This publication explores the emerging concept of behavioural additionality and summarises results of a multinational effort to develop better ways of measuring it.

1. Government R&D Funding and Company Behavior Measuring Behavior Additionality H.C. Kuo2009.11.12

2. Problematic Evaluation

3. The Grant Cycle

4. Problematic Questions about the effectiveness of government financing of business R&D are of growing importance to policy makers Does it encourage firms to pursue different types of R&D, or to include more collaboration in the R&D process? Do firms develop improved R&D managementcapabilities that lead to enduring changes in their R&D strategy and performance?

5. Problematic Project Fallacy Traditional studies of the impact of public R&D grants on recipient firms have often failed to distinguish between a single sponsored project and the longer-term business innovation effort of which it is part Measurement and attribution It is also difficult to define which effects to measure, and to attribute these to a specific government intervention

6. Research Framework Definition Theoretical foundations Cases by Countries

7. Additionality: a Definition Important concept in public finance Addressing the issue of whether public support is resulting in new activity rather than substituting for private support that would have occurred in the absence of the intervention Dimensions InputAdditionality: budget… OutputAdditionality: profits, patents, products… BehavioralAdditionality

8. The Grant Cycle

9. The Grant Cycle Input Additionality Behavioral Additionality OutputAdditionality

10. Measuring Behavioral Additionality

11. Theoretical foundations Resource-based view of the innovative firm Firms:bundles of resources that are unique and difficult to imitate, such astechnological knowledge, human resources (including R&D personnel), and capitalstrength proposes resourcebuilding and construction as a way to leapfrog the competition Value innovation proposes that companies that grow the most are those that are able to get intoentirely new market segments Kim and Mauborgne (2004)

12. Measuring Behavioral Additionality Cases by Countries

13. Case Study: UK

15. has either annual turnover of less than €50million or a balance sheet of no more than €43 million.

17. Case Study: the UK SMART & LINK LINK Collaborative Research: two partners – one business and one research base Peer Review: the scientific quality of the research is maintained by peer review Pre-Commercial Maximum Funding 75% for feasibility 50% for core research 25% for development

18. Case Study: the UK SMART & LINK

19. Case Study: the UK SMART & LINK Behavioral Additionality Effects Human resources: people recruited as a result of one grant were subsequently key contributors to later work. Technological knowledge and skills: enhancements during one grant were applied in subsequent innovation activities. Networking: partners and contacts acquired as a result of one grant formed the basis of subsequent collaborations.

20. Case Study: the UK SMART & LINK Behavioral Additionality Effects Reputational and prestige benefits accumulated through a track record of awards. External knowledgeabsorption: distinct from networking but often a consequence Using public support: in the context of the critical role of public funding for R&D that was reported by these SMEs, it can be argued that an important dimension of learning is the ability initially to win, and then to sustain, public support through successive applications Improved innovation management capabilities

21. Case Study: EU

22. Case Study: the EU’s 5th FP European Context fund as a structural policy tool The EU Framework Programs for Research and Technological Development the main instrument: research, science and technology policies. introduced in 1984 originally conceived as research support mechanisms promoting scientific excellence and the competitiveness of European industry. the fifth framework programme (FP5, 1999-2003)

23. Case Study: the EU’s 5th FP Rejected applicants: actual changes in project characteristics

24. Case Study: the EU’s 5th FP Amongst the population of rejected applicants, the absence of FP5 funding resulted in carrying out some of these projects: a longer time scale similar expectations and partners with no substitute for EU funds more ambitiousobjectives

25. Conclusion BAs: During the Project BAs: After the Project Contribution

26. During the Project

27. BAs: During the Project Decision Changes At least at the Project Level Acceleration Enabling a firm to move ahead Expansion Scale and Scope Risk Taking To take on more challenging R&D projects

28. After the Project

29. BAs: After the Project Collaboration ½ to 2/3  new collaboration Follow-up ½ to 2/3  Additional projects funded Management capabilities Further participation in Government programs Organizational changes for R&D Management strategies changes

30. BAs Summary

31. Contribution BAs: Useful vocabulary for explanation, rather illustration（the black box） Conceptual bridging the neo-classical approach with the systemic approach by evaluating the difference in behavior on the firm level due to government financial support has gained support The delivery mechanism for grants and the contacts between the agency and firms are as much a part of the effects as is the finance itself The legitimacy of policy intervention Tax orGrant ?

32. Contribution Measurement Issues Case studies a still favored method Survey approach much of theevidence comes from surveys of program participants Cumulative approach accurate results may take years rather than the three months typicallyallocated to a routine evaluation theassessment of long-term learning and persistence of effects is crucial

33. The End Thank You