R&D in the Thames Valley
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Research and Development in the Thames Valley Report prepared for the Thames Valley Enterprise and Innovation Group by Zella King Dept of Management The University of Reading Business School P O Box 218 Reading RG6 6AA [email protected] September 2003 R&D in the Thames Valley R&D in the Thames Valley Report for the Thames Valley Enterprise and Innovation Group TABLE OF CONTENTS 1. Executive Summary.......................................................................................2 2. Introduction....................................................................................................4 3. Setting the context..........................................................................................4 4. Model, Methodology and Data Sources.........................................................7 5. R&D inputs ....................................................................................................9 6. R&D expenditure by business .....................................................................12 7. Extent of product and process innovation....................................................14 8. The local research base ................................................................................16 9. Knowledge transfer between universities and business...............................18 10. Generation of patents ...................................................................................20 11. Innovation awards........................................................................................22 12. European comparisons.................................................................................22 13. Conclusions..................................................................................................25 14. Acknowledgements......................................................................................27 Appendix 1: Geographic definitions....................................................................28 Appendix 2: European comparator regions .........................................................30 1 R&D in the Thames Valley R&D in the Thames Valley Report for the Thames Valley Enterprise and Innovation Group 1. Executive Summary The report describes a small-scale study, conducted by the University of Reading on behalf of the Thames Valley Enterprise and Innovation Group. Its objective is to provide some baseline data establishing an indication of the Thames Valley’s performance in terms of innovation and R&D. In order to explore the sub-region’s R&D performance, a simple model, based on Robert Huggins Associates’ work on regional knowledge economies, has been applied: A Model of the R&D process Innovation R&D Regional R&D inputs capacity outputs outcomes At the request of TVEP, the Thames Valley’s performance in R&D terms is benchmarked against that of a number of UK and continental European sub-regions. These include, in the UK, Cambridgeshire, Oxfordshire and Greater London. The data used is that available from government and public sources, such as the Annual Business Inquiry, Eurostat regional statistics and the DTI’s R&D Scoreboard. R&D Inputs The Thames Valley’s inputs to the R&D process appear to be equivalent to Oxfordshire and Cambridgeshire. It has as many employees in R&D, although these are based in fewer, larger workplaces. This possibly reflects the greater proportion of subsidiaries of foreign-owned firms in the Thames Valley. The local research base (in terms of university research and other non-commercial institutes) is significantly smaller than that in Oxfordshire, Cambridgeshire or Greater London. Innovation Capacity Expenditure on R&D: Although more money is spent on R&D by commercial firms in the Thames Valley than by firms in Oxfordshire or Cambridgeshire, their expenditure is a smaller proportion of total sales. The Thames Valley’s research base (outside commercial organisations) is a much smaller player in funding terms than in the other sub-regions. The nature of business innovation: Indicative data suggests that Thames Valley firms are less likely to generate novel innovations (i.e. that are new to their market or industry) than Cambridgeshire or Oxfordshire firms, although they are more likely to do so than the Greater London firms. 2 R&D in the Thames Valley Knowledge transfer between universities and business: The University of Reading appears to be very successful in knowledge transfer partnerships with SMEs, and, for its size, performs well in comparison with Oxford and Cambridge Universities in terms of government awards for knowledge transfer. However, its emerging commitment to knowledge transfer has probably not yet been recognised by larger commercial players and service providers in the sub-region. These findings suggest that the innovation capacity of the Thames Valley is weaker that the UK comparators. The Thames Valley seems to do less with its R&D inputs than other regions. This is perhaps consistent with prevailing perceptions that Thames Valley firms are more focused on the import and commercialisation of new technology from elsewhere than the development of novel innovations in partnership with the local research base. R&D outputs Perhaps reflecting its weaker innovation capacity, the Thames Valley (Berkshire) does less well than Cambridgeshire or Greater London in terms of its ability to generate intellectual property (in the form of high-technology patent applications). However, the ‘wider’ Thames Valley (including Buckinghamshire and Oxfordshire) outperforms a number of continental European sub-regions, such as Lombardia and Karlsruhe, once R&D inputs have been taken into account. The wider Thames Valley is apparently one of the most innovative sub-regions in Europe, with the only clear out-performers amongst the benchmarked sub-regions being East Anglia, Oberbayern (in Bavaria) and Île de France (Paris and its surroundings). Strengths and weaknesses in R&D The Thames Valley therefore has considerable strengths • a strong base of employment in research and development, and a prime business location, housing the headquarters of many major national and international companies who spend over £1 billion on research and development in the UK • an excellent record in high-technology patent generation, demonstrating its potential as a sustainable knowledge-based economy in the future • a university with recognised international excellence in a number of fields, which has an emerging commitment to promoting and facilitating knowledge transfer with local businesses However, in comparison with Cambridgeshire in particular, the Thames Valley appears to do ‘less with more’ in terms of its R&D. Given the preliminary and small- scale nature of this project, we can only speculate on the reasons for the Thames Valley’s apparently weaker innovation capacity. The differences may be due to sectoral composition, or to the greater proportion of foreign subsidiaries in the Thames Valley, and/or to a failure to exploit opportunities for action as an integrated regional ‘system’ of innovation. Further research to explore these questions is necessary before any clear policy implications are formulated. 3 R&D in the Thames Valley 2. Introduction In 2002, the Thames Valley Economic Partnership adopted a new economic strategy for the region1. The strategy, which was prepared by Segal Quince Wicksteed (SQW), identified a number of priorities intended to drive the region toward becoming the ‘knowledge capital of Europe’. The intention is for the Thames Valley to become one of the most prosperous, skilful and creative sub-regional economies in Europe. To take this strategy forward, the Thames Valley Enterprise and Innovation Group has been formed with a particular brief to (1) strengthen the links between research, education and business and (2) promote a culture of entrepreneurialism and develop an infrastructure to sustain it. A first priority for this group is to establish some baseline data providing an indication of the Thames Valley’s performance in terms of innovation. The sub-region has been characterised by SQW as rich in the use of technology, but relatively static in terms of the transfer of technology, both amongst firms, and between firms and the local research base. However, there are some notable examples of research excellence within the sub-region. In order to move forward, there is a need for quantitative data on the sub-region’s innovative performance. This report takes a preliminary step in that direction by drawing together a range of data setting the Thames Valley’s innovative performance against comparable sub- regions within the UK and continental Europe. It aims to identify the sub-region’s strengths and its areas of weakness. 3. Setting the context In a number of recent reports, the Thames Valley has been identified as a business region that has been immensely successful and that has considerable potential. It is a prime location for business investment, from both the UK and abroad, and accommodates the UK or European headquarters of a prestigious group of FTSE and NASDAQ companies, such as ARM, Cisco, Eli Lilly, Intel, Microsoft, Motorola, Oracle and Vodafone. The Robert Huggins Associates’ (RHA) report for SEEDA2 identified the Thames Valley as the knowledge powerhouse of the South East, outperforming other sub-regions and the South East as a whole on a range of measures. In employment terms, the sub-region’s dominant sectors are in software and computer services, computer hardware and electronic components,