Institutional Mapping of Finland's National System of Innovation

First Step RESEARCH AND DEVELOPMENT

PARLIAMENT

COUNCIL OF STATE Science and Technology Policy Council Ministries

Finnish Higher Education Evaluation Council

promoting and supporting organizations

Academy of Finland Tekes

PUBLIC R&D ORGANIZATIONS PRIVATE R&D ORGANIZATIONS Research Joint Private National Units and research nonprofit Private funds Technical Research Research departments institutes of research Scientific and Universities Centre of Finland (VTT) Institutes of entreprises enterprises institutes societies foundations

TECHNOLOGY TRANSFER

Science/Technology University/Research institute Centres of Expertise Regional Centres of Labour Parks based technology transfer companies and Business Development

VENTURE CAPITAL SITRA Private and mixed VC organizations Industry Investment Ltd. Start Fund of Kera Ltd. Description of institutions

Parliament makes laws with the President of the Republic and approves the annual state budget. Oversees the State administration and the activities of public officials.

Council of State (or Government). For the general governing of the State there is a Council of State, which consist of a Prime Minister and the necessary number of ministers (up to 17). The term is also applied to the whole formed by the Government and the 13 ministries.

Science & Technology Policy Council is an advisory body to the Government in issues relating to science, technology and innovation policy. The Council is chaired by the Prime Minister and its membership consists of 5 other ministers and 10 high level expert members.

Ministries

Ministry of Trade and Industry Ministry of Education Ministry of Agriculture and Forestry Ministry of Social Affairs and Health Ministry of Defence Ministry of Environment Ministry of Finance Ministry of Transport and Communications Ministry for Foreign Affairs Ministry of the Interior Ministry of Justice Ministry of Labour Prime Minister's Office

Finnish Higher Education Evaluation Council (FHEEC) assists universities and polytechnics and the Ministry of Education in matters relating to evaluation. The aim is to make evaluations an integral part of institutional practice and to enhance institutions' expertise in evaluation. The Council may also evaluate the impact of certain higher education policy solutions. The Evaluation Council is a coordinating and implementing expert body independent of both educational administration and higher education institutions. It does not make administrative decisions. The Council consists of 12 members invited by the Ministry of Education for a four-year term. Its Secretariat has 4 members.

Academy of Finland advances scientific research and its exploitation, develops international research cooperation and serves as an expert body in matters concerning science policy. Funding includes the funding of high-standard research and researcher training in fixed-term projects and the creating of other preconditions for research, such as participation in international research cooperation and the publication of research results. Expert tasks: The Academy has commissioned evaluations of fields of research in Finland since 1983. In 1995 it started an evaluation of the overall state and standard of research in Finland. The purpose of this evaluation is to provide an overall picture of Finnish research, and some of its most important functions will be to prepare a basic charting of, for example, the resources and organizational structure of science, the standard of research and its social significance. The first evaluation of these will be completed in 1997. The Academy is also responsible of the selection of Finnish researcher training programmes and in the designation of Centres of Excellence in Research.

Technology Development Centre (Tekes) promotes the technological competitiveness in Finnish industry. Activities should lead to an increase and diversification of industrial production and exports and an improvement of well-being in society. Tekes promotes technological research and development and the cooperation of companies, universities and research institutes within Finland as well as internationally. Main duties: 1) laying out technological strategies, 2) funding applied research and development projects of industry (note especially Technology programmes which are a means of creating new technological know-how through the cooperation of companies, research institutes and universities. Industry plays an active role in coordinating and defining and directing the content of the programmes. Currently there are 80 active programmes), 3) co-ordination and funding of international technology co-operation (promotion of Finland's participation in research and development programmes of the European Union and cooperation with EUREKA, ESA, COST, IMS, IEA, OECD, the Nordic countries, USA, Japan and China) 4) information and technology transfer (especially sme).

Finland has 20 Universities - ten multidisciplinary and six specialist institutions and four art academies - all of them State-run and engaged in both education and research. The university network covers the entire country. The development of the university system was characterized by expansion from the 1960s to the 1980s by a rapid growth in resources and an increase in independent decision-making from the mid-1980s up to 1990. In 1990s, the functional independence of universities has continued to grow, while attention has focused increasingly on improving performance and quality. The research expenditure of the university sector has also continued to grow after a slight decrease between 1991-1993 due to the economic recession. The structural development of the higher education system taking currently place in Finland will result in the establishment of a distinct non-university sector of higher education by the end of the decade. Finland has the following universities located in 11 university town:

University of Helsinki Helsinki School of Economics and Business Administration Swedish School of Economics and Business Administration Sibelius Academy University of Art and Design The Theatre Academy Academy of Fine Arts Helsinki University of Technology University of Turku Åbo Akademi University Turku School of Economics and Business Administration Lappeenranta University of Technology University of Tampere Tampere University of Technology University of Jyväskylä University of Joensuu University of Vaasa University of Kuopio University of Oulu University of Lappland. 3

Technical Research Centre of Finland (VTT) is an impartial expert organization that carries out technical and technoeconomic research and development work. VTT develops technologies to improve both the competitiveness of companies and the basic infrastructure of society, and to foster the creation of new businesses. 9 Institutes :Electronics, Information Technology, Automation, Chemical Technology, Biotechnology and Food Research, Energy, Manufacturing Technology, Building Technology, Communities and Infrastructure.

National Research Institutes

The Research Institute for the Languages of Finland The National Board of Antiquities Geological Survey of Finland (GSF) The National Consumer Research Centre Agricultural Research Centre of Finland (MTT) Agricultural Economic Research Institute Finnish Forest Research Institute (METLA) Finnish Game and Fisheries Research Institute Finnish Geodetic Institute (FIG) National Veterinary and Food Research Institute (EELA National Research and Development Centre for Welfare and Health (STAKES) National Public Health Institute (KTL) Finnish Institute of Occupational Health Finnish Centre for Radiation and Nuclear Safety (STUK) The Defence Forces Research Centre (DFRC) Finnish Environment Institute Finnish Meteorological Institute (FMI) Finnish Institute of Marine Research Government Institute for Economic Research National Research Institute of Legal Policy

Joint research institutes of enterprises. Central Laboratory (KCL). KCL is owned by four forest industry companies. Its task is to promote the competitiveness of these companies by carrying out their jointly funded research. KCL also serves other companies. Research is conducted into the raw materials for pulp and papermaking, the processes themselves, as well as the end products, i.e. the entire chain from wood to the final coated, calendered and printed end product. About 25 % of all pulp and paper industry r&d work in Finland is conducted at KCL.

Science/Technology Parks are located in the vicinity of universities or research institutes. Judicial form is a limited company and shareholders consist of a mixture of private (financial institutions, industry) and public organizations (communities, universities, science institutions). In addition to offering premises and a technically developed infrastructure science/technology parks offer a stimulating and innovative business environment. In addition to industrial companies and research units different kinds of private and public/semipublic service organizations are located in the science parks. Science park often play an important coordinating or implementing role in various business development and regional development programmes. There are 12 science/technology parks in Finland: Innopoli (at Espoo), Otaniemi Technology Park (subsidiary of Innopoli), Helsinki Science Park Ltd, Carelian Science Park, Jyväskylä Science Park, Technology Centre Teknia, Finnmedi -Research Ldt., Kareltech Technology Centre, Oulu Technopolis and Medipolis, Tampere Technology Centre Hermia, Turku Technology Center (DataCity, BioCity, ElectroCity, EuroCity), Technology Center Merinova Ltd. 4

University/Research Institute based technology transfer companies (Aboatech Oy, HU Licensing OyFinntech Oy, Oulutech Oy, Tuotekehitys Oy Tamlink). The main function of these technology transfer companies is to commercialize the research results of their owner institutions (SITRA, Technical Research Centre of Finland -VTT, Universities) in cooperation with foreign companies when needed. Activities are concentrated on publically financed innovations and research projects. As private companies they are able to make commercial research, development and exploitation agreements that the universities, VTT and researchers are not willing to make because of liabilities or risks involved. In addition a technology transfer company is able to benefit the national and international public financing and private financing.

Centres of Expertise. The objective of the national Centre of Expertise (CoE) is to enhance regional competitiveness and to increase the number of high-tech products, companies and jobs. To achieve this objective, the programme is used to -implement projects reflecting the needs of industry -encourage industry and the research and training sectors to cooperate -ensure rapid transfer of the latest knowledge and know-how to companies -exploit local creativity and innovation -enable the establishment of knowledge-intensive companies -encourage regions to develop themselves and to participate in a joint strategy.

The CoE Programme supports regional specialization and cooperation between CoEs thus generating a strong and functional CoE network in Finland. At the same time, the aim is to make CoEs attractive to foreign companies and investors. The programme is being coordinated jointly by the Ministry of the Interior, the Ministry of Education, the Ministry of Trade and Industry and the Ministry of Labour. Regional programmes are managed by the Regional Councils. In the individual CoEs, programmes are being implemented in cooperation with companies, cities, science parks, universities, research institutes and other government bodies. Operatively the projects are usually headed by the respective science park companies in the regions. There are presently 12 Centres of Expertise in Finland.

Regional Centres of Labour and Business Development. In 1997 the regional service units of the Ministry of Trade and Industry, Tekes, Ministry of Labour and Ministry of Agriculture and Forestry were merged to form 15 Regional Centres of Labour and Business Development. Their function is to advise and support entrepreneurs, to promote companies' technological development, exports and internationalization, agribusiness and rural sources of livelihood, take care of fisheries' administration at regional level, promote regional employment policy and adult education and to supervise employment offices.

Other technology transfer organizations.

1) The Foundation for Finnish Inventions supports and helps private individuals and entrepreneurs to develop and exploit invention proposals both within Finland and internationally. The Foundation is at the forefront in advising, evaluating, financing, developing and marketing over thousand projects in different areas of technology every year. It serves as a link between inventors, innovators, consumers, businesses and industry in Finland or other parts of the world whether it is a matter of setting up production, licensing or any other means of exploiting an invention. Besides evaluation, protection, promotion and product development of inventions the Foundation's services include Financial support: Risk financing (Grants, Loans), Marketing and commercialization of inventions (Search for Finnish and/or foreign partners, Licensing offers, Information on inventions 5 and innovations through media coverage, seminars and relevant trade affairs, Legal and other assistance in licensing negotiations and preparing agreements).

2) A nation wide Business and technology development network of polytechnics and institutes of technology aims at the development of smes' competitiveness at regional level. The activity is focused on the development of production and exports. At the same time the institutes acquire experience for the development of education and training. The services are custom made with emphasis on consulting, research and development, application of know-how and cooperation. 30 institutes are presently included in the network. 3) There is a number of private companies in technology transfer business.

Venture capital organizations can be divided into public and private organizations. There are three public organizations in venture capital business in Finland: Sitra, Start Fund of Kera Ltd and Industry Investment Ltd.

1) SITRA (The Finnish National Fund for Research and Development) promotes the stable and balanced development of Finland, qualitative and quantitative growth, as well as international competitiveness and cooperation, by working especially for the implementation of projects that contribute to more effective use of resources, raise the standard of research and education, or chart alternatives for future development. Invests (equity, convertible loans, minority loans and full investments) in seed, start-up, expansion, buy-out and turnaround high tech companies and venture capital funds in Finland and abroad. Sitra also promotes technology transfer (it is a partner in the university/research institute based technology transfer companies described above) and finances interdisciplinary and innovative research projects which support the national strategy and complement the mainstream academic research. 2) The products of Start Fund of Kera Oy include equity investments and equity loans. Start Fund of Kera Oy concentrates on small and medium sized companies. 3) Industry Investment Ltd is principally a "fund of funds" making investment in equity funds in the form of share capital, convertible bonds, redeemables or other equity-related loans but it also makes syndicated co-investments in strategically important industrial ventures.

There are 21 other (private or mixed funds) in Finland. Functional Institutional Matrix

FUNCTION INSTITUTION

Counci S Mi FH Ac T S U V Nationa Joint Researc Science/ Univ./ Centres of Regional Other Venture l of T n EE a d. e I n T l research h units Technol. Research Expertise Centres technolo capital State PC i C k TR i T Researc institutes and parks Institute of Labour gy compani s of e A v. h of enterpr. departm. based and transfer es t s Insitute of Techn. Business organiza r Fin s enterpris transfer Develop. tions i la es companie e nd s s

Technology and innovation policy x xxxx xx x CoordinatesCoordinate formulation, co-ordination, supervision at regional s at and assessment level regional Performing R&D -basic xx x x x -pre competitive xxx x x -applied xx x xx

Financing R&D -support to non-business institutions x xxx and organisations undertaking basic or applied research -support of R&D projects in the x x x business enterprise sector (direct and indirect) -support of special areas of research x x independent from the institution or firm where it is undertaken.

Promotion of human resource xxxxx xx x xx development and mobility Technology diffusion -improve the adoptation and adaptation x xx xxx x of specific technologies -improve the general technology x x x xx x x x receptor capacity of firms -build the innovation capacity of firms x x x xx x x x Promotion of technological entrepreneurship -financing technology-based firms x x xxx (eg.venture capital) -others x x xxxx x xx National r&d expenditure in the private and public sectors

Private sector Public sector Year GERD/ Total GDP Universities Other public sector

FIM million % of total FIM % of total FIM % of total million million

1995 8166 63 2526 20 2226 17 12918 2,37

1996* 9895 67 2687 18 2191 15 14773 2,60

*Estimate

Allocation of government r&d appropriations by sector and within a sector (FIM million)

Name of the Ministry Gov. r&d Ministry Promoting Universities, Resear No. of appropria and university ch research tions supporting central centres centres in the organizations hospitals and sector other

Ministry of Trade and Industry 2142 157 1639 - 347 3 Ministry of Education 2254 86 567 1575 27 2 Agriculture and Forestry 450 77 - - 372 6 Ministry of Social Affairs and Health 676 - - 408 268 4 Ministry of Environment 144 75 - - 69 1 Ministry of Finance 148 134 - - 14 1 Transport and Communications 168 103 - - 65 2 Other ministries 220 215 - - 5 2 Total 6202 847 2206 1983 1168 21 Research performing institutions: financial r&d resources, r&d personnel and main areas of activity

Institution Budget No. of Personnel Public r&d Main area of FIM million institutes appropriations/ research financing

Universities 1785 17400 Appropriations 1575 - of which Operating costs 1497 Building 53 Other 25

VTT 959 9 2595 Appropriations 287 Electronics,Informatio gov.appr. 287 n jointly financed 276 Technology,Automati commissioned 396 on, Chemical Technology, Biotechnology and Food Research, Energy, Manufacturing Technology, Building Technology, Communities and Infrastructure.

National Research 955 20 6170 Appropriations 818 - Institutes

Joint research 119 - 300 Publically financed 13 raw materials for institutes of basic res. funding62 pulp and enterprises: KCL contract research44 papermaking and publically funded13 related processes and products

Research units and Total r&d expenditure of the - Total r&d Total public financing -process development departments of private sector personnel in of the private sector 16 % enterprises 8166 of which 6551 financed companies r&d expenditure -product development by the companies themselves 24243 of 79 % 662 and 1614 from outside which in -other 5 %* sources industry 19198

* Basic or applied research with no direct product or process development objective

Technology and innovation promoting and supporting organizations: breakdown of r&d appropriations by objective and number of employees

Institution Objective (FIM million) Employees Operating Research Product development Total costs Basic International Applied researchpr research technical ojects projects research Grants Loans Academy 129 389 50 - - - 567 95 of Finland Tekes 59 - - 630 650 300 1639 210 Total 188 389 50 630 650 300 2206 305 Technology transfer organizations

Institution Numb Total Staff Science Companies, research er of turnover/Budget park units etc. hosted units (FIM million) premises (m2) Number Staff

Science/Technology 12 105 (operative 90 244350 800 5800 Park companies activity) (companies +renting of premises ) approx. 180 2200 (research units) University/Research 544 56 Institute based technology transfer companies Centres of Expertise 12 9 (operating costs) 20 management 300 (projects) (242 in projects 482 in advisory and expert groups) Regional Centres of Labour 15 300 (operating 1100 and Business Development costs) The Foundation for 126 16 Finnish Inventions (of which 21,5 public support) Business and technology 30 113 300 development network of polytechnics and institutes of technology

Promotion of technological entrepreneurship

Institution Target Investment in 1996 Investment decisions in Gov.support FIM million customers FIM million 1996 Coverage of losses Equity

Industry VC funds and 129 8 of which 5 in funds Share stock 64 - Investment strategic of which and 3 in companies equity 337 Ltd ventures 90 in funds 39 in companies

Sitra technology 237 of which 65 600 and surplus Gov. budget money based and 110 in domestic funds from previous transferred when growth 53 in international funds years 739 needed; in 1996 FIM companies; 21 seed financing 20 million VC funds 51 growth companies

Start Fund of innovative sme 6 9 share stock 206 - Kera Oy growth Total investments by the end of Total number of client companies 1996: 161 companies by the end of 1996: 56