The Linkage between Innovation Policy and Economic Performance in Ireland

• Main Author: Hanrahan, Eoghan
• Published: University of Brighton 2007
• Subjects: 330.941
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.486663

Economic prosperity is not exclusively attributable to R&D and innovation, but innovation is an important factor in supporting economic growth. Every day companies across Europe face· significant challenges which include technological challenges. The technological challenges require responses and solutions if companies are to compete in a global knowledge based economy, but innovative solutions are required and with that comes risk. For some companies the risks are too high and governments incentivise them to carry out R&D projects. Ireland, like other economies, offers a number of support mechanisms to aid companies in their R&D endeavours. This thesis sets out to assess the impact and implications of government support mechanisms on R&D. The literature is analysed to examine the arguments in favour of and against government support for companies. In relation to Ireland, the thesis examines the Research Technology and Innovation (RTI) Initiative. The objective is to ascertain if the State is getting a commensurate return on its investment, and if this model will be appropriate for an economy that is in transition from a manufacturing to a knowledge based economy. ' In examining state support for R&D there are implications for 'innovation policy' and 'innovation management'. What is clear from interviewing a sample of RTI companies, using the University of Brighton Capability Assessment Tool (CAT), is that, while R&D funding is useful, for most companies undertaking R&D it is not essential. From an 'innovation management' perspective, the companies interviewed have to overcome significant deficiencies. The CAT revealed weaknesses in companies in their capability to successfully complete R&D projects, e.g. weaknesses in the technological capability of companies, the learning processes associated with R&D and the overall approach to managing R&D projects. Considering that most of the companies interviewed were categorised as 'high level performers' this does not auger well for the majority of companies that are not as technically advanced. From an 'innovation policy' point of view, there needs to be a focus on supporting 'technology based R&D'. Innovation policy initiatives need to provide financial aid and also target the deficiencies in the R&D capability of companies. While the funding is available to support low level R&D, and it is useful to get companies to start doing R&D, there needs to be a step change in the standard of R&D supported if Ireland is to remain competitive. The deadweight needs t6 be reduced and the level of return on R&D expenditure needs to be reviewed. Governments need to continue to support companies to do R&D, but it is argued that the R&D offering should be more sophisticated, and the criteria for eligibility for support needs to be based on technical merit rather than on political or short term commercial decisions.