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THEME 4: EXPANDING BUSINESS INNOVATION
Main Issues
1. Business Innovation covers a wide spectrum of activity, from at one end, innovation building on scientific advances, through to, at the other end, less science-based activity such as adoption of new business processes and new design. All can lead to competitive advantage, and we do not seek to value one more than another. The two main issues under this theme are how to increase business investment in research and development, and how to build a more pervasive culture of innovation in our company base.
Investment in R&D
2. In 2003, Scotland's businesses on average invested in R&D at around half the rate as in the UK as a whole; at 40% of the OECD average; and at 30% of the target in the European Union for 2010. Over the last 6 years there has been some improvement in our figures, but clearly much remains to be done. Our investment data are also particularly volatile because much investment is concentrated in a small number of firms in a small number of sectors, many of them foreign-owned. Losing one or two of these firms could seriously reduce the Scottish figures but, conversely, attracting one or two major firms willing to spend substantial amounts on R&D could improve the figures dramatically.
3. The Partnership Agreement commits the Executive to working with businesses to increase their investment in research and development to match more closely our competitors in the OECD.
We need to:
- Maintain or grow R&D in sectors where Scotland is strong
- Attract investment into Scotland from multi-nationals willing to carry out R&D
- Increase R&D intensity in firms or sectors that are lagging behind; and
- Develop new R&D intensive sectors and the creation of R&D intensive SMEs
- Increase involvement in the EU Framework Programmes for collaborative R&D
Business Innovation
4. The Community Innovation Survey shows that innovation in Scottish firms is overall at a lower level than in the UK, and that they depend more on the public sector to support their innovation activity. As we move increasingly towards an economy where competitive advantage lies in innovation we need to develop and maintain a climate that encourages our firms to innovate continuously as part of their overall business model. This impacts on all areas of the economy: it applies in all sectors and to all sizes of firms whether high-tech or traditional.
5. Views are sought in this consultation on what else can and should be done to expand business investment in R&D and to grow innovative firms more generally.
Commitments and actions from the Progress Report on the science strategy
6. In responding to this consultation it would be helpful to have views on the following proposed aspirations and actions:
Long term aspirations
- Increase business investment in research and development to match more closely our competitors in the OECD
- Encourage the acceptance of a climate that encourages business investment in R&D, particularly through links with the science research base.
- Scotland to be in the top quartile of EU regions for innovation indicators allied to businesses
- Ensure the Executive has a portfolio of connected policies that encourages firms to increase their level of innovation activity to match that of our international competitors.
Short to Medium Term Action Points
- Work with Scottish Development International to increase inward R&D investment.
- Maintain our pipeline of support for innovation and commercialisation of research from the science research base.
- Work with the Intermediary Technology Institutes to increase the amount of business-relevant R&D undertaken and exploited in Scotland.
- Use the Executive's Business Support Review to streamline and increase the effectiveness of our support for business R&D
- Develop mechanisms to encourage academia and industry to participate in European Framework Programme 7.
- Work with businesses and their representatives to encourage more innovation as part of standard business models
- Develop new mechanisms for exchanging ideas and best practices and also for widely disseminating innovative and successful thinking.
- Work with research providers and businesses to ensure that Scotland benefits from initiatives under DTI's Technology Strategy.
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