- •Executive Summary
- •Box K1.1. Why is innovation important?
- •Box K1.2. Incremental and radical innovation
- •Figure 1.1. Driving forces of innovation
- •Table 1.1. Innovation style at different stages of the firm
- •Table 1.2. Closed innovation versus open innovation principles
- •Table 1.3. The benefits of collaboration
- •Figure 1.2. Structure of the national innovation system
- •Box K1.3. Public-private partnerships for innovation
- •Table 1.4. Options for improving the functioning of an innovation system
- •Box K1.4. The public sector role as coordinator
- •Box K1.5. Innovation Agencies and Innovation Councils
- •Executive Summary
- •A. The importance of framework conditions
- •Box K2.1. Entrepreneurship as a driver of innovation
- •B. Local and regional dimensions
- •Box K2.2. Are local factors still relevant?
- •Box K2.3. Codified and tacit knowledge
- •C. The role of the business environment
- •Box C2.3. Good practices in company formation
- •Table 2.3. Basic principles in the organization and delivery of business services
- •Box K2.4. What is R&D and why it matters?
- •Table 2.4. Principles of designing tax incentives for R&D in firms
- •Figure 2.2. Eligibility of UK companies for R&D tax incentives
- •Table 2.5. Direct funding and tax incentives for R&D
- •Figure 2.3. Funding requirements lifecycle
- •Table 2.6. Taxonomy of types of support for early-stage companies
- •Executive Summary
- •A. Identifying industry-science linkages and the forms of public support
- •Figure 3.1. How the public and private sector can join forces in support of innovation
- •Table 3.1. Different categories and forms of industry-science relations
- •B. Supporting industry-science linkages at different stages of the innovation process
- •Table 3.2. Industry-science relations (ISR) and the institutional setting in public science
- •Table 3.3. Responsible Partnership Guidelines for Collaborative Research
- •Table 3.4. The types of technology that lead to spin-outs or established firm licenses
- •Executive Summary
- •A. Innovation support institutions and firms’ innovation activities
- •Table 4.1. Types of innovation support institutions
- •B. Business incubators
- •Box K4.1. What is a business incubator?
- •Box K4.2. Pre-incubation
- •Table 4.2. Performance evaluation: definition of key evaluation issues
- •Table 4.3. Performance evaluation: Definition of key performance evaluation indicators
- •C. Science and technology parks
- •Box K4.4. Different definitions of science parks
- •Table 4.5. Four science park models: Main features
- •Table 4.6. Profile of a typical North American university research park
- •D. Innovation clusters
- •Box K4.5. The main features of innovation clusters
- •Table 4.7. An illustrative framework for cluster monitoring, benchmarking and evaluation
46 Policy Options and Practical Instruments
___________________________________________________________________________
Direct public funding
The provision of public resources for financing specific R&D projects may be pursuing policy aims distinct from the promotion of innovation, although some positive spillovers can result (Table 2.5.). These projects may be administered by a variety of public bodies.
Table 2.5. Direct funding and tax incentives for R&D
Criterion |
Policy instrument |
||
Direct funding |
Tax incentives |
||
|
|||
Effectiveness in |
Varies depending on selection |
Generates R&D in excess of |
|
boosting levels of |
criteria, design, and capability |
||
lost revenue. |
|||
business R&D. |
of administrators. |
||
|
|||
Ability to target |
Good. Government can |
Limited. Some targeting of |
|
industries/sectors. |
establish criteria. |
SMEs. |
|
Ability to influence |
Can affect collaboration, |
Limited. Can encourage |
|
business R&D behavior. |
management of R&D. |
increased R&D investment. |
|
|
|
|
|
Selection of projects. |
Government selects among |
Industry decides without |
|
industry proposals. |
intervention. |
||
|
|||
Administrative costs. |
High, need to establish |
Low, but hard to estimate. |
|
bureaucracy. |
Enforcement costs vary. |
||
|
|||
Government skills |
Strong skills in selecting |
Effective, efficient tax |
|
projects, managing |
|||
needed. |
administration. |
||
programme. |
|||
|
|
||
Scope of participating |
Limited to selected firms. |
All R&D-performing firms, |
|
firms. |
but special regimes may exist. |
||
|
|||
|
Good for building R&D |
Good for providing basic |
|
|
capacity in specific sectors, |
||
|
financial incentive/reward to |
||
Summary |
concentrating resources. |
||
business; incremental |
|||
|
Incremental and radical |
||
|
innovation. |
||
|
innovation. |
||
|
|
||
Source: Adapted from Jerry Sheenan, Incentives and Support Systems to Foster Private Sector Innovation, presentation at the Science, Technology and Innovation Network IADB Regional Policy Dialogue, 16-17April 2007.
Ease of access to finance for early-stage companies
Entrepreneurs trying to transform new ideas into compelling commercial propositions face significant challenges in raising finance at the very early stages of development of a company. Venture capital financing cannot be relied on as an initial source of financing:
•Venture capital is not a source of funding for the proof of concept or seed stages. It only comes into play when the company achieves a certain minimum size.