Stay same size 14 17 7 13 20 19

Grow moderately 62 58 69 61 64 72

Grow significantly 19 19 20 22 1 5

Not applicable 5 6 3 4 14 4



3.2.12 Irrespective of their objectives for growth, the survey results suggest that at the start

of the scheme, the recipients were convinced that their projects were important to the

R&D activities of their respective organisations. As can be seen from Table 3.16,

three-fifths (60%) indicated the project was either critical (16%) or very important

(44%) to them, while more than a third (35%) described the project as quite

important. Only a few recipients (five per cent) did not think the project was important

in any way to their R&D activities. Looking at the results more widely, it is notable that

the non-recipients (25%) were significantly less likely than recipients (44%) to indicate

that the project was very important to R&D in their organisation. But they were

significantly more likely than recipients to say their projects were quite important for

their R&D activities.

Table 3.16 Extent to which the project was important to the organisation’s R&D/innovation activities at start of the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Critically 16 16 16 17 8 8

Very 44 46 40 41 61 25

Quite 35 32 40 36 26 50

Not at all 5 6 4 5 5 17



3.2.13 Compared with the importance to R&D activities (see Table 3.16 above), the

importance of the project to the organisation’s growth was slightly smaller. Fewer

than half of the recipients (45%) indicated that the project was either critical (10%) or

very important (35%) to their organisation’s growth. Two-fifths (41%) of recipients

thought the project was quite important. However, more than one in ten (13%) were

certain that the project was not at all important to the growth of their organisation. See

Table 3.17.



Table 3.17 Extent to which the project was important to the organisation’s growth


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Critically 10 10 11 11 9 7

Very 35 37 33 36 28 29

Quite 41 39 43 42 31 45

Not at all 13 14 13 12 32 20



3.3 Further collaboration

3.3.1 66% of case study interviewees are collaborating with at least some of their partners

on a continuation of their project, and 13% are collaborating with all the partners.

Those partners who started collaborating after entry into the competition are far more

likely to be working with their partners on a continuation of the project; 91% are doing

so, as against 38% of partners whose collaborative activity took place before the

competition. This is a rather striking result – it may be that the competition tended to

forge longer-lasting partnerships, but part of the explanation for the result may simply

be that partnerships tend to have a characteristic length, and the ones which started

earlier may be more likely to finish earlier.

3.3.2 44% of case study interviewees are collaborating with at least some of their partners

on a new project. Six per cent have involved all their partners in a new project. 84%

view their relationships with other partners as “very good”, and the remainder as

“good”.

3.3.3 53% of case study interviewees stated that their project has made them “much more

likely” to engage in future collaboration, and 31% stated that collaboration was “more

likely”. 13% stated that there had been no change in their likelihood to collaborate,

and only three per cent felt that future collaboration had become less likely as a result

of the project.

PACEC Objectives of Project Partners


4 Objectives of Project Partners

4.1.1 The survey sought to find out more about why the recipient organisations and their

partners took part in the projects, and why they had also sought funding from the

CR&D scheme. They were asked, first, about their objectives in participating in the

project, i.e. what they wanted to achieve by taking part. Those objectives were

grouped under specific areas of business activity, including costs, R&D collaboration,

innovation and skills processes, the application of technology, development of

products and processes, and anticipated final outcomes. Table 4.1 provides a

summary of the responses, and shows that all the delineated areas of business

activity were quite important for the vast majority of recipients.

Table 4.1 Overall objectives in participating in the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Costs 80 79 80 80 78 79

R&D Collaboration 80 80 81 82 75 46

Innovation / R&D skills and processes 82 81 85 85 74 56

Technological applications 88 88 89 87 91 69

Products and processes 89 88 91 91 82 77

Final overriding objectives 68 63 78 73 52 20


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q12A) – see section 1.4 for explanation of ESS, Bolding and Shading

4.1.2 The breakdown of these overall objectives is explored in detail. With regard to costs,

shown below, almost three-quarters of the recipients indicated they wanted to share

the risk of their investment in R&D. But almost two-fifths (38%) wanted to use the

project to lever in other private sector finance to help the development of the project.

This was particularly true of the market led projects. The disaggregated data show

that, on the whole, the non-recipient businesses were less likely than recipients to

use the scheme to share the risk of investment in R&D, and significantly less so to

lever in other private sector finance. See Table 4.2.

Table 4.2 Cost objectives of the organisation


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Costs (any) 80 79 80 80 78 79

Share risk of R&D investment 73 72 76 75 68 64

Lever in finance 38 36 42 38 36 17

Other 2 2 2 2 2 0





4.1.3 The recipients’ motivation for R&D collaboration varied widely, although five factors

stood out. More than half (55%) wanted to use the scheme to access technical and

other research and development skills. Over two-fifths (44%) thought it would enable

them to strengthen collaborative activity with other businesses, and approximately a

third (32%), collaborative activity with higher education institutions. Just over a

quarter (28%) hoped collaboration would provide them access to leading edge

research, and about one in five (19%), access to equipment and research

infrastructure. Table 4.3 sets out the range of factors influencing R&D collaboration.

Table 4.3 Factors influencing R&D collaboration


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

R&D Collaboration (any) 80 80 81 82 75 46

Access commercialisation skills 13 16 7 13 10 3

Access technical / R&D skills 55 54 56 60 35 30

Access leading edge research 28 29 25 30 19 7

Access equipment and research infrastructure 19 19 19 22 10 3

Strengthen collaborative activity with businesses 44 47 38 42 50 10

Strengthen collaborative activity with HEIs 32 30 35 36 18 5

Improve HEI enterprise/entrepreneurial curriculum 8 7 8 3 24 0

Provide placements/sponsorship for research students 5 5 7 2 17 1

Change business model 2 2 3 3 0 0

Other 5 4 7 5 4 0


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q12B) – see section 1.4 for explanation of ESS, Bolding and Shading

4.1.4 Table 4.4 shows the objectives of the recipients for innovation and other skills and

processes. Here, the dominant motivation of the majority (64%) was the need to

improve their technical skills. This was followed by the desire to enhance knowledge

transfer across the business or education institution (51%), and to improve their

technical knowledge and understanding. Two-fifths of the recipients (40%) wanted to

use the project to improve the culture of their organisation towards overall

collaboration, and around a third (34%), to improve their innovation culture in

particular.



Table 4.4 Innovation/R&D skills and process objectives


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Innovation / R&D skills & processes (any) 82 81 85 85 74 56

Improve commercialisation skills 13 12 14 13 12 1

Improve technical /R&D skills 64 63 68 66 58 44

Improve technical knowledge / understanding 49 50 47 52 39 20

Enhance equipment & research infrastructure 14 14 15 14 15 4

Enhance knowledge transfer across the business/HEI 51 51 50 50 52 25

Improve collaboration (culture/capability) 40 38 42 41 33 4

Improve innovation culture/capacity 34 31 40 35 32 2

Other 1 1 0 1 0 0


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q12C) – see section 1.4 for explanation of ESS, Bolding and Shading

4.1.5 The principal objective of the recipients regarding the application of technology was to

develop new scientific or technical knowledge applications. Almost two-thirds of all

recipients (64%) cited this. More than half (55%) were less specific, but indicated they

wanted to use the project more generally to explore the application of different

technologies. Other recipients were more specific in their intent, and around half

(49%) were looking to use the project to investigate the technical feasibility of ideas,

and around a quarter (24%), to investigate the commercial feasibility of an idea. See

Table 4.5.

Table 4.5 Technological application objectives


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Technological applications (any) 88 88 89 87 91 69

Produce new scientific/technical knowledge 64 68 58 60 80 57

Explore the application of technologies 55 58 50 52 65 48

Investigate the technical feasibility of an idea(s) 49 48 49 48 51 16

Investigate the commercial feasibility of an idea 24 26 20 25 18 12

Other 1 1 2 1 2 0


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q12D) – see section 1.4 for explanation of ESS, Bolding and Shading



4.1.6 Two factors stood out in particular, with regard to the recipients’ objectives for

products and processes. Three-fifths (59%) of all recipients indicated they wanted to

use the project to develop new products or services, but almost half (48%) suggested

they wanted to use the project to reduce the environmental impact of existing

practices and activities. The other important factors, mentioned by at least a fifth of

the recipients were developing new processes (26%), making a positive social impact

(23%), and improving existing products or services. See Table 4.6.

Table 4.6 Product and process objectives


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Products and processes (any) 89 88 91 91 82 77

Develop new product/service(s) 59 57 63 59 60 51

Improve existing product/service(s) 22 24 17 24 14 24

Develop new process(es) 26 26 24 26 24 27

Improve existing process(es) 12 13 8 12 11 12

Reduce environmental impact 48 47 51 50 41 37

Have a positive social impact 23 22 24 24 20 22

Meet regulatory requirements 12 12 14 12 15 12

Other 1 0 1 1 0 1


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q12E) – see section 1.4 for explanation of ESS, Bolding and Shading

4.1.7 On the whole, the partners were less definitive about having a specific final or

overriding objective for participating in the project. Instead, they hoped participation

would help them achieve a number of specific goals. Around one in three hoped that

the project would help them increase the value of their business (37%); improve the

image and reputation of their business or academic institution (34%); enter new

markets or increase their market share (30%). About one in four hoped participation

would help them to increase their turnover (26%), or increase their profits (24%) and

one in five (21%) to increase employment. See Table 4.7.



Table 4.7 The final objectives of the organisation


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Final objectives (any) 68 63 78 73 52 20

Start up a spin-off business 2 2 3 2 2 0

Position the bus/HEI for merger acquisition 2 2 2 2 1 3

Enter new markets or increased market share 30 29 33 37 7 2

Increase export sales (or start exporting) 12 12 11 14 2 1

Increase income from intellectual property 17 15 21 18 11 1

Increased publications 13 13 11 8 30 2

Improve the image/reputation of the Bus/HEI 34 32 37 35 31 3

Reduce costs per unit produced / provided 6 6 6 7 3 0

Increase turnover 26 25 28 32 6 5

Increase employment 21 20 23 25 8 4

Increase profitability 24 24 25 30 3 5

Increase value of the Bus/HEI 37 35 41 40 25 2

Other 19 15 25 21 11 2


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q12F) – see section 1.4 for explanation of ESS, Bolding and Shading

4.1.8 In order to get a better perspective of the importance of CR&D funding to recipients

achieving their objectives in the areas of business activity (examined above), the

survey explored the barriers that had prevented them from pursuing those objectives

in the first place. Table 4.8 presents a summary of the factors that recipients identified

as significant barriers. It is clear from the figures that cost was by far the most

important barrier the recipients faced. More than two-thirds of the respondents (68%)

indicated cost was a significant constraint. The issues of collaboration (14%),

development and transfer of knowledge (nine per cent), skills (seven per cent) and

markets (four per cent) were far less significant barriers.



Table 4.8 Barriers to objectives prior to CR&D grant (summary)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Cost 68 69 66 70 62 80

Collaboration 14 14 16 15 12 7

Knowledge 9 10 8 11 4 4

Skills 7 6 8 8 2 1

Market 4 5 4 5 3 2

Other 12 13 11 11 15 11

None 10 10 11 10 12 9



4.1.9 Table 4.9 sets out the barriers mentioned by recipients in greater detail. The

particular areas of cost worth noting were those relating to R&D or innovation in

general (51%), and to a lesser extent, access to finance and the economic risk of

undertaking the project itself. The main issues about collaboration related to

recipients establishing good relationships with businesses and higher education

institutions.



Table 4.9 Barriers to objectives prior to CR&D grant (detail)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Cost of finance 12 11 15 13 9 10

Cost of R&D / innovation 51 52 48 52 46 41

Access to finance 15 15 13 14 18 42

Economic risk 10 9 13 11 7 9

Collaboration with businesses 13 12 15 14 12 6

Collaboration with HEIs 7 7 6 7 5 1

Technical challenge 9 9 8 10 4 3

Leading edge research 2 2 2 2 1 1

Ability to arrange IPR 1 1 1 1 1 0

Commercialisation skills 1 1 1 0 2 0

Technical / R&D skills 6 5 7 7 1 1

Equipment, research infrastructure 2 2 1 2 0 0

Meeting UK/EU regulation 0 0 0 0 1 0

Other priorities of the Bus/HEI 3 3 3 4 1 1

Competitor products/services/processes 0 0 0 0 0 0

Low/uncertain demand for products/services 1 1 1 1 1 1

Other 12 13 11 11 15 11

None 10 10 11 10 12 9



4.1.10 The importance of CR&D funding can be gauged from the fact that only one in six

recipients (16%) had sought alternative funding before applying for a grant from the

scheme. See Table 4.10.

Table 4.10 Organisation sought alternative funding before the CR&D grant


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Yes 16 15 18 17 13 n/a

No 74 73 76 74 75 n/a

Don't recall 10 12 6 9 13 n/a

Number of respondents (ESS) 278 169 112 212 66 n/a


4.1.11 Those who had sought any alternative funding at all, had relied mostly on their

organisation’s own finances (13%), grants and funding from research councils (13%),

and finance from venture capitalists, either as loans (11%) or equity (11%). See

4.1.11.



Table 4.11 Type of alternative funding to CR&D sought


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Internal Funding 13 15 11 15 6 n/a

Bank loan 5 0 12 7 0 n/a

Bank loan with Small Firms Loan Guarantee 5 7 3 6 0 n/a

Other businesses: equity / share capital 5 6 3 6 0 n/a

Other businesses: loan 3 6 0 4 0 n/a

Business angel finance: equity / share capital 6 7 6 8 0 n/a

Business angel finance: loan 7 3 12 8 0 n/a

Venture capital finance equity / share capital 11 10 13 13 0 n/a

Venture capital finance loan 11 10 13 13 0 n/a

KTN (Knowledge Transfer Network) 3 0 7 0 20 n/a

KTP (Knowledge Transfer Partnership) 3 3 3 4 0 n/a

R&D Tax credit 0 0 0 0 0 n/a

GRD (Grant for Research and Development) 1 2 0 0 6 n/a

Other RDA funding (Please specify below) 5 0 12 6 0 n/a

Research Council funding 13 19 6 5 54 n/a

Hire purchase / lease finance 0 0 0 0 0 n/a

Trade credit (from suppliers / customers) 0 0 0 0 0 n/a

Other 43 48 36 44 35 n/a



4.1.12 On the whole, the respondent organisations that had not sought alternative funding

were less specific about the reasons for not doing so, hence the large proportion

responding with “other” (74%). Among those who provided any specific reasons,

about one in seven (14%) claimed they were not aware of any sources of finance for

that purpose. Just eight per cent did not think they could obtain funding for their

project from elsewhere. See Table 4.12.



Table 4.12 Reason for not seeking alternative funding to CR&D


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Did not think it would be obtained 8 8 9 10 1 n/a

Previous difficulties in obtaining finance 4 5 1 4 2 n/a

Not aware of any sources of finance 14 16 12 15 11 n/a

Able to manage without other finance 5 4 6 5 7 n/a

Unsatisfactory terms were likely 0 0 1 0 2 n/a

The funding was too risky 0 0 1 0 0 n/a

Wanted to stay independent 3 2 4 3 0 n/a

High cost of finance 3 1 6 2 6 n/a

Other 74 77 70 75 73 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (Q14C) – see section 1.4 for explanation of ESS, Bolding and Shading

4.1.13 The extent to which the recipient organisations were reliant on CR&D funding can be

seen from the fact that the vast majority (79%) had not sought additional finance from

elsewhere, in addition to the award, to enable them to carry out their project. Again,

only one in seven (14%) indicated they had sought additional funding. See Table

4.13.

Table 4.13 Organisation sought additional funding in conjunction with the CR&D grant to undertake the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Yes 14 12 18 13 20 n/a

No 79 78 79 81 69 n/a

Don't recall 7 9 2 6 11 n/a



4.1.14 Here too, the additional funding had come mostly from the organisations’ own

finances. One in ten (10%) had sought additional funding from the RDAs. Recipient

businesses in particular were significantly more likely than academic recipients to rely

on internal funding; whilst the roles were reversed, with academic recipients

significantly more likely than businesses to apply to RDAs for additional funding. See

Table 4.14.



Table 4.14 Type(s) of additional funding sought


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Internal Funding 32 26 39 43 0 n/a













Other RDA funding 10 18 0 5 26 n/a




Other 44 43 45 40 58 n/a



PACEC Intermediate Changes to Attitudes and Behaviour


5 Intermediate Changes to Attitudes and Behaviour

5.1.1 The respondent recipients were asked a series of questions aimed at exploring the

effects of the projects on the capacity and ability of the businesses and educational

institutions to meet their performance objectives. They were asked specifically to

consider whether the projects had actually had any effects, or whether they thought

they were likely to have any effects at all on costs, R&D collaboration, innovation,

technological applications, and products and processes.

5.1.2 Although it is true that the award of grant by itself has an impact on research costs

and, in particular, a sharing of the risk of R&D investment, it is relevant to know that,

when asked about the actual and likely impact of the grant on costs, the

overwhelming majority of grant recipients were aware of this impact on sharing the

risks of their investment in R&D (85%). In addition almost three quarters believed

that the grant had, or was likely to have, a positive impact in levering in private sector

finance (74%). See Table 5.1.

Table 5.1 Actual and likely intermediate impacts on costs


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Costs (any) 90 91 88 91 87 n/a

Share risk of R&D investment 85 85 85 87 79 n/a

Lever in finance 74 73 75 74 74 n/a

Other 9 8 10 7 15 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q16al) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.3 The actual and likely intermediate impacts on R&D collaboration were particularly

noticeable in how the projects had strengthened collaborative activity with businesses

(84%) and higher education institutions (73%). In particular, projects had provided

access to technical and R&D skills (67%), leading edge research (59%), and

equipment and other research infrastructure (56%). There were also improvements

in the enterprise curriculum in the higher education institutions (49%), increased

provision of placements and sponsorship for research students (44%), and in overall

access to skills in the commercial applications of [research] projects (39%). As can

be seen from Table 5.2, the recipient businesses were significantly more likely than

academic ones to highlight the impact of access to technical skills and leading edge

research, and in strengthening their collaboration with higher education institutions.

Perhaps not surprisingly, the recipient academic institutions were themselves

significantly more likely to highlight the improvements to their enterprise curriculum,

and the opportunity for research students to go on placements or be sponsored.



Table 5.2 Actual and likely intermediate impacts on R&D collaboration


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

R&D development (any) 96 97 93 96 95 n/a

Access commercialisation skills 39 41 35 39 39 n/a

Access technical / R&D skills 67 66 69 71 52 n/a

Access leading edge research 59 60 59 63 47 n/a

Access equipment and research infrastructure 56 54 58 59 45 n/a

Strengthen collaborative activity with businesses 84 84 86 85 83 n/a

Strengthen collaborative activity with HEIs 73 72 74 76 63 n/a

Improve HEI enterprise/entrepreneurial curriculum 49 51 47 43 71 n/a

Provide placements/sponsorship for research students 44 47 36 37 68 n/a

Change business model 9 10 7 9 8 n/a

Other 6 5 8 6 6 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q16bl) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.4 With regard to innovation, the largest actual or likely intermediate impacts were

evident in improvements in the technical knowledge and understanding of recipients

(84%), and improvements in organisational culture towards collaboration (84%). At

least three-quarters thought there had been, or was likely to be, enhancement of

knowledge transfer across the organisation (78%), and improvements in their

innovation culture (75%) and technical skills (74%). Around three-fifths (59%) also

thought there had been an impact in enhancing equipment and other research

infrastructure. The least impact here was the development of commercialisation skills

(41%). See Table 5.3.



Table 5.3 Actual and likely intermediate impacts on innovation / R&D skills and processes


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Innovation / R&D skills and processes (any) 92 93 89 92 91 n/a

Improve commercialisation skills 41 40 42 42 37 n/a

Improve technical /R&D skills 74 74 75 76 68 n/a

Improve technical knowledge / understanding 84 84 84 85 81 n/a

Enhance equipment & research infrastructure 59 60 58 58 65 n/a

Enhance knowledge transfer across the Bus/HEI 78 78 79 77 84 n/a

Improve collaboration (attitudes/culture/capability) 84 84 83 83 87 n/a

Improve innovation culture/capacity 75 73 79 74 79 n/a

Other 11 12 10 11 13 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (q16cl) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.5 The recipients’ perception of the actual and likely impact of the projects on

technological applications was high overall. More specifically, recipients highlighted

how the projects had contributed towards their investigation of the technical feasibility

of ideas (83%), exploration of the application of technologies (78%), producing new

scientific and technical knowledge (73%), and investigating the commercial feasibility

of ideas (62%). See Table 5.4.

Table 5.4 Actual and likely intermediate impacts on technological applications


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Technological applications (any) 93 93 93 93 93 n/a

Produce new scientific/technical knowledge 73 77 66 70 83 n/a

Explore the application of technologies 78 80 74 76 87 n/a

Investigate the technical feasibility of an idea(s) 83 82 85 83 83 n/a

Investigate the commercial feasibility of an idea 62 63 59 62 61 n/a

Other 3 3 2 3 2 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (q16dl) – see section 1.4 for explanation of ESS, Bolding and Shading



5.1.6 Lastly, in this section, the survey explored recipients’ perceptions on the actual and

likely impact of the projects on products and processes in their organisations.

Although not high overall, compared with other outputs, the impacts of the projects in

these areas were positive nevertheless. More than two-thirds of recipients (70%)

pointed to the development of new products or services, and almost three-fifths to the

development of new processes and reduction in environmental impact (57% in each

case). Just under half had improved their existing processes (48%) or products

(46%), or seen a positive social impact (48%). See Table 5.5.

Table 5.5 Actual and likely intermediate impacts on products and processes


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Products and processes (any) 87 88 87 88 84 n/a

Develop new product/service(s) 70 68 74 69 76 n/a

Improve existing product/service(s) 46 46 45 46 46 n/a

Develop new process(es) 57 59 54 57 59 n/a

Improve existing process(es) 48 50 44 48 47 n/a

Reduce environmental impact 57 55 61 58 53 n/a

Have a positive social impact 48 47 51 49 45 n/a

Meet regulatory requirements 37 37 38 34 48 n/a

Other 8 8 10 10 4 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (q16el) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.7 It was possible to aggregate the respondents’ perceptions about the actual and likely

effects of the outputs discussed above, and Table 5.6 provides a summary of these.

As can be seen, around nine out of ten respondents were convinced that the projects

had made an impact, or were likely to do so.

Table 5.6 Actual and likely intermediate impacts (summary)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Costs 90 91 88 91 87 n/a

R&D development 96 97 93 96 95 n/a

Innovation / R&D skills and processes 92 93 89 92 91 n/a

Technological applications 93 93 93 93 93 n/a

Products and processes 87 88 87 88 84 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (Q16A) – see section 1.4 for explanation of ESS, Bolding and Shading



5.1.8 But it was also possible to look separately at the views of respondents who were able

to report on the actual impacts, because it was possible to do so accurately. The

results are aggregated and summarised in Table 5.7.

Table 5.7 Actual intermediate impacts (summary)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Costs 88 89 86 90 83 n/a






Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (Q16A) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.9 It is clear from looking at the figures in Table 5.6 and Table 5.7 that almost all of the

intermediate impacts that are likely to take place, in terms of costs, research and

development, innovation, technological application, and products and processes,

have already taken place.

5.1.10 When they were probed further, a relatively high proportion of the recipients were

prepared to say the projects had made significant intermediate impacts. As can be

seen from Table 5.8, around two-thirds thought there had been significant impacts in

innovation (68%) and technological application (66%), and around half on costs

(50%) and in research and development (48%). The disaggregated data show further

that recipient market led organisations were one-and-a-half time more likely than

enabling technology recipients to indicate the project had a significant intermediate

impact on research and development. Recipient businesses were, similarly, more

likely than academic institutions to highlight the significant impact of the projects on

costs.

Table 5.8 Significant intermediate impacts (summary)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Costs 50 50 50 54 34 n/a









5.1.11 The main reason that more impacts were not realised, according to the case study

interviewees, was a lack of collaboration with businesses. This was reported by 19%

of case study interviewees. Technical challenges were reported by 11% of the case

study interviewees, and access to finance by seven per cent. The most important

impact on the company was in the area of technology (78%) rather than know-how

(nine per cent).

5.1.12 The respondents were next asked to assess the likely beneficial social impacts of

their projects. The results are presented in Table 5.9, and show that on the whole, the

recipients did not generally claim that their projects had beneficial social impacts

across a wide range of social conditions. Indeed, around a fifth (22%) did not think

there were any beneficial social impacts at all. Only two areas stood out, where

recipients thought there was some beneficial effect: in general environmental

improvement (43%) and access to information and knowledge (22%) has resulted

from CR&D.

Table 5.9 Beneficial social impacts of the research, products and services


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Health improvements 8 8 7 7 10 n/a

Social care improvements 4 5 1 4 1 n/a

Educational improvements 2 2 1 2 1 n/a

Transport improvements 5 7 1 4 8 n/a

Housing improvements 1 0 1 1 0 n/a

Access to facilities 1 1 0 0 2 n/a

General environmental improvements 43 39 49 43 42 n/a

Community / social cohesion benefits 6 8 2 5 9 n/a

Ability of people to communicate 7 7 7 7 5 n/a

Access to information / knowledge 22 23 21 21 28 n/a

General living / quality of life conditions 7 8 5 7 7 n/a

Other 12 10 15 12 11 n/a

None 22 25 16 21 23 n/a



5.1.13 More respondents were certain that their project had had beneficial environmental

impacts. The important areas they highlighted included: more efficient use of energy

(27%), reduced carbon emissions (25%), increased understanding of environmental

issues (20%), and reduced waste (17%). It is notable, however, that almost 30% of

the recipients did not think their projects had any beneficial impact at all. See Table

5.10.

5.1.14 Lastly in this section, the partners were asked to compare their Technology

Readiness Levels (TRLs) at the start of their projects compared to at their completion



(or at the time of the survey). They were asked to indicate the levels on a scale of one

to nine. Figure 5.1 charts the progress of the partners. The focus was on basic

principles (30%), the technology concept (28%), and critical functions (18%). By the

end of projects the focus was on operational prototypes (25%), qualified operators

(20%), and laboratory prototypes (16%). There was a major shift from the basic /

concept level to the operational levels.

5.1.15 By the time of the survey, the recipients had undergone a complete turnaround. Only

one per cent were at the most basic stage of observing and reporting on the basic

principles involved with the technological development of their product. However,

increasing numbers of recipients went through each subsequent stage, such that a

fifth (20%) had successfully deployed the technology involved in the project at the

final stage.

Table 5.10 Beneficial environmental impacts of the research, products and services


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

More efficient use of energy 27 24 34 29 22 n/a

Reduced carbon emissions 25 22 32 25 27 n/a

Improved sustainability of products 11 11 9 10 13 n/a

Increased understanding of environmental issues 20 22 16 20 20 n/a

Improved alternative / renewable energy supplies 6 6 7 6 5 n/a

Reduced use of rare resources 10 13 6 9 16 n/a

Reduced waste 17 16 19 18 15 n/a

Other 16 13 22 16 18 n/a

None 29 33 21 28 31 n/a





Figure 5.1 Change in Technological Readiness Level

0 5 10 15 20 25 30 35

1 Basic principles

2 Technology concept

3 Critical function

4 Laboratory validation

5 In situ validation

6 Laboratory prototype

7 Operational prototype

8 Qualified testing

9 Qualified operation

% of partners

After Before

Source: PACEC CR&D survey of CR&D grant participants

5.1.16 The changes in the level of technological development of the products and services

at the different stages are summarised in Table 5.11. Just over a quarter of recipients

(27%) progressed through the first two levels; more than two-fifths (45%) through

levels 3-5, and almost 30%, through levels 6-8. The disaggregated data show that

market led recipients were significantly more likely to progress at the highest levels of

technological change, compared with enabling technology recipients.

Table 5.11 Change in level of technological development before and after the CR&D project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

0-2 Levels 27 30 22 27 25 n/a

3-5 Levels 45 48 40 45 43 n/a

6-8 Levels 28 22 39 27 31 n/a


Source: PACEC CR&D survey (Q19ch) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.17 The recipients were asked about whether and when the product or service from their

project had either reached the market, or their estimate of when they expected to do

so. About half of recipients (49%) claimed the outputs from their projects were

already on the market (and in some cases had been since 2005), while a third of the

recipients (34%) also indicated that the outputs would reach the market imminently,

between 2011 and 2013 (i.e. 83% in total). The rest (15%) were looking towards the



medium to long term, and expected the outputs to reach market between 2014 and

2025. See Table 5.12.

Table 5.12 Year in which products and services are likely to reach the market


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

2005-2010 49 44 55 49 45 n/a

2011-2013 34 38 27 32 42 n/a

2014-2025 18 18 17 18 14 n/a


Source: PACEC CR&D survey (Q20group) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.18 As can be seen from Table 5.13, 35% had registered a patent, one third of recipients

expect the project to result in at least one item of intellectual property. More

specifically, approximately one fifth of the recipients (21%) were confident that one

patent will result from the project, and just under one in seven (13%) expected two or

more patents.

Table 5.13 Number of items of intellectual property (patents) which have resulted or will result from the project supported by the grant


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

None 65 68 60 65 66 n/a

1 21 22 19 20 21 n/a

2 6 7 6 7 6 n/a

3 2 2 4 2 3 n/a

4 or more 5 2 12 6 4 n/a



5.1.19 Almost two-thirds of the recipients who were anticipating patents (64%) were

developing, or had developed a patent that their organisation owned exclusively. But

there was further evidence to suggest a high level of collaboration between the

partners, particularly from the fact that a fifth of the patents (19%) were owned jointly

with another business or higher education institution and one in six (16%) were

owned by another organisation and licensed by the partner concerned. See Table

5.14.



Table 5.14 Ownership of intellectual property (patents) which have resulted or will result from the project supported by the grant

Percentage of respondents anticipating some patents (by Competition and Sector)

Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Owned exclusively by the Bus/HEI 64 65 63 69 46 n/a

Jointly owned by the Bus/HEI 19 19 18 16 29 n/a

Licensed by the Bus/HEI (owned by others) 16 15 18 14 24 n/a

Not licensed by the Bus/HEI (owned by others) 7 6 8 6 8 n/a



5.1.20 The scale of the success of the projects in developing intellectual property is

demonstrated by the fact that more than three-fifths of the recipients who were

anticipating patents (62%) had actually obtained a patent. More than a third (37%)

had also applied for a patent and were awaiting the result. The rest (14%), moreover,

were confident they would apply for a patent in the near future. See Table 5.15.

Table 5.15 Stage of applications for intellectual property (patents) which have resulted or will result from the project supported by the grant


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Obtained 62 57 68 59 73 n/a

Applied for, but not obtained 37 36 38 39 27 n/a

Likely to be applied for in the future 14 15 11 16 5 n/a



5.1.21 Where a patent had been awarded, the most likely beneficiaries were likely to be the

qualifying recipients themselves. Consequently, almost two-thirds of the recipients

who were anticipating patents (63%) indicated they did not expect to license the

research output to anybody else. Around a quarter (26%) expected to share the

benefits by licensing the patent to their partners, and one in seven (14%), to other

businesses. Very few expected (three per cent) to license the patent to an academic

institution. Further analysis according to sectors showed that the market led

recipients were more likely to license the patent to other businesses; and enabling

technology recipients, to retain the benefits themselves. See Table 5.16.



Table 5.16 Likely licensees of CR&D research outputs


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Partners 26 22 33 24 35 n/a

Other HEIs 3 2 6 4 1 n/a

Other businesses 14 10 24 15 10 n/a

None 63 70 46 64 57 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q21M) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.22 The respondents were next asked what barriers they anticipated would prevent them

from introducing their products and services from the projects into the market place.

Table 5.17 shows that around two out of five recipients (39%) did not foresee any

potential barriers to bringing their products to market. Those who anticipated any

particular difficulty cited the high costs involved (17%), lack of knowledge, in

particular the technical challenges involved (12%), and the particular demands of

markets (12%).

Table 5.17 Barriers to introducing products/services arising from the project into the market place (summary)


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

Cost 17 16 18 16 18 n/a

Collaboration 3 3 2 2 4 n/a

Knowledge 12 12 11 14 1 n/a

Skills 3 3 3 3 1 n/a

Market 12 12 12 13 8 n/a

Other 30 32 26 31 27 n/a

None 39 35 48 38 46 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q22A) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.23 The details of the potential barriers anticipated by the recipients are set out in Table

5.18.



Table 5.18 Barriers to introducing products/services arising from the project into the market place (detail)


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

Cost of finance 2 3 1 1 6 n/a

Cost of R&D / innovation 10 9 10 9 11 n/a

Access to finance 5 5 4 5 5 n/a

Economic risk 5 4 6 6 1 n/a

Collaboration with businesses 2 2 2 2 1 n/a

Collaboration with HEIs 2 2 2 2 3 n/a

Technical challenge 11 12 9 13 1 n/a

Leading edge research 0 0 0 0 0 n/a

Ability to arrange IPR 1 0 1 1 0 n/a

Skills Commercialisation skills 1 1 1 1 0 n/a

Technical / R&D skills 2 2 2 2 1 n/a

Equipment, research infrastructure 0 0 1 0 0 n/a

Market Meeting UK/EU regulation 2 1 3 2 1 n/a

Other priorities of the Bus/HEI 2 2 2 2 2 n/a

Competitor products/services/processes 1 1 1 1 0 n/a

Low/uncertain demand for products/services 8 8 8 9 5 n/a

Other 30 32 26 31 27 n/a

None 39 35 48 38 46 n/a

Cost effectiveness / viability 5 4 5 6 1 n/a

Not ready 5 5 4 5 3 n/a

Didn't work 2 3 1 3 0 n/a

Another partner's responsibility 5 5 5 4 10 n/a



5.1.24 There was evidence from the survey to suggest that many of the partners who

received CR&D grants had been encouraged by the success of their project to seek

to improve their products, or even to introduce new products. As can be seen from

Table 5.19, approximately a third of the recipients (32%) had sought further finance

for exploitation and to enable them to introduce new or improved products into the

market place, since completing their original product.



Table 5.19 Partners that sought further finance for exploitation (new products and services for the market place)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Yes 32 34 30 33 29 n/a

No 64 61 69 63 67 n/a

Don’t know 4 5 1 4 4 n/a



5.1.25 A large majority of those who had sought further finance (60%) were planning to use

this to support their R&D activities. One in seven (15%) intended to use the money to

develop commercial products and services, while a quarter (25%) were planning to

do both. See Table 5.20.

Table 5.20 Purpose for which partners sought further funding


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

R&D 60 67 46 59 64 n/a

Commercial development 15 13 19 14 19 n/a

Both 25 20 36 27 17 n/a


Source: PACEC CR&D survey (Q23B) – see section 1.4 for explanation of ESS, Bolding and Shading

5.1.26 When they were probed further, the indications were that the sources of further

finance were spread widely. The main sources were internal funding (from turnover

and reserves), a combination of loans (primarily from the banks and other

businesses, and to some extent form venture capital funds and business angels) – in

similar proportions risk capital for the VCs and business angel sectors, and loan or

equity in equal proportions from other trading businesses.

5.1.27 The survey results provided evidence of other benefits the recipients were enjoying,

as a result of being awarded a CR&D grant. In particular, almost two-thirds of the

recipients (64%) indicated that getting the grant has made it easier for them to obtain

finance more generally. More than a quarter (27%) claimed they had found it much

easier, and almost two-fifths (37%), a little easier. However, more than a third (36%)

did not think that the award had made any difference to their ability to obtain finance.

In terms of sector, the recipient businesses were significantly more likely than

recipient academic institutions not to see any difference in their ability to obtain

finance. See Table 5.21.



Table 5.21 Effects of the CR&D grant on the ability of firms to obtain finance


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Made it much easier 27 29 23 25 33 n/a

Made it a little easier 37 39 33 34 46 n/a

Made no difference 36 32 44 40 21 n/a

Made it much more difficult 0 0 0 0 0 n/a



PACEC Business Performance and Economic Impacts


6 Business Performance and Economic Impacts

This chapter examines the impacts that CR&D has had on the business performance

of grant receivers. Based on the results, the economic impacts are examined in

terms of gross and net additional jobs and GVA, together with the costs of generating

these impacts, i.e. the efficiency of CR&D.

6.1 Business Performance Impacts

6.1.1 The survey with businesses explored the effects of the projects on the business

performance of the recipients, in particular their financial turnover and levels of

employment. The recipients were asked their views and perceptions about the actual

and likely performance effects of the project on a range of business performance

measures. Their responses are set out in Table 6.1. By far the most important impact

of the project was the way in which they believed it would improve the image and

reputation of the recipient businesses and academic institutions. Four out of every

five recipients (79%) cited this business performance measure. Around three-fifths

(62%) also indicated that the project would increase the value of their business. It is

particularly notable that more than half of the businesses (56%) anticipated increased

employment, as a result of the project. More than half also thought it would enable

them to enter new markets or increase their market share (53%), increase their

financial turnover (53%), or increase their profits (51%). Quite important too was how

they thought the project would increase the income of the business from intellectual

property rights (45%). For the academic institutions in particular, there was an added

benefit from increased publications (42%), whilst exporters predicted an increase in

their overseas sales (39%). Around a third of the businesses (34%) also believed

they would become more efficient and more productive, as they reduce their

production costs.

6.1.2 The disaggregated data in Table 6.1 show there was considerable variation between

the sectors in their views about the actual and likely business performance effects.

The recipient businesses were significantly more likely than academic institutions to

have higher expectations across several of the business performance measures, in

particular, entering new markets, increasing turnover, increasing profitability,

increasing employment, and increasing export sales. Academic institutions, not

surprisingly, were more likely than businesses to expect an increase in publications.



Table 6.1 Organisation’s views on the actual and likely business performance effects of the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Start up a spin-off business 9 8 11 10 7 n/a

B: Position the bus/HEI for merger acquisition 8 9 6 9 5 n/a

B: Enter new markets or increased market share 53 51 57 60 28 n/a

B: Increase export sales (or start exporting) 39 38 42 45 20 n/a

Increase income from intellectual property 45 45 44 43 51 n/a

H: Increased publications 42 44 38 32 76 n/a

Improve the image/reputation of the Bus/HEI 79 79 79 77 87 n/a

B: Reduce costs per unit produced / provided 34 33 34 35 27 n/a

Increase turnover 53 51 58 60 27 n/a

Increase employment 56 52 63 61 38 n/a

Increase profitability 51 48 56 59 19 n/a

B: Increase value of the Bus/HEI 62 60 66 64 55 n/a

Other 14 13 15 12 23 n/a

None of the above 8 8 8 10 1 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (Q25C) – see section 1.4 for explanation of ESS, Bolding and Shading

6.1.3 It was possible to assess the actual effects separately, to give a true indication of the

measures of business performance. These are set out in Table 6.2. When compared

to Table 6.1 which shows the likely and actual effects, it can be seen that many of the

effects still need to feed through, partly as a reflection of the time it takes on

innovation / technology projects.

6.1.4 Lastly, on business performance, the respondents were asked to indicate which

areas of business performance their project had had a significant effect. As can be

seen in Table 6.3, only two areas stood out: the improvement in the image and

reputation of the organisation, and their entry into new markets.



Table 6.2 Partner’s views on the actual business performance effects of the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All













Other 9 10 8 8 14 n/a






Table 6.3 Partner’s views on the significant effects of the project


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All













Other 7 7 7 7 7 n/a




6.1.5 The survey provided evidence that the projects had employment effects, in the sense

that they had created new jobs or safeguarded existing jobs (i.e. full time equivalent

FTE jobs). There was considerable variation in the level of job creation. As can be

seen from Table 6.4, the projects of over half the partners (58%) created no jobs,

while over a fifth (22%) created up to nine jobs. A very small proportion (one per

cent) created more than 10 jobs.

6.1.6 Table 6.5 shows a similar pattern for safeguarded jobs, with six out of ten (60%)

partners not safeguarding any jobs and just under one in five (18%) safeguarding

between one and nine jobs. Very small proportions of organisations do safeguard

between 11 and 99 jobs (three per cent) and over 100 jobs (two per cent).



Table 6.4 Number of FTE jobs created by the project


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

None 58 60 55 56 66 n/a

At least one (unspecified) 18 14 24 19 14 n/a

1-9 22 24 19 23 19 n/a

10-99 1 1 2 1 1 n/a

100+ 0 0 1 0 0 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q26abgrp) – see section 1.4 for explanation of ESS, Bolding and Shading

Table 6.5 Number of FTE jobs safeguarded by the project


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

None 60 64 51 54 79 n/a


1-9 18 17 20 22 6 n/a

10-99 3 2 4 3 1 n/a

100+ 2 2 1 2 0 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q26cdgrp) – see section 1.4 for explanation of ESS, Bolding and Shading

6.1.7 It was possible to estimate the number of full-time equivalent jobs created or

safeguarded, for partners. These are presented in Table 6.6, and show just under

half (46%) of partners do not create or safeguard any jobs. However small

proportions give rise to 10-99 jobs (four per cent) and 100+ jobs (two per cent).

Table 6.6 Number of FTE jobs created or safeguarded by the project


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

None 46 50 38 41 64 n/a


1-9 31 31 31 34 21 n/a

10-99 4 3 5 5 0 n/a

100+ 2 2 2 2 1 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q26grp) – see section 1.4 for explanation of ESS, Bolding and Shading



6.1.8 The survey also provided evidence about the salary from the jobs created and

safeguarded by the projects. More than two-fifths (42%) of the respondent

organisations that were prepared to provide information indicated that the average

salary pertaining to the jobs was between £15-29k. For around half (49%), the

average salary was in the region of £30-39k, whilst for one in ten, it was £40-60k. On

the whole, the enabling technology firms were significantly more likely than the

market led recipient firms to pay higher average salaries. See Table 6.7.

Table 6.7 Average salary of jobs created and safeguarded


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

15-29k 42 30 63 41 48 n/a

30-39k 49 58 31 48 52 n/a

40-60k 9 12 6 11 0 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q27grp) – see section 1.4 for explanation of ESS, Bolding and Shading

6.1.9 Only a relatively smaller number of respondents were able to provide estimates of

their likely business’ turnover, as this is difficult to predict given the economic context

and uncertainties. The discussions showed that the annual turnover generated by the

projects varied considerably. As can be seen from Table 6.8, one in three recipient

businesses (31%) generated annual turnover of less than £100,000 from their project.

More than two-fifths (44%) had turnover of between £100,000 and £900,000, and one

in five (21%), between £1-9 million. A small proportion reported higher turnover of

£10-99 million.

Table 6.8 Likely annual turnover generated (where greater than zero)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

1-99k 31 25 41 34 11 n/a

0.1-0.9m 44 47 40 42 61 n/a

1-9m 21 24 15 20 29 n/a

10-99m 4 4 4 5 0 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (q28grp) – see section 1.4 for explanation of ESS, Bolding and Shading

6.1.10 The respondents were asked how long they thought the business performance

impacts examined in this section were likely to persist. The majority (54%) were not

sure how long their businesses would maintain the current level of business

performance. Those who were prepared to speculate, though, thought that the effects

would not be short-lived. Fewer than one in ten (six per cent) believed that the

impacts would last about three years or less. The same proportion (six per cent)



thought the impacts would last between four and five years. However, more than a

third (35%) believed the effects would last six years or more. See Table 6.9.

Table 6.9 Likely persistence of business impacts


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

1 year 1 2 1 1 4 n/a

2-3 years 5 5 6 6 0 n/a

4-5 years 6 5 7 5 7 n/a

6+ years 36 30 45 37 30 n/a

Don’t know 52 58 42 51 60 n/a


Respondents could select several options; so percentages in any column may sum to more than 100. Source: PACEC CR&D survey (q29) – see section 1.4 for explanation of ESS, Bolding and Shading

6.1.11 In order to assess the direct effects of the CR&D scheme more accurately, the

recipients were asked, first, to estimate how much of the employment impacts would

have taken place anyway, i.e. without the CR&D grant. Table 6.10 shows that over

two thirds of recipient organisations (69%) were confident that none of the jobs, in the

absence of the grant, would have been created or safeguarded. Just under a tenth

(nine per cent) would have created and safeguarded under a half, and probably all,

the jobs. This low estimate of deadweight is backed up by the evidence from

the non recipient survey in which only two per cent of projects that did not

receive grants went ahead with the project anyway.

Table 6.10 Employment effects likely to have taken place without the project


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

None 69 72 64 66 87 n/a

1-49% 9 6 14 9 6 n/a

50-99% 12 12 12 13 7 n/a

100% 10 11 10 12 0 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (q30agrp) – see section 1.4 for explanation of ESS, Bolding and Shading

6.1.12 The recipients were next asked about the financial (i.e. turnover) impacts. Nearly four

out of five recipients (78%) believed no turnover effects would have occurred without

the CR&D funded project. Only small proportions (seven or eight per cent) believed

that a minority, majority or all of the turnover impacts would have occurred in the

absence of the project. See Table 6.11.



Table 6.11 Turnover effects likely to have taken place without the project


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

None 78 80 73 74 100 n/a

1-49% 8 7 10 9 0 n/a

50-99% 8 7 9 9 0 n/a

100% 7 7 8 8 0 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (q30bgrp) – see section 1.4 for explanation of ESS, Bolding and Shading

6.2 Economic impacts

6.2.1 We have used the evidence from the survey responses to estimate the impact of the

CR&D scheme, in terms of jobs and Gross Value Added (GVA). The estimates of

gross and net impacts are set out in Table 6.12. It should be noted that the estimates

of GVA are based on the employment costs of the estimated jobs. This is an

underestimate of GVA, since it excludes the profits component of GVA (which

partners are very unwilling to estimate) because of the uncertainty of the levels over

the next few years as a result of the economic environment. In some cases partners

were reluctant to disclose future profits.

6.2.2 Column 1 in Table 6.12 provides information on the actual and likely number of jobs

from the projects. In terms of employment, the total number of jobs accruing to all the

projects supported by CR&D grants, i.e. gross jobs, is 23,700. The estimate of gross

jobs is calculated from the actual number of jobs reported by respondents, as well as

estimates, where respondents reported an employment impact, but could not provide

information on the actual number of jobs created or safeguarded. The deadweight

associated with the projects is 9,360. The estimate of deadweight is the number of

jobs that would have been created without the CR&D grant. The gross additional

number of jobs is 14,340. This is calculated from gross jobs, less deadweight. The

displacement from the projects is 5,440. Displacement is the number of jobs lost by

other businesses because of the projects. The net additional number of jobs is

8,900. This is calculated from gross additional jobs, less displacement. The linkages

associated with the project is 4,450. Linkages is the number of jobs gained by other

businesses because of the projects. The full net additional number of jobs,

therefore, is 13,350. This is calculated from net additional jobs, plus linkages.

6.2.3 Column 3 in Table 6.12 provides information on actual and likely GVA. The gross

GVA per annum is £843 million. Following the same calculations for the estimates of

jobs, the full net additional GVA is £467 million. The net cumulative GVA,

therefore, is £2,877 million.



Table 6.12 Jobs and GVA: gross to net impacts

Jobs (000s) (Full Time Equivalents)

Gross Value Added (£m per annum)

Actual+Likely Actual Actual+Likely Actual

Gross 23.70 1.36 843 134

Deadweight 9.36 0.47 346 73

Gross Additional 14.34 0.88 497 61

Displacement 5.44 0.33 186 23

Net additional 8.90 0.56 311 38

Linkages 4.45 0.28 156 19

Full Net Additional 13.35 0.83 467 56

Net Cumulative 2,877 361

Deadweight (/%) 40% 35% 41% 55%

Displacement (/%) 38% 37% 37% 38%

Linkages 1.5 1.5 1.5 1.5

Persistence 6.2 6.4

Source: PACEC CR&D survey

6.2.4 Table 6.13 provides summary evidence of the cost-effectiveness of the CR&D

scheme, based on a number of [cost effectiveness] measures, at current and 2010

prices. The project costs is £429 million. The total amount of grants disbursed to all

the projects was £195 million. The cost per gross job is £18,000 (Project costs/Gross

Jobs). The full net cost of jobs is £32,000 (Project costs /Full Net Additional Jobs).

The Gross Value Added for every pound spent is £1.97 (GVA/ Project costs). The net

cumulative GVA per pound spent is £6.71 (Net Cumulative GVA/ Project costs). This

means that every £1 spent by Technology Strategy Board increased GVA by £6.71.



Table 6.13 The Cost Effectiveness of CR&D

Cost Effectiveness measures

(Current Prices) (2010 Prices)

Actual+Likely Actual Actual+Likely Actual

Total Project costs (£m) 429 429 486 486

TSB Expenditure (£m) 195 195 221 221

Gross Jobs (FTE 000s) 23.70 1.36 23.70 1.36

Net Additional Jobs (FTE 000s) 8.90 0.56 8.90 0.56

Full Net Additional Jobs (FTE 000s) 13.35 0.83 13.35 0.83

Cost / Gross Job (£k) 18 316 20 358

Cost / Net Additional Job (£k) 48 772 55 875

Cost / Full Net Attributable Job (£k) 32 515 36 584

Gross GVA (£m pa) 843 134 843 134

Net Additional GVA (£m pa) 311 38 311 38

Full Net Additional GVA (£m pa) 467 56 467 56

Net Cumulative GVA (£m) 2,877 361 2,792 340

Gross GVA / £ spent 1.97 0.31 1.74 0.28

Net Additional GVA / £ spent 0.73 0.09 0.64 0.08

Full Net Additional GVA / £ spent 1.09 0.13 0.96 0.12

Net Cumulative GVA / £ spent 6.71 0.84 5.75 0.70


6.2.5 There are likely to be additional impacts as the CR&D technologies and knowledge is

transferred as partners leave their projects or the technology in the public domain

feeds into other products, services and processes.

6.2.6 The methodology used for the evaluation allows some cost effectiveness

comparisons to be made with other evaluations for R&D programmes that have

funded R&D through grants. This is where similar approaches have been used and

they also reflect the unique characteristics of their schemes. This comparison is

shown in Table 6.14 for Smart and Grants for R&D (GRD) and other schemes. While

the cost per job of CR&D (£36k) falls within the range found for GRD and Smart

(£31k to £38k), CR&D’s albeit high level of GVA return on investment (£5.75) is not

as high as the very high levels achieved by GRD (£9) and Smart (£10).



Table 6.14 The Cost Effectiveness of CR&D and Other Programmes

CR&D GRD

Smart: Scotland

Smart (England)

Full net additional attributable job (FTE) cost £36k £32k £38k £31k

Net cumulative GVA / £ spent £5.75 £9 £10 N/A

Source: PACEC7

6.2.7 Table 6.15 provides and summarises evidence of the cost effectiveness of the CR&D

scheme according to the characteristics of the recipient organisations. When looking

at the table it should be noted that high levels of impacts give rise to low cost per job

and high GVA per £ spent. The observations from the table are:

● There is very little difference between the effectiveness of CR&D (as measured either by cost per job or GVA generated per unit of grant) between the Enabling technologies and the Market Led grants as a whole. While there is considerable variation between the individual sectors, caution should be applied to drawing any conclusions due the relatively small sample sizes and due to the Pareto effect (where a five per cent of projects give rise to 87% of the impacts). However, the results do show that there are some projects (in transport and materials/nano) which have particularly large economic impacts

● The fact that business performance effects in academic partners (£0.90 GVA per £ spent) are almost a tenth of those in business organisations (£8.13) reflects the different roles that academic and business partners play in projects. However, the benefit of academic involvement is clearly demonstrated by the fact that the overall business impacts in projects with two or more academic partners (£9.67) are more than double those in projects with no academics (£4.22)

● There is some evidence that grants over £750k give rise to smaller business performance effects (£2.34 of GVA per £ spent) than either grants under £250k (£10.96) or medium sized grants, between £250 and £749k (£10.01)

● There is some evidence that the optimal number of partners is 4 or 5, since these projects gave rise to greater business performance effects (£8.91 GVA per £ spent) than either those with only 2 or 3 partners (£4.81) or those with 6 or more partners (£6.57)

● Business impacts are five times greater in late (2007 or later) projects compared with early (2006 or earlier) projects. It is impossible to infer from the research whether this is due to greater realism (and less optimism) in older projects

7 Sources: PACEC studies on the Evaluation of Grants for R&D and Smart (BIS. 2009), the

Evaluation of SMART: Scotland (Scottish Government. 2010), and the Evaluation of Smart (DTI.

2001/02).



Table 6.15 Actual and likely employment impacts with cost effectiveness measures

Cost per job (£k) GVA per £ spent

All 32 6.71

Enabling Technologies 33 6.87

Market Led 31 6.37

Business partner 27 8.13

Academic partner 210 0.90

2/3 partners in the project 41 4.81

4/5 partners in the project 27 8.91

6+ partners in the project 31 6.57

No academic partners 44 4.22

1 academic partner 34 5.71

2+ academic partners 25 9.67

Project start <= 2005 50 3.87

Project start 2006 65 3.46

Project start >= 2007 9 24.63

Project length <=24 months 31 6.61

Project length 25-35 months 42 4.44

Project length >=36 months 30 7.59

Overall project grant <250k 18 10.96

Overall project grant 250-749k 22 10.01

Overall project grant >750k 101 2.34

Grant<50% project costs 42 4.79

Grant=50% project costs 43 4.51

Grant>50% project costs 15 15.39

Bioscience 46 3.97

Electronics, Photonics and Electrical Systems 57 3.35

High Value Manufacturing 37 6.61

Information and Communications Technology 540 0.44

Advanced Materials and Micro and Nanotechnologies 15 15.41

Energy Generation and Supply 60 3.60

Environmental Sustainability 33 5.39

Transport (Aerospace, Low Carbon Vehicles, Intelligent Transport Systems) 16 13.29


6.2.8 One check for the validity of the estimates of impact based on the survey of recipients

is to compare the actual change in employment of recipients with non-recipients. As

shown in Table 6.16, non recipients (68%) are much more likely to have no change in

employment than recipients (48%). There is also evidence that this increase in growth

is spread over all levels of growth (namely 1-9, 10-99 and 100+).



Table 6.16 Change in employment since project started (if started before 2008)


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

Loss 13 12 15 14 0 9

Static 48 49 45 47 59 68

Growth 1-9 17 19 14 17 18 14

Growth 10-99 16 15 19 16 23 7

Growth 100+ 5 4 7 6 0 2


Respondents could select several options; so percentages in any column may sum to more than 100. A number is shown in bold where, taking into account the margin of error due to sampling, we are 95% certain that it is different from the number in the left hand total column (using a Chi-Squared statistical test) Source: PACEC Survey (q31difg)

PACEC Wider Effects


7 Wider Effects

The research examined two aspects of the wider effects: the effect on strategic

partners and in particular the extent to which CR&D allows them to achieve their

aims; and the wider impact of businesses who were awarded the CR&D grant

7.1 Wider impacts on strategic partners

7.1.1 The Technology Strategy Board and CR&D partners at national and regional levels

provide direct funding to CR&D of some 6.5% of project expenditure and provide

resources in kind through helping to develop the CR&D strategy, exchange views and

become involved in the different stages of applications and project monitoring. They

also provide some advice to businesses, in particular, on their innovation services (as

well as funding), the relationship to CR&D and refer potential participants to CR&D.

7.1.2 All the partners consulted considered that CR&D helped them to achieve their

objectives with respect to collaborative innovation and R&D, prototyping and

demonstrating outputs, and deploying them through exploitation. CR&D, in their

view, contributed to the strategic alignment of programmes and a more joined up

approach in the public sector support for key priority sectors, technologies and

platforms as well as the challenge and competitive approach to collaborative projects.

This allows the partner and CR&D funding to be more focused than it otherwise

would be and the risks to be shared, culminating in additional benefits to the UK

economy. Partners also referred businesses and academics on their own

programmes to CR&D to help underpin the collaborative approach and ensure

outcomes could be achieved. The joint working contributed to the synergies between

partners and the innovation programmes.

7.2 Wider impacts of project partners

7.2.1 The survey investigated recipients’ views about whether there were any positive or

negative wider effects of CR&D projects on other firms and organisations, and on the

wider economy. They were asked, first, whether they thought there had been, or are

likely to be any positive effects from the projects, on their customers, suppliers or

competitors. Table 7.1 shows that most recipients thought the project effects would

be felt more by their customers. Almost half of the recipients (48%) believed this to be

the case. One in six (17%) thought their suppliers had benefited, and just over one in

ten (13%), their competitors. It is worth pointing out that almost one in three of the

recipients (31%) did not think their projects had had any positive effects on their

customers, suppliers or competitors.

PACEC Wider Effects


Table 7.1 Positive effects on customers, suppliers or competitors


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Customers 48 45 54 54 27 n/a

Suppliers 17 16 18 17 14 n/a

Competitors 13 13 12 14 10 n/a

None of these 31 32 29 29 37 n/a

Don’t know 19 21 17 16 34 n/a



7.2.2 The majority of those who indicated there had been any positive effects at all thought

that the impact had been strongest in technology and other innovation practices

(60%). Around one in three (30%) thought it was business performance that had

benefited, and just over a quarter (27%), products and services. Just over a fifth

(23%) cited the impact on processes, and another fifth (21%), the impact on R&D

activities. See Table 7.2.

Table 7.2 Partner’s views on the nature of the impact


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

R&D activities 21 24 17 20 30 n/a

Technology / innovation practices 60 67 51 59 68 n/a

Products /services 27 28 27 27 31 n/a

Processes 23 16 35 21 38 n/a

Business performance 30 34 24 30 32 n/a

Other 16 13 20 16 13 n/a



7.2.3 The recipients were, on the whole, quite optimistic that the outputs and knowledge

from their projects would be disseminated or transferred. More than two-thirds

thought the outputs would be disseminated widely; with almost half (46%) suggesting

this would be done quite widely, and more than one in five (23%) very widely. A little

over a quarter (27%) thought dissemination would be limited somewhat. See Table

7.3.

PACEC Wider Effects


Table 7.3 Partner’s views on the likely dissemination or transfer of project outputs


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Very widely 23 23 22 21 31 n/a

Quite widely 46 47 42 44 49 n/a

Limited amount 27 25 31 29 18 n/a

Not at all 5 5 5 6 2 n/a



7.2.4 Those who indicated the outputs would be widely disseminated believed they would

have a world-wide audience. Table 7.4 shows that almost nine in ten (86%) thought

the outputs would have international application. One in three (32%), however,

thought dissemination was likely to be limited to the UK. At the same time, more than

one in ten respondents (12%) thought the product outputs would have application in

other sectors, while a much smaller proportion thought they could be applied to other

technologies (six per cent) or other products (four per cent).

Table 7.4 Recipients’ views on the likely areas for wider dissemination of project outputs


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Across UK 32 33 29 32 32 n/a

Internationally 86 85 86 84 90 n/a

Other technologies 6 8 2 5 11 n/a

Other sectors 12 12 10 11 14 n/a

Products/services 4 4 2 3 5 n/a

Processes 1 1 1 1 2 n/a


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (Q34B) – see section 1.4 for explanation of ESS, Bolding and Shading

7.2.5 Given their views about the positive effects of the project outputs on their customers,

suppliers and competitors, it is not surprising that the overwhelming majority of these

also did not think there had been any negative effects on those organisations. See

Table 7.5.

PACEC Wider Effects


Table 7.5 Organisations suffering negative effects


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Customers 1 0 1 1 0 n/a

Suppliers 1 0 1 1 0 n/a

Competitors 2 3 1 2 0 n/a

None of these 83 83 85 84 80 n/a



7.2.6 Lastly in this section, the recipients were asked what they thought would happen to

the sales arising from the project, if they suddenly ceased trading. Their views were

highly polarised. Half of them (50%) did not think any of their sales would be taken by

UK competitors, while almost two-fifths (37%) thought all their sales would be. Just

over one in ten (13%) thought this would be somewhere in-between the two. See

Table 7.6.

Table 7.6 Partner’s views on % of sales arising from the project that would be taken by UK competitors if they ceased trading


Recipient

All


Recipient market


Recipient Academic

Non Recipient

All

None 50 54 41 58 26 n/a

1-49% 6 7 5 6 6 n/a

50-99% 7 6 9 4 16 n/a

100% 37 33 45 32 51 n/a



PACEC Additionality of the projects


8 Additionality of the projects

8.1.1 The respondents were asked a series of questions intended to find out what they

thought might have happened to their firms’ projects if they had not received funding

from the CR&D scheme. Table 8.1 provides further evidence of the importance of

CR&D funding to the success of the recipients’ projects. Seven out of ten of all

recipients (70%) indicated that they would definitely not have proceeded with their

project if they had not received a CR&D award. One in six (16%) said they would

probably not have gone ahead with their project. Only around one in ten were certain

they would have probably (seven per cent) or definitely (two per cent) gone ahead

without CR&D funding.

Table 8.1 Recipients’ views on whether their project would have gone ahead without a CR&D award


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Definitely 2 2 4 2 2 n/a

Probably 7 7 6 7 6 n/a

Possibly 4 3 7 5 1 n/a

Probably not 16 20 10 17 16 n/a

Definitely not 70 69 73 69 74 n/a



8.1.2 The majority of those who indicated that their project would have definitely or

probably proceeded without the award conceded they would have delayed the project

for anything up to five years. Approximately two-thirds would have delayed their

project for 1-2 years, and a fifth (21%), for between three and five years. Only one in

ten (11%) thought their project would have gone ahead at the same time it did.

8.1.3 Only a small number of those saying they would have proceeded without CR&D

funding provided some indication about the likely scale of the project. Around half of

these (52%), thought it would have been on the same scale. The rest believed the

projects would have been smaller; and, variously, between a quarter (15%) and

three-quarters (13%) of the present scale. See Table 8.3.

8.1.4 The same respondents were asked about the scope of their project, if they had not

received CR&D funding. The majority (65%) were, again, certain that the aims and

focus of their project would have been the same. The rest thought the scope would

have been different: and either slightly (11%), moderately (13%) or very (11%)

different. See Table 8.4.



Table 8.2 Timing of the projects without CR&D funding


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Sooner 2 0 5 2 0 n/a

Same 11 5 20 13 0 n/a

1-2yr later 66 73 56 60 100 n/a

3-5 yrs later 21 23 19 25 0 n/a

6+yrs later 0 0 0 0 0 n/a



Table 8.3 Scale of the project without CR&D funding


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Greater 2 0 5 2 0 n/a

Same 52 66 30 50 69 n/a

¾ the size 13 12 14 13 12 n/a

½ the size 18 8 35 18 19 n/a

¼ the size 15 14 16 17 0 n/a



Table 8.4 Scope of the project (aims / focus) without CR&D funding


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Same 65 68 59 66 60 n/a

Slightly different 11 12 10 11 11 n/a

Moderately different 13 6 24 11 29 n/a

Very different 11 14 6 13 0 n/a



8.1.5 68% of the case study interviewees stated that they were currently active in exploiting

the outputs of their projects. On average, they felt that they were two years ahead of

their competition in terms of technological development and market exploitation.

8.1.6 Lastly, in this section, those who indicated they would have proceeded without CR&D

funding were probed further to find out about the possible alternative sources of

funding they would have used for their projects. As can be seen from Table 8.5, the

large majority (65%) would rely on their own (internal) finances. Around one in ten

(12%) would have applied for a research and development grant (GRD), and a



smaller proportion that this, other businesses loan or business angel finance (eight

per cent in each case).

Table 8.5 Firms definitely or probably proceeding without CR&D funding: types of finance that would have been used


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Internal funding 65 52 84 72 26 n/a













Other RDA funding 5 5 5 6 0 n/a




Other 19 32 0 14 49 n/a



PACEC Assessment of the scheme


9 Assessment of the scheme

9.1.1 In the final section of the research questionnaire, the recipients were asked for their

overall assessment of the CR&D scheme, and also their views on how they thought

the scheme might be developed or improved.

9.1.2 The assessment started by asking respondents how their participation had satisfied

their initial objectives when they applied for a CR&D grant. Table 9.1 shows that the

majority of recipients were convinced the scheme had satisfied their objectives for

joining in the first place. Just under a quarter (23%) thought the scheme had only

partly satisfied their objectives. Two-fifths (39%) were more positive, and thought the

scheme had largely satisfied their objectives, while around a third (31%) went further,

and thought the scheme had wholly satisfied their objectives for joining.

Table 9.1 Extent to which participation in the CR&D scheme generally satisfied objectives


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Wholly 31 27 39 27 47 n/a

Largely 39 41 36 41 32 n/a

Partly 23 25 18 25 16 n/a

To small extent 4 5 4 4 4 n/a

Not at all 3 3 3 3 1 n/a



9.1.3 The recipients’ views about the critical factors to the success of their projects are

summarised in Table 9.2. By far the most important success factor was the level of

collaboration engendered by the project. Three out of five recipients (59%)

highlighted this. Just over a third (35%) attributed success to the contribution the

grants made towards project costs, while roughly one in five believed the knowledge

(22%) and skills (21%) they developed from the project had been invaluable.

9.1.4 The full range of the critical success factors cited by the recipients is presented in

Table 9.3.



Table 9.2 Critical factors to the success of the project (summary)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Cost 35 42 23 34 39 n/a

Collaboration 59 51 73 57 65 n/a

Knowledge 22 26 17 21 28 n/a

Skills 21 19 23 18 30 n/a

Market 1 2 1 1 5 n/a

Other 9 11 5 9 8 n/a

None 7 8 5 8 3 n/a



Table 9.3 Critical factors to the success of the project (detail)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Cost of finance 1 1 2 2 0 n/a

Cost of R&D / innovation 19 21 14 18 20 n/a

Access to finance 16 19 10 14 21 n/a

Reduction in economic risk 4 5 1 4 1 n/a

Collaboration with businesses 52 47 62 49 63 n/a

Collaboration with HEIs 34 30 40 36 26 n/a

Technical challenge 18 21 14 18 20 n/a

Leading edge research 11 13 8 8 22 n/a

Ability to arrange IPR 3 3 3 3 4 n/a

Commercialisation skills 4 4 3 4 4 n/a

Technical / R&D skills 18 17 21 15 28 n/a

Equipment, research infrastructure 4 4 3 4 4 n/a

Meeting UK/EU regulation 1 0 1 0 2 n/a

Other priorities of the Bus/HEI 0 1 0 0 2 n/a

Competitor products/services/processes 0 0 0 0 2 n/a

Low/uncertain demand for products/services 0 0 1 0 0 n/a

Other 9 11 5 9 8 n/a

None 7 8 5 8 3 n/a





Table 9.4 Mean assessment of the scheme (1=Very Poor 2=Poor 3=Fair 4=Good 5=Very Good)

Statistics of all respondents. (by Competition and Sector)

Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Application process (incl. lead time, forms) 3.7 3.7 3.7 3.7 3.8 3.2

Technology areas 4.1 4.0 4.2 4.1 4.0 3.2

Support from the CR&D team 3.9 3.9 4.0 3.9 4.0 3.0

Amount of grant 3.6 3.7 3.6 3.6 3.8 3.0

Other 3.3 3.3 3.4 3.3 3.4 3.0


Respondents could select several options; so percentages in any column may sum to more than 100 Source: PACEC CR&D survey (Q39A1+q39a2+q39a3+q39a4+q39a5) – see section 1.4 for explanation of ESS, Bolding and Shading

9.1.5 The most common suggestions for improvements to the scheme offered by the

survey respondents and case study interviewees was to simplify and streamline the

necessary paperwork to apply for and participate in the scheme, and reduce

bureaucracy. The case study interviewees reported mixed experiences with their

monitoring officers, but it was commonly reported that a monitoring officer with good

knowledge of the relevant industry could provide significant benefits. Another

example of potential good practice to improve the scheme would be to extend and

encourage networking outwith the project partners (including with competitors),

perhaps via “marriage brokering”.

9.1.6 Finally, the respondents were asked what barriers they thought may prevent them

from carrying out research and development in the future. Table 9.5 provides a

summary of the principal barriers. It is clear that by far the biggest constraint on the

ability of organisations to undertake research and development activities is the cost

associated with the process as a whole. It is not only the cost of the innovation

activity itself, but also other elements, such as the cost of finance, and access to

finance. It is notable that a third of the respondent recipients did not think there were

any significant barriers to carrying out research and development.



Table 9.5 Barriers to carrying out R&D in the future (summary)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Cost 55 57 50 53 61 55

Collaboration 6 6 6 5 9 6

Knowledge 4 3 5 4 1 3

Skills 2 2 3 3 2 0

Market 4 3 5 5 1 6

Other 12 12 13 12 12 3

None 34 33 37 34 37 38



9.1.7 Table 9.6 shows full details of the barriers cited by the respondents.

Table 9.6 Barriers to carrying out R&D in the future (detail)


Recipient

All


Recipient Market


Recipient Academic

Non Recipient

All

Cost of finance 11 11 11 12 9 9

Cost of R&D / innovation 41 42 41 42 41 26

Access to finance 24 25 22 21 34 31

Economic risk 10 11 9 11 7 9

Collaboration with businesses 5 5 4 4 8 6

Collaboration with HEIs 3 2 4 3 2 4

Technical challenge 3 2 5 4 1 1

Leading edge research 0 0 0 0 0 0

Ability to arrange IPR 1 0 1 1 0 2

Commercialisation skills 1 0 1 1 1 0

Technical / R&D skills 2 2 3 2 1 0

Equipment, research infrastructure 0 0 1 0 0 0

Meeting UK/EU regulation 1 1 0 1 0 0

Other priorities of the Bus/HEI 1 1 2 2 0 6

Competitor products/services/processes 1 1 0 0 1 0

Low/uncertain demand for products/services 2 1 4 3 0 0

Other 12 12 13 12 12 3

None 34 33 37 34 37 38





9.1.8 Reinforcing the above conclusion that cost is the main barrier to R&D, the survey and

case study interviewees commonly stated that the best thing that the Technology

Strategy Board could do to help overcome R&D barriers was to provide more funding.

Specific suggestions by the project partners included improved cohesion in the

process of funding projects between the prototype and production phases, and

increased speed of funding, particularly for the smallest companies, which are most

sensitive to cashflow, especially in the current financial and funding climate and

uncertainty.

9.1.9 The strategic partners made some similar points to the project partners in the context

of their support for CR&D and the role that it played in assisting them to meet their

objectives. It was considered that there could be more consultation on policy

changes made for CR&D at the planning and strategy development stage, and the

launch of competitions and challenges. At the application stage, suggestions were

made to give more notice in advance of challenges, the inclusion of more academics

as assessors on applications, the provision of application outcome decisions in

advance and prior to agreeing the details (e.g. IP arrangements) and the streamlining

of the process. The monitoring of projects could also be more consistent, reflecting

guidelines.

PACEC Key Findings


10 Key Findings

Key Findings for the Research

This chapter sets out the main summary points from the chapters above. The

findings in terms of the evaluation aims are shown in the Executive Summary.

Panel 10.1 Characterisation of Projects

● There were a total of 396 CR&D projects, awarded between 2004 and early 2009, on which the evaluation focused. The value of grants was £195m.

● There was a total of 253 enabling technology projects that received a total £134 million in grants, mainly in Advanced Materials and Micro and Nanotechnologies (77 projects), and electronics, photonics and electrical systems (70 projects).

● There were 143 market application projects that received a total of £61 million in grants, mainly energy generation and supply projects (52) and environmental sustainability projects (45).

● Projects most commonly involved three total partners (23% of cases), but were roughly equally likely to involve four partners (20%), five or six partners (19%), seven or more partners (19%), or just two partners (18%). Larger grants generally went to projects with more partners.

● All projects had business partners. More than two-thirds of the projects (69%) were projects that involved one or more academic partners. Projects involving academic partners tended, on the whole, to receive larger grants.

● The majority of the projects have been operating for at least two years. Two out of five (44%) have been established for three years or more.

● More than 60% of the £195 million went to projects that were three years or older.

● Grants received made significant contributions to the total project costs. Almost two-thirds of the projects (67% or 264 projects) had half or more of their total costs reflecting the CR&D management information covered by the CR&D grant.

PACEC Key Findings


Panel 10.2 Project Participants

Project details

● Completed interviews were held with 336 partners participating in 167 projects.

● Almost three-quarters of the partners (73%) indicated that the lead partner was the main initiator of the project.

● By far the largest input to projects as an activity was applied research undertaken by the partners (59%). The other input of note was product development (16%).

● The overwhelming majority of partners described the level of collaboration between the partners as either significant (45%) or high (36%).

Company background

● Around half of the partners in projects (51%), as the largest group, were independent businesses at the time the project started and this did not change in broad terms during their participation in CR&D.

● The majority (65%) of the partners at the start of the project were SMEs. Of these, around a fifth (19%) were micro businesses with fewer than ten employees.

● Very few of the participating organisations (four per cent) indicated that they did not have any employees engaged in research and development (R&D).

● More than half of the businesses (55%) started trading before 2000.

● Just over two-fifths of partners (42%) were involved in production activities, followed by R&D (30%), services (18%) and education (11%).

● One in five business partners were either a spin-off from an existing business (nine per cent) or a spin out from a university or college (four per cent), or the result of a merger or acquisition of an existing business (four per cent), or a management buy-out (three per cent).

● The overwhelming majority of the partners were located in England. Only a handful were in each of the other three regions / devolved administrations.

● The majority of the partners operated in their local area, with just under two-thirds (65%) indicating they only had sites in their region.

● It is also notable that just over one in five (21%) had global operations.

● At the start of the project, the majority of the recipients (68%) were looking to grow moderately. Just under one in five (17%) were more ambitious, and looking to grow significantly. The relative positions of the partners had altered only slightly at the time of the survey, with lower growth expectations – which probably reflects the current economic context and uncertainty.

● Three-fifths of partners (60%) indicated the project was either critical (16%) or very important (44%) to their R&D/innovation activities, whereas fewer than half of the partners (46%) indicated that the project was either critical (10%) or very important (36%) to their organisation’s growth.

PACEC Key Findings


Panel 10.3 Objectives of Project Partners

● The main objectives for participating in CR&D were to generate products and processes (89%) and to develop technological applications (88%)

● For the development of products and processes as a key aim, three-fifths (59%) of all partners indicated they wanted to use their project to develop new products or services, while almost half (48%) suggested they wanted to reduce the environmental impact of existing practices and activities.

● The principal objective of the partners regarding the application of technology, was to access and develop new scientific or technical knowledge (64%)

● With regard to CR&D’s contribution to costs, almost three-quarters (73%) of the recipients indicated they wanted to share the risk of their investment in R&D, but almost two-fifths (38%) wanted to use the project to lever in other private sector finance to help the development of the project.

● More than half (55%) wanted to use the scheme to access partners’ technical skills and other research and development skills. Over two-fifths (44%) thought their projects would enable them strengthen collaboration with other businesses.

● On innovation, the dominant motivation of the majority (64%) was the need to improve their technical skills.

● On final overall impacts of CR&D, around one in three partners stated as an objective that the project would help them increase the value of their business (37%); improve the image and reputation of their business or academic institution (34%); enter new markets or increase their market share (30%).

● Cost was by far the most important barrier the partners faced when considering whether or not to carry out their project without CR&D. More than two-thirds of the survey respondents (68%) indicated cost was a significant constraint, i.e. costs for R&D or innovation in general.

● Only one in six partners (16%) had sought alternative funding before applying for a CR&D grant.

● They relied mostly on their organisation’s own finances (13%), and grants and funding from research councils (13%).

● The vast majority (79%) had not sought additional finance for R&D and innovation from elsewhere once their project was underway.

● The additional funding had come mostly from their internal sources, from other public sector sources (primarily RDAs including GRD and Research Councils) and to a lesser extent from venture capital and business angel sources.

PACEC Key Findings


Panel 10.4 Intermediate Changes to Attitudes and Behaviour

● The main actual (or likely) impact of CR&D was that it had reduced and contributed to costs for 90% of partners. For 85% CR&D helped spread the risk of investment and for 74% it helped to lever in finance.

● In terms of R&D aims, the projects had strengthened collaborative activity with business partners (84%) and higher education institutions (73%), but also provided access to technical and R&D skills (67%), as well as to leading edge research (59%).

● With regard to innovation aims, the largest actual or likely impacts were improvements in the technical knowledge and understanding of partners (84%), and improvements for their overall attitudes to collaboration (43%).

● In terms of technological application aims, CR&D allowed the technical feasibility of ideas to be assessed (83%), and the application of technologies to be explored (78%).

● Nearly nine out of ten (87%) of partners said that products and processes had been or would be developed. More than two-thirds of recipients (70%) pointed to the development of new products or services.

● A relatively high proportion of the partners said that the projects had resulted in significant impacts – around two-thirds thought there had been significant impacts on innovation activities (68%) and on technological applications (66%).

● Almost 80% of the partners identified social impacts arising from their projects. The most common social impacts were those arising from environmental impacts (43%) and improvements to the ability to access information and knowledge (22%).

● Seven out of ten partners said that their project had had beneficial environmental impacts, such as more efficient use of energy (27%) and reduced carbon emissions (25%).

● Using Technology Readiness Levels (TRLs), there was a major shift from the basic / concept levels at the start of their projects (76%) to the operational levels at the end of the projects (60%).

● In projects where products or services are likely to reach the market, in about half the cases (49%) the outputs from their projects were already on the market, and in some cases had been since 2005.

● One third of partners expected their projects to result in at least one item of intellectual property. For most of these (21%) it would be one patent.

● Just over a third of patents are either jointly owned (19%) or involve a licensing agreement between the partners (23%).

● Two out of five partners (42%) did not foresee any potential barriers to bringing their products to market. Those who anticipated any difficulties, cited the high costs involved (14%), lack of knowledge, in particular the technical challenges involved (12%), and the particular demands of markets (11%).

● A third of the partners (32%) had sought further finance to enable them to exploit the outputs of their projects, and to introduce new or improved products into the market place. In terms of further finance, business loans, venture capital loans and equity funding, and internal funding were mentioned as the main sources.

● Almost two-thirds of those surveyed (64%) said that getting the CR&D grant has made it easier for them to obtain other finance.

PACEC Key Findings


Panel 10.5 Business Performance and Economic Impacts

Business Performance Impacts

● By far the most important impact of the project was the way in which partners believed it would improve their image and reputation as a business or academic institution (79%).

● Three-fifths (62%) also indicated that the project would increase the value of their business.

● More than half thought CR&D would enable them to enter new markets or increase their market share (53%), increase their employment (56%), turnover (53%), or profits (51%).

● Businesses were significantly more likely than academic institutions to anticipate improved business performance effects. Academic institutions, not surprisingly, were more likely than businesses to expect an increase in publications.

● In cases where the respondents were able to quantify the number of jobs created or safeguarded, there was a very large spread between those generating 1-9 jobs (31%) 10-99 jobs (four per cent) and 100+ jobs (two per cent).

● The average salary pertaining to the jobs was between £15-29k.

● One in three recipient organisations who were able to quantify an increase in turnover (31%) generated annual turnover of less than £100,000 from their project. A small proportion reported higher turnover of £10-99 million.

● The majority (54%) were not sure how long their businesses would maintain the current level of business performance. However, more than a third (35%) believed the effects would last six years or more.

● Almost three-fifths of the recipient businesses (57%) were confident that they would have created and safeguarded the same (i.e. all) number of jobs, in the absence of the grant.

● More than half of the recipients (56%) believed they would have achieved the same level of turnover without the CR&D grant.

PACEC Key Findings


Panel 10.6 Business Performance and Economic Impacts (cont)

Economic impacts: Employment

● There are likely to be 23,700 Full Time Equivalent (gross) jobs safeguarded or created as a result of the projects supported by CR&D grants, of which 1,360 have already been safeguarded or created.

● 9,360 (40%) of these gross jobs would have been created/safeguarded without the CR&D grants, yielding 14,340 gross additional jobs.

● 5,440 (38%) of the gross additional jobs are likely to displace jobs in other UK organisations which are not funded by CR&D, yielding 8,900 net additional jobs

● The net additional jobs are likely to support 4,450 supply chain jobs (using a multiplier of 1.5), yielding a total of 13,350 full net additional jobs.

● The cost per net additional job is £32,000 (or £36,000 in 2010 prices).

● All the partners consulted considered that CR&D helped them to achieve their objectives with respect to collaborative innovation and R&D.

● The joint working contributed to the synergies between partners and the innovation programmes.

Economic impacts: Gross Value Added (GVA)

● Using the full employment costs of the employment impacts (and excluding profits), Gross GVA of (at least) £843m per annum is likely to yield full net additional GVA of £467m per annum.

● The business performance impacts are estimated to last for just over 6 years, yielding net cumulative GVA of £2.9bn.

● For each £1 of CR&D grant, there is an increase in GVA of £6.71 (or £5.75 in constant 2010 prices).

Economic impacts: variation by projects and partners

● There is very little difference between the effectiveness of CR&D (as measured either by cost per job or GVA generated per unit of grant) between the Enabling technologies and the Market Led grants as a whole. While there is considerable variation between the individual sectors, caution should be applied to drawing any conclusions due the relatively small sample sizes and due to the extreme Pareto plus effect where less than a fifth of the projects (five per cent) produce more than four fifths (87%) of the impacts.

● While business performance effects in academic partners are almost a tenth of those in business organisations, the overall business impacts in projects with no academics is around half that where there are two or more academic partners. Furthermore, projects with 2 or 3 partners produced around a third fewer business impacts than those with more partners.

● Larger grants (over £750k) are less effective than small and medium sized grants.

● Business impacts are five times greater in late (2007 or later) projects compared with early (2006 or earlier) projects. The extent to which this is due to greater realism (and less optimism) in older projects is not known.

PACEC Key Findings


Panel 10.7 Wider Effects

● Technology Strategy Board and CR&D partners provide some direct funding to CR&D and are involved in implementation and the referral of partners.

● All the partners consulted considered that CR&D helped them to achieve their objectives with respect to collaborative innovation and R&D.

● The joint working contributed to the synergies between partners and the innovation programmes.

● Most partners considered that the wider project effects would be felt more by their customers (48%) rather than suppliers or competitors.

● The strongest impacts were with regard to technology and other innovation practices (60%).

● The partners were, on the whole, quite optimistic that the outputs and knowledge from their projects would be disseminated or transferred (69%).

● Those who indicated the outputs would be widely disseminated believed they would have an international audience (86%).

● The overwhelming majority (83%) did not think there had been any wider negative effect of their projects.

● Half of the partners (50%) did not think any of their sales would be taken by UK competitors (if they were to cease trading tomorrow – as a measure of displacement), while almost two-fifths (37%) thought all their sales would be.

Panel 10.8 Additionality of the Projects

● Seven out of ten partners (70%) indicated that they would definitely not have proceeded with their project if they had not received a CR&D award. One in six (16%) said they would probably not have gone ahead with their project.

● The majority (87%) of the relatively small group that indicated that their project would have definitely or probably proceeded without the CR&D considered that it would have been delayed – by anything up to five years. By and large the project would have been on the same scale and scope.

● A large majority (65%) would rely on their own (internal) finances in the absence of CR&D. Around one in ten (12%) would have applied for a research and development grant (e.g. GRD).

PACEC Key Findings


Panel 10.9 Assessment of the scheme

● The majority of project partners (70%) considered that CR&D had wholly or largely satisfied their objectives. Just under a quarter (23%) through the scheme had only partly satisfied their objectives.

● By far the most important success factor was the level of collaboration stimulated by their project (59%). Just over a third (35%) attributed success to the contribution the grants made toward project costs, while roughly one in five believed the knowledge (22%) and skills (21%) they developed from the project had been invaluable.

● By far the biggest constraint on the ability of partners to undertake research and development activities is the cost associated with the process as a whole (55%), e.g. finance and access to finance.

● A third of the partners (34%) did not think they were left with any significant barriers to carrying out future research and development.

● The strategic partners made suggestions to consult more on policy changes and competition launches. They also suggested the application process could be streamlined and shortened, with advance decisions given, and the monitoring and projects could be more consistent.

Documents

Evaluation of the Collaborative Research and …webarchive.nationalarchives.gov.uk/20130221185318/http:/www... · Technology Strategy Board Evaluation of the Collaborative Research