Slide1: Innovation creates success and growth DM 218475
04-2007 Copyright © Tekes
Innovation is a profitable investment for the future: Renewing business structures
Affluence
Regional vitality
Employment
Environment and health
Security and safety
Social well-being Investments Results Direct effects Impact on national economy and society DM 218475
03-2007 Copyright © Tekes Innovation is a profitable investment for the future R&D investments Competence
New knowledge
New business models
Networking
Innovations: products and services, methods and processes, organisational innovations Start-ups, new business areas and services
Growth and globalisation of companies
Productivity
Definition of innovation: Definition of innovation DM 218475
09-2006 Copyright © Tekes
Impacts on companies of innovation activities and market forces: Impacts on companies of innovation activities and market forces DM 218475
09-2006 Copyright © Tekes Innovation activities give rise to new and more productive jobs.
Low-productivity jobs are relocated or eliminated
as a result of international competition.
Drivers for growth and conditions for their utilisation: DM 218475
09-2006 Copyright © Tekes The impact of drivers for growth remain minor without continual structural reform. Conditions for the utilisation of drivers for growth Opening up of markets
Flexibility of structures and regulations
Incentives
for the success of innovative companies
for private risk investments
Macroeconomic policies Drivers for growth and conditions for their utilisation
The importance of investment in R&D has been understood in Finland: Investments Results Direct effects Impact on national economy and society DM 218475
03-2007 Copyright © Tekes The importance of investment in R&D has been understood in Finland R&D investments
Finnish investment in R&D: Finnish investment in R&D DM 218475
09-2006 Copyright © Tekes
Funding of R&D expenditure: Source: Statistics Finland Funding of R&D expenditure Billion euros *) Funding from abroad, foundations, other sources. **) Including funding from foreign units of consolidated companies. DM 36100 and 218475
10-2007 Copyright © Tekes 4.6 4.4 3.9 3.4 2.9 2.2 1.8 1.7 1.5 1.1 0.9 0.6 4.8 5.0 5.3 5.8 5.5
R&D investments in some countries: R&D investments in some countries DM 36109, 36054 and 218475
01-2008 Copyright © Tekes Percentage of GDP Sources: OECD, Main Science and Technology Indicators and Statistics Finland Prel.
Business enterprises funding of public R&D expenditure: Business enterprises funding of public R&D expenditure DM 36109, 36054, 58774 and 218475
03-2007 Copyright © Tekes % Sources: OECD, Main Science and Technology Indicators Business enterprises funding of public R&D expenditure is above international averages in Finland.
Public funding for R&D in companies: Public funding for R&D in companies Source: OECD, Main Science and Technology Indicators DM 36109, 36054, 58774 and 218475
04-2007 Copyright © Tekes % Covers R&D grants, not loans.
Alleviation of taxes for corporate R&D: Alleviation of taxes for corporate R&D Percent of corporate R&D DM 36054 and 218475
03-2007 Copyright © Tekes % Source: OECD
Venture capital investments: Venture capital investments Average 2000-2003 Source: OECD, Science, Technology and Industry Scoreboard 2005 DM 36104, 36054 and 218475
09-2006 Copyright © Tekes Percent of GDP 0.0 0.1 0.2 0.3 0.4 0.5
Capital investments by stage of development: Capital investments by stage of development Source: Finnish Venture Capital Association Buyout Other (incl. secondary financing) Growth Bridge financing Early growth Start-up Seed DM 36104 and 218475
03-2007 Copyright © Tekes Million euros
Tax incentives: Tax incentives DM 218475
11-2006 Copyright © Tekes
Input additionality: Input additionality DM 218475
09-2006 Copyright © Tekes Input additionality means that the company invests more in R&D
than it would otherwise do without the public funding.
The impact of public R&D funding on private R&D investments (input additionality): The impact of public R&D funding on private R&D investments (input additionality) DM 218475
04-2007 Copyright © Tekes Supported firms tend to immediately increase their resources devoted to innovation projects. Falk R. 2006 (Austria)
We find that public funds contribute to an increase in the total R&D efforts in Sweden for small manufacturing and services firms. Lööf & Hesmati 2005 (Sweden)
No crowding out of private R&D money is observable. However, the leverage effect of funding varies depending on the funded technology. Löhlein & Fier 2005 (Germany)
Out of ten innovation vouchers, eight are used for projects that would not have been assigned without such a voucher. Cornet et al. 2005 (Netherlands)
The impact of public R&D funding on private R&D investments (input additionality): The impact of public R&D funding on private R&D investments (input additionality) DM 218475
04-2007 Copyright © Tekes We can also fully reject partial crowding out effects. Public incentive schemes seem to accelerate R&D spending in the business sector. Czarnitzki & Hussinger 2004 (Germany)
Subsidies are found to increase R&D spending in the Spanish manufacturing sector with no crowding out of private funds. Gonzales et al. 2004 (Spain)
Direct R&D subsidies and the high-tech export share significantly contribute to business sector intensity. Falk, M. 2004 (Austria)
Crowding out effects can be rejected for subsidised firms in Flanders, Belgium. Aerts & Czarnitzki 2004 (Belgium)
Public funds add to private funds so that there would be no significant crowding out effect. Duguet 2003 (France)
The impact of public R&D funding on private R&D investments (input additionality): The impact of public R&D funding on private R&D investments (input additionality) DM 218475
09-2006 Copyright © Tekes It turns out that public funding increases firms’ R&D expenditure in the German manufacturing sector. Hussinger 2003 (Germany)
Public financing increase firms’ innovation activities by about 4%. Almus & Czarnitzki 2001 (Germany)
Both fiscal incentives and direct funding stimulate business-funded R&D but they substitute each other. Guellec & van Pottelsberghe 2001 (OECD countries)
Public grants raise the firms’ privately financed innovation activities in the German service sector. Czarnitzki & Fier 2001 (Germany)
How much does one euro of public R&D funding increase company’s own R&D investments?: How much does one euro of public R&D funding increase company’s own R&D investments? DM 218475
04-2007 Copyright © Tekes According to research results, one euro of public R&D funding increases private R&D investments by 0.40-0.93 euros. In other words, the overall additionality of public R&D funding is 1.40-1.93 euros. 1 euro adds 0.93 euro (Commission staff working document, European Competitiveness Report 2004) (Finland, Germany)
1 euro adds 0.62-0.86 euro Ali-Yrkkö 2004 (Finland)
1 euro adds 0.40 euro Streicher et al. 2004 (Austria)
1 euro adds 0.70 euro Guelle & van Pottelsberghe 2003 (OECD countries)
1 euro adds 0.41 euro Lach 2000 (Israel)
1 euro of tax alleviation adds 0.01-0.02 euro Poot et al 2005 (Netherlands)
1 euro of tax alleviation adds 0.02 Brouwer et al. 2002 (Netherlands)
1 euro of RAAK subsidy leads to 5 euros of organisational investment (RAAK = Dutch Regional Attention and Action for Knowledge circulation 2004-2008) Den Hertog et al. 2007 (Netherlands)
The visible results of R&D investments are competence, networking and innovations: Investments Results Direct effects Impact on national economy and society DM 218475
03-2007 Copyright © Tekes The visible results of R&D investments are competence, networking and innovations Competence
New knowledge
New business models
Networking
Innovations: products and services, methods and processes, organisational innovations
Results of public R&D funding (behavioural additionality): Results of public R&D funding (behavioural additionality) SenterNovem found out that the innovation vouchers reached a new group of firms: 40% of the users were not formerly users of SenterNovem services and 83% had not used a specific innovation scheme before, suggesting that the behavioural additionality is exceptionally high. Concerning the effectiveness: 80% of the knowledge exchange would not been done without the subsidy. Den Hertog et al. 2007 (Netherlands)
As a result of public support schemes, additionalities in scope increase as well as willingness to create new collaborations and to engage in riskier projects. Scale and acceleration additionalities are substantial particularly in start-up firms. Falk R. 2006 (Austria)
As a result of public R&D funding, the duration of the project has increased. Public R&D funding also has a positive impact on the permanent cooperation network. Löhlein & Fier 2005 (Germany) DM 218475
04-2007 Copyright © Tekes
Results of public R&D funding (behavioural additionality): Results of public R&D funding (behavioural additionality) Public R&D funding has a positive impact on the risk level, scope and technological level of the project as well as on cooperation and commercialisation prospects. Shipp 2004 (USA)
The Austrian federal R&D support scheme has a positive impact on scale and scope of the project as well as on the innovation capabilities and competence building of the firms. Falk R. 2004 (Austria)
Public R&D programme leads to a more intensive adoption of advanced technologies especially for firms which did not use these when the programme started. Arvantis et al. 2002 (Switzerland)
Public R&D funding has a positive impact on knowledge diffusion, cooperation and commercialisation. Feldman & Kelley 2001 (USA) DM 218475
04-2007 Copyright © Tekes
Behavioural additionality: DM 218475
09-2006 Copyright © Tekes Behavioural additionality
Cooperation between companies and research: Cooperation between companies and research DM 218475
09-2006 Copyright © Tekes Suppliers of equipment, materials, components or software Competitors or other companies in the sector Public or private non-profit research institutions Consultancy companies, commercial laboratories or private research institutions Universities and polytechnics Companies within the same Group Source. Statistics Finland
SMEs participating in innovation cooperation: SMEs participating in innovation cooperation % DM 58774, 36054, 36109 and 218475
03-2007 Copyright © Tekes Source: European Innovation Scoreboard 2006
Impact of innovation activities on innovation cooperation between companies: DM 36100 and 218475
10-2006 Copyright © Tekes Impact of innovation activities on innovation cooperation between companies Percent Number of employees Source: Statistics Finland Total 2002-2004
Technological readiness: Technological readiness Points according to WEF Source: WEF, The Global Competitiveness Report 2007-2008 DM 36054 and 216475
11-2007 Copyright © Tekes The Technological readiness index covers laws relating to ICT, technology transfer, foreign direct investments, mobile phones, internet users and personal computers.
Innovation: Innovation Points according to WEF The Innovation index covers quality of research institutions, company spending on R&D, university and industry research collaboration, availability of scientists and engineers,
utility patents and intellectual property protection. Source: WEF, The Global Competitiveness Report 2007-2008 DM 36054 and 216475
11-2007 Copyright © Tekes
Competence, networking and innovations promote the growth and success of companies: Investments Results Direct effects Impact on national economy and society DM 218475
03-2007 Copyright © Tekes Competence, networking and innovations promote the growth and success of companies Start-ups, new business areas and services
Growth and globalisation of companies
Productivity
Direct effects of public R&D funding (output additionality): Direct effects of public R&D funding (output additionality) DM 218475
09-2006 Copyright © Tekes When new to market product innovations are considered, central government support leads to an direct increase of 2.7 percentage points in innovative sales in addition to the 0.7 percentage point due to the indirect effect through R&D. The total effect of central government support on the share of new to market innovative sales amounts to 3.3 percent. Mohnen & Garcia 2006 (Austria)
Both in Germany and in Finland public funding exerts a positive influence on the funded companies’ propensity to patent. European Competitiveness Report 2004
In a group of Austrian companies that is part of the study, an increase of 10% in public R&D funding increases productivity by 0.5 percentage units per employee over the next two years. Falk R. 2004 (Austria)
Participants in publicly sponsored R&D consortia exhibit a higher propensity to patent than firms in non-sponsored networks. Czarnitzki & Fier 2003 (Germany)
Output additionality: Output additionality Results Direct effects DM 218475
09-2006 Copyright © Tekes Company R&D investments
Product lifecycle stages and the economy: DM 218475
04-2007 Copyright © Tekes Product lifecycle stages and the economy
Patents in Europe and in the United States: Patents in Europe and in the United States DM 36052, 36054 and 218475
03-2007 Copyright © Tekes Sources: Calculated from USPTO- (patents) and EPO- (applications) figures and number of inhabitants in average from Statistics Finland Patents and applications for patents per million inhabitants in 2005.
Number of triadic patents per working age population and business-sector R&D intensity: % Number of triadic patents per working age population and business-sector R&D intensity Number of triadic patents per million of working age population in 2003 Business-sector R&D intensity, per cent of GDP in 2005 * * Australia, Japan, USA and Great Britain from 2004. DM 36052, 36054 and 218475
04-2007 Copyright © Tekes 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Source: OECD, Main Science and Technology Indicators 2006 and the Compendium of Patent Statistics 2006
Turnover in industry and knowledge intensive services: Turnover in industry and knowledge intensive services Turnover, billion euros Other industry Knowledge intensive services High tech and mid-tech industry DM 36095 and 218475
03-2007 Copyright © Tekes Knowledge intensive services without educational, health and social services R&D investments in the high tech and mid-technology sectors are at least 2 per cent, in other industries less than 2 per cent of turnover. Knowledge intensive services include banking and insurance services, postal services and telecommunications, leasing of equipment, R&D, information technology and other business services and education, health and social services. Source: Statistics Finland
Reserve of direct foreign investments: Reserve of direct foreign investments Source: Unctad % of GDP DM 36054 and 218475
03-2007 Copyright © Tekes
Impact of R&D on productivity: Impact of R&D on productivity R&D enhances productivity of Finnish companies in 3-5 years. Ali-Yrkkö et al. (2006)
In the years 1995-2001, productivity growth in Finland has been 2.5 percentage units and the influence of ICT has been 1.1 percentage units. Jalava et al. (2004)
Characteristics of information and communication equipment raise labour productivity (mobility, wireless and wire communications, processing and data recording. Maliranta et al. (2004)
The most central reason for the increase in R&D and productivity growth in Finland seems to be competitive pressure through internationalization. Maliranta (2004)
In global production sharing, those industries that have high labour productivity survive better than those of low labour productivity. Hyvärinen (2004) DM 218475
04-2007 Copyright © Tekes
Impact of R&D on productivity: Impact of R&D on productivity Because of the breakthrough of the telecommunication industry, Finnish manufacturing is among the leaders in the international productivity comparisons. Pohjola (2003)
Information and communication technology improves the labour productivity of employees approximately 8-12 per cent, the effect is the fastest in new firms. Maliranta et al. (2003)Â
The private service sector is small in Finland but it has big potential. Mankinen et al. (2002)
Productivity is increased rapidly for example in financial and insurance activities as well as in telecommunication. Mankinen et al. (2002)
When compared internationally, productivity is relatively high in communications services and transport in Finland but low in the retail trade as well as in hotel and catering services. Mankinen et al. (2002) DM 218475
04-2007 Copyright © Tekes
Impact of R&D on productivity: Impact of R&D on productivity Annual productivity growth in public services has been 0.4 per cent on average in 1980-2001. Mankinen et al. (2002)
Productivity in the Finnish economy is intermediate in international comparisons. When productivity in manufacturing is high then productivity in services has to be low. Pohjola (2001)
Labour productivity in the wholesale and retail trade is only 56 per cent and in transport and communication services 82 per cent in Finland compared to the US productivity level. van Ark et al. (2001)
High productivity plants create new plants and employment more effortlessly than low productivity plants. Maliranta (1998) DM 218475
04-2007 Copyright © Tekes
Growth in labour productivity 1995-2004: Growth in labour productivity 1995-2004 DM 36097, 36054 and 218475
03-2007 Copyright © Tekes Source: EU KLEMS Database 2007 GDP per hour worked, annual change, % %
Labour productivity in industry and services: Labour productivity in industry and services Real value added per hour worked 1980-2004 DM 36097, 36054 and 218475
03-2007 Copyright © Tekes Source: EU KLEMS Database 2007 1995=100
Labour productivity growth in Finnish industries compared to USA : Labour productivity growth in Finnish industries compared to USA DM 36097 and 218475
03-2007 Copyright © Tekes Average annual growth, 2000-2004 * Excluding telecommunication **Electronics industry, post- and telecommunication Source: EU KLEMS Database 2007
Labour productivity in Finnish manufacturing compared to USA: Labour productivity in Finnish manufacturing compared to USA The productivity of industrial work has on average grown faster in Finland than in the United States. DM 36097 and 218475
03-2007 Copyright © Tekes Source: EU KLEMS Database 2007
Labour productivity in Finnish private services compared to USA: Labour productivity in Finnish private services compared to USA DM 36097 and 218475
03-2007 Copyright © Tekes Source: EU KLEMS Database 2007 Average annual growth, 2000-2004, % %
Average growth of labour productivity in industry, construction and private services: Average growth of labour productivity in industry, construction and private services % DM 36097 and 218475
03-2007 Copyright © Tekes Source: EU KLEMS Database 2007 Average annual growth in Finland 1995-2004, %
Growth in labour productivity by branch: Growth in labour productivity by branch DM 36097, 36054 and 218475
04-2007 Copyright © Tekes -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Source: OECD, Compendium of Productivity Indicators 2006 Share of average annual growth 2000-2005*, value added per employee. % * 2005 or latest available annual figure
Number of new companies and growth companies in Finland: Number of new companies and growth companies in Finland 1-5% of new companies are growth companies New growth companies ca. 100-500 Time DM 90614 and 218475
09-2006 Copyright © Tekes
The goal of innovation activities is growth in the national economy and in well-being: Renewing business structures
Affluence
Regional vitality
Employment
Environment and health
Security and safety
Social well-being Investments Results Direct effects Impact on national economy and society DM 218475
03-2007 Copyright © Tekes The goal of innovation activities is growth in the national economy and in well-being
New economic growth model – sources of economic growth: New economic growth model – sources of economic growth DM 36095 and 218475
09-2006 Copyright © Tekes Productivity growth Growth in well-being According to the new growth model, economic growth is rooted in education, research and technology.
GDP per capita: GDP per capita DM 36095, 36097 and 218475
08-2006 Copyright © Tekes USD in current prices and PPPs GDP in Finland has grown at a rate faster than the OECD average both before and after the recession. 35,000
30,000
25,000
20,000
15,000
10,000
5,000
0 Figures for Finland according to new calculations from Statistics Finland. Sources: For Finland: ETLA 2006; for OECD: OECD
GDP per capita in 2006: GDP per capita in 2006 Sources Maddison (2003); IMF and ETLA DM 36054, 36095 and 218475
11-2006 Copyright © Tekes USD, international prices in 2004 0 10,000 20,000 30,000 40,000
Income and productivity levels in 2005: Income and productivity levels in 2005 Percentage gap with respect to US GDP per capita = + 1. Based on hours worked per capita. Source: OECD Compendium of Productivity Indicators, 2006 DM 3609, 36054 and 218475
11-2006 Copyright © Tekes Effect of labour 1 utilisation Percentage gap with respect to US GDP per hour worked
Innovation inputs and outputs: Innovation inputs and outputs DM 36054 and 218475
04-2007 Copyright © Tekes Source: European Innovation Scoreboard 2006 According to indicators used by the EU, innovation inputs produce outputs in line with expectations in Finland. 0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Composite indicator for input Composite indicator for output
Correlation between innovation and GDP per capita: Correlation between innovation and GDP per capita DM 36054 and 218475
04-2007 Copyright © Tekes GDP per capita 2005, EU 25 = 100 Summary Innovation Index GDP per capita in Finland has lagged behind due to the recession of the early 1990s. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Source: European Innovation Scoreboard 2006; EU Structural Indicators (preliminary GDP)
Volume index of industrial production: Volume index of industrial production DM 36097, 36054 and 218475
03-2007 Copyright © Tekes Source: Statistics Finland 12 month moving average * Until 2006/5 EU15, since then EU 13. Industrial production has grown faster in Finland than in other developed nations. 1995=100
Evaluation of the Finnish science, technology and innovation environment: Evaluation of the Finnish science, technology and innovation environment DM 36054 and 218475
11-2007 Copyright © Tekes According to WEF, Finland was the sixth most competitive country in the world in 2007. The three most competitive countries were USA, Switzerland and Denmark. Finland's strengths are the efficiency of public institutions and the educational system. Finland's weaknesses are tax rates and restrictive labour regulations. Finland fell four positions compared to 2006. Finland's weakened position is partly due to changes in calculating methods.
IMD ranks Finland 17th in overall competitiveness in 2007. The three most competitive countries were USA, Singapore and Hong Kong.
Based on the Lisbon Review, Finland was the second most competitive country in the EU in 2006 after Denmark. Finland was on top of the comparison in R&D and innovation activities as well as in sustainable development.
Based on the comparison of the European Commission in 2005, Finland was among the leading countries in investing into knowledge-based economy and performance of the economy. 1/2 Sources: WEF, The Global Competitiveness Report 2007-2008; IMD, The World Competitiveness Yearbook 2007; The Lisbon Review 2006; EU, Key Figures 2005 on Science, Technology and Innovation
Evaluation of the Finnish science, technology and innovation environment: Evaluation of the Finnish science, technology and innovation environment According to the European Innovation Scoreboard 2006, the innovativeness of Finland has diminished somewhat. Sweden, Switzerland and Finland are leading innovative countries in the EU.
In the Canadian Performance and Potential 2005-2006 comparison, Finland was among the four gold medallist countries when OECD countries were compared in light of a large set of economic, societal and environmental indicators.
In a comparison made by the University of United Nations, Finland was ranked second in overall ranking. Finland was also ranked second in education, technology and information indices.
According to the OECD PISA 2006 study, young Finns were first in the OECD in mathematics, second in sciences and reading.
Finland's position in competitiveness comparisons has been good, but comparisons also show signs of weakening in competitiveness. For instance, GDP per capita in Finland is average among the developed countries. Sources: The European Innovation Scoreboard 2006; Performance and Potential 2005-06, The World of Canada, Trends Reshaping Our Future, 2005; United Nations University, The Millennium Project 2001; OECD, Programme for International Student Assessment PISA 2006 DM 36054 and 218475
12-2007 Copyright © Tekes 2/2
Finnish exports by industry: Wood and wood products Pulp, paper and paper products Electronics and
electrotechnical products Other goods Machines, machinery and vehicles Basic metals and metal products Chemicals and chemical products Services Finnish exports by industry Sources: National Board of Customs and Bank of Finland. The exports of services in 2006 are based on preliminary figures from the Ministry of Finance DM 32186 and 218475
03-2007 Copyright © Tekes Finnish exports of goods in 2006 totalled 61 billion euros and total exports including services 75 billion euros. Billion euros
Personnel in industry and knowledge intensive services : Personnel in industry and knowledge intensive services Personnel, 1,000 persons Source: Statistics Finland R&D investments in the high tech and mid-technology sectors are at least 2 per cent, in other industries less than 2 per cent of turnover. Knowledge intensive services include banking and insurance services, postal services and telecommunications, leasing of equipment, R&D, information technology and other business services and education, health and social services. DM 36095 and 218475
03-2007 Copyright © Tekes
GDP growth and share of R&D from value added in Finnish regions: GDP growth and share of R&D from value added in Finnish regions Source: Statistics Finland DM 58620 and 218475
08-2006 Copyright © Tekes %
GDP and the Well-being Index : GDP and the Well-being Index GDP per capita in 1999, (corrected for purchasing power) in US dollars Sources: Robert Prescott-Allen (2001): The Wellbeing of Nations: A Country-by-Country Index of Quality of Life and the Environment; Human Development Report 2001. The United Nations Development Program. WI=Well-being Index DM 36054 and 218475
08-2006 Copyright © Tekes Finland has had better success than other industrialised nations in combining higher income levels with well-being.
GDP and the Human development index: GDP and the Human development index GDP per capita in 2006 in US dollars (corrected for purchasing power) Sources: United Nations Development Programme: Human Development Report 2007/2008 and Statistics Finland Human development index DM 36054 and 218475
12-2007 Copyright © Tekes Israel Norway USA Ireland Switzerland Iceland Canada Denmark Australia Austria Finland Sweden Netherlands Japan France Great Britain Belgium Spain Hong Kong Italy Germany 0.930 0.935 0.940 0.945 0.950 0.955 0.960 0.965 0.970
Environmental quality and growth competitiveness: Sources: WEF: Global Competitiveness Report 2005-2006; WEF, Yale and Columbia universities: Environmental Sustainability Index 2005 Environmental quality and growth competitiveness DM 36054 and 218475
04-2007 Copyright © Tekes ESI index* (2005) Growth Competitiveness Ranking (2005) * ESI = Environmental Sustainability Index In Finland, investment in the quality of the environment and competitiveness complement one another.
Impact of Tekes activities : Impact of Tekes activities Investments Results Direct effects Impact on national economy and society Project monitoring, Tekes’ operative indicators (BSC) Studies, evaluation, international benchmarking, indicators Objectives Strong knowledge and competence base for R&D and innovation
Productivity and renewal of industries
Well-being Core processes DM 32189 and 218475
02-2008 Copyright © Tekes
Tekes investments: funding and know-how: Investments Results Direct effects Impact on national economy and society DM 218475
03-2007 Copyright © Tekes Tekes investments: funding and know-how Additional investments from Tekes
Tekes funding depends on the project’s degree of challenge, novelty and time to market: Tekes funding depends on the project’s degree of challenge, novelty and time to market Time to market increases R&D grant International top level Product development Research Demanding national level Demanding international level National top level Degree of challenge
and novelty increases R&D loan R&D grant or
combined funding DM 42097, 279135 and 218475
01-2008 Copyright © Tekes
Technology programmes in brief: 22 ongoing programmes in spring 2007 with a total volume of 1.6 billion euros
Each programme typically lasts 5 years
Tekes generally finances about half the total investment in R&D of a programme
2,000 company participations and 500 university and research institute participations annually Technology programmes in brief DM 218475
04-2007 Copyright © Tekes Effective utilisation of research results is ensured by scheduling the projects of research institutes and universities concurrently with company R&D projects, and by networking with them.
Impact of project funding in large companies: Large companies (more than 500 employees) received 17 % of Tekes total funding and 29 % of Tekes business R&D funding during 2005-2007. Large companies co-finance Tekes R&D projects in universities, public research institutes and SMEs substantially more than Tekes finances their projects.
This system is managed by Tekes funding criteria, Increasing the quality of R&D projects and having important externalities in:
knowledge transfer between large companies, universities and research institutes
development of SMEs as subcontractors and strategic partners of large companies Impact of project funding in large companies DM 356306, 58774 and 218475
01-2008 Copyright © Tekes Universities
Public research centres SMEs 78 mill. euros Project volume
217 mill. euros 44 mill. euros 30 mill. euros 13 mill. euros Funding flows to/from large companies, million euros
Tekes funding to R&D projects of large companies
Large companies projects buy research services from research organisations
Large companies projects use SMEs as subcontractors
Large companies co-finance public research projects
Net flow Large companies Funding flows of Tekes funded R&D projects between large companies, (more than 500 employees), universities, research institutes and SMEs Annual average 2005-2007 + 78
- 44
- 30
- 13
- 9
Funding granted to SMEs and companies with less than 500 employees: Funding granted to SMEs and companies with less than 500 employees % DM 356306, 218475 and 58774
01-2008 Copyright © Tekes Proportion of all corporate R&D funding granted by Tekes To the smallest companies employing less than 10 employees, Tekes directed approximately 24 per cent of the total funding of companies, i.e. 69 million euros in 2007.
Annually an additional 10-15 million euros was directed towards SMEs through projects in large companies, which increases SMEs’ share by 5-8 percentage units.
Tekes considers the financing of SMEs to be at an optimal level. It is important to also retain large companies in the network.
Tekes funding is heavily concentrated on R&D in small companies: Tekes funding is heavily concentrated on R&D in small companies % Tekes funding covers more than one third of R&D in companies with less than 50 employees, but less than three per cent of R&D in companies with more than 500 employees. Sources: Statistics Finland and Tekes Size of company by number of employees DM 356306, 58774, 279135 and 218475
01-2008 Copyright © Tekes Share of Tekes funding in 2007 compared with companies own R&D investments in 2006
Degree of challenge in R&D projects funded by Tekes: Degree of challenge in R&D projects funded by Tekes DM 356306 and 218475
01-2008 Copyright © Tekes The risk of failure is high in R&D. The job of Tekes is to share in this risk and accept greater uncertainty than other financial backers. Number of projects in 2007
Project evaluation after three years: Project evaluation after three years DM 127715 and 218475
09-2006 Copyright © Tekes Small and medium-sized companies
Survey in spring 2005 on projects ended in 2002 Approximately one in three enterprise projects funded by Tekes fails to meet expectations or fails altogether. Estimates were available for every other project. According to studies, the same distribution applies to results from other projects as well. Commercial success cannot be reliably evaluated in all projects after only three years.
Project evaluation after three years: Project evaluation after three years DM 127715 and 218475
09-2006 Copyright © Tekes Large companies
Survey in spring 2005 about projects ended in 2002 Approximately one in three enterprise projects funded by Tekes fails to meet expectations or fails altogether. Estimates were available for every other project. According to studies, the same distribution applies to results from other projects as well. Commercial success cannot be reliably evaluated in all projects after only three years.
Tekes customers declaring bankruptcy: Tekes customers declaring bankruptcy Number of companies DM 356306,127715 and 218475
01-2008 Copyright © Tekes Annual number of customers declared bankrupt for which Tekes has paid funding in the four years preceding bankruptcy. Of the ca. 3,000 companies funded in the last five years, approximately 1%, i.e. 20-40 companies ended up bankrupt each year. About 1.3 percent of all Finnish companies face bankruptcy every year.
International cooperation projects funded by Tekes by country groups: International cooperation projects funded by Tekes by country groups DM 356306, 31947 and 218475
01-2008 Copyright © Tekes Tekes funding, million euros Almost 40 percent, equal to 832 projects funded by Tekes were internationally networked in 2007. Tekes funded the projects with 277 million euros. Any project can belong to more than one country group.
International cooperation in R&D projects funded by Tekes in 2006: International cooperation in R&D projects funded by Tekes in 2006 Additionally cooperation with 20 countries in less than 10 R&D projects per country. DM 31947 and 218475
03-2007 Copyright © Tekes Number of projects 651 R&D projects in more than 40 countries
Research findings on the impacts of R&D funding from Tekes on companies’ own investments in R&D: Research findings on the impacts of R&D funding from Tekes on companies’ own investments in R&D DM 218475
09-2006 Copyright © Tekes On average, public R&D funding in Finland increases the private innovation activities of the funded companies in both nominal and real terms. Ebersberger et al. (2006)
Results from public R&D funding show a strong additionality to companies’ own R&D investment. Ebersberger (2005a)
An increase of €1 in public R&D funding increases companies’ own investments in R&D by 0.62-€0.86, bringing the overall impact to €1.62-€1.86. Ali-Yrkkö (2004)
Analysis does not show R&D funding from the public sector to displace corporate financing. Receipt of public R&D funding increases the following year’s R&D activities financed by the company itself. Ali-Yrkkö & Pajarinen (2003)
Research findings on the impacts of R&D funding from Tekes on companies’ own R&D investments: Research findings on the impacts of R&D funding from Tekes on companies’ own R&D investments DM 218475
09-2006 Copyright © Tekes Companies that received Tekes funding conducted more self-financed R&D than companies to which funding was not granted. Ali-Yrkkö & Pajarinen (2003)
Public funding does not displace companies’ own investments in R&D. Lehto (2000)
Public R&D funding increases companies’ own investment in R&D. Toivanen & Niininen (2000)
Results: competence and new business models: DM 218475
03-2007 Copyright © Tekes Results: competence and new business models Investments Results Direct effects Impact on national economy and society
Research findings on the impacts of R&D funding from Tekes on business models and competence: Research findings on the impacts of R&D funding from Tekes on business models and competence DM 218475
09-2006 Copyright © Tekes Public R&D funding has a fairly positive impact on the innovation activeness, independence and cooperation of companies in Finland. Hovi et al. (2006)
Public subsidies to the cooperation of universities and SMEs generates substantial added value. Kutinlahti et al. (2006)
Public funding encourages closer cooperation between companies. A study of cooperation between traditional industry and knowledge- intensive service companies showed public funding to stimulate industry into cooperation with more service companies of different types. Ebersberger (2005b)
Tekes funding has increased the risk level and productivity of R&D projects, promoted the construction of a network of cooperation between companies, increased the human capital of the companies by boosting competence level and impacted on the long-term business strategies of the companies. Pekkanen et al. (2004)
Research findings on the impacts of R&D funding from Tekes on business models and competence: Research findings on the impacts of R&D funding from Tekes on business models and competence DM 218475
09-2006 Copyright © Tekes Tekes funding serves to increase cooperation and the risk level and duration of R&D projects. Vaihekoski et al. (2003)
The importance of public R&D funding was highlighted in the development of the most radical innovations presenting the greatest challenges in terms of competence. Tanayama (2002)
Some 60% of the most significant innovations developed in Finland over the past 15 years had received Tekes funding. In technology programmes, the importance of cooperation was highlighted especially in the product development projects of small companies. Palmberg et al. (2000)
Low-technology sectors would seem to reap particular benefits from public sector technology programmes, which underscores the importance of technology policy in support of networking in these sectors. Palmberg et al. (2001)
Results of completed projects: Results of completed projects DM 356306 and 218475
01-2008 Copyright © Tekes
Implementation and utilisation of the technology developed: Implementation and utilisation of the technology developed DM 218475
04-2007 Copyright © Tekes Source: Tekes customer surveys 2002-2006 Projects in universities and public research institutes, %
Impacts of funding from Tekes on project implementation: Impacts of funding from Tekes on project implementation % Results 3 years after end of project. Projects ended in 2003. DM 218475
03-2007 Copyright © Tekes Source: Tekes customer survey 2006
Impacts of Tekes on company operations: Impacts of Tekes on company operations DM 218475
09-2006 Copyright © Tekes Source: LTT Research
Funding from companies to research projects at universities and research institutes: Funding from companies to research projects at universities and research institutes Sources: Statistics Finland and Tekes DM 36100, 58774 and 218475
12-2007 Copyright © Tekes Million euros
Impact of Tekes funding on cooperation with companies by universities and research institutions: Impact of Tekes funding on cooperation with companies by universities and research institutions Source: Tekes customer survey 2006 DM 58774 and 218475
03-2007 Copyright © Tekes Projects concluded in 2003, %
Networking in corporate R&D projects funded by Tekes: Networking in corporate R&D projects funded by Tekes Share of networked projects, % Almost all projects funded by Tekes in large companies and about two thirds of all R&D projects in SMEs are networked. The figures include corporate R&D projects, but not smaller feasibility studies. DM 58774, 58620, 356306 and 218475
01-2008 Copyright © Tekes Subcontracting from universities and research institutes Part of a technology programme Large company subcontracting from SMEs International cooperation
Impact of Tekes funding on product quality: Source: Tekes customer survey 2006 Impact of Tekes funding on product quality DM 218475
03-2007 Copyright © Tekes %
Competence and new business models are manifested as growth in the turnover, productivity and employment of companies: DM 218475
03-2007 Copyright © Tekes Competence and new business models are manifested as growth in the turnover, productivity and employment of companies Investments Results Direct effects Impact on national economy and society
Research findings on the impacts of R&D funding from Tekes on outputs and financial performance: Research findings on the impacts of R&D funding from Tekes on outputs and financial performance DM 218475
09-2006 Copyright © Tekes Tekes’ clients have experienced more rapid growth than companies in the business register in general. Business Aid Database Creation: Final Report by the Working Group (2006)
R&D funding from Tekes increases the growth, activeness in seeking patents and demand for labour of companies and reduces the likelihood of business closures and mergers. Hovi et al. (2006)
R&D funding from Tekes has increased the growth of productivity and improved employment in companies with a well compensated R&D staff. The impact on productivity was greatest in SMEs and companies near the pinnacle of productivity. Piekkola (2006)
Tekes funding could be observed to have a clear positive impact on growth in the number of R&D personnel at the companies. Ali-Yrkkö (2005)
Research findings on the impacts of R&D funding from Tekes on outputs and financial performance: Research findings on the impacts of R&D funding from Tekes on outputs and financial performance DM 218475
09-2006 Copyright © Tekes Public innovation subsidies have a positive impact on the growth of employment in companies. A company receiving public funding is more likely to seek patents than other companies. Ebersberger (2005b)
Nearly two in three companies perceived Tekes funding to have helped the company increase its net sales. Pekkanen et al. (2004)
The study supports the hypothesis of public R&D funding having a positive impact on the generation of innovations in companies. Ebersberger (2004)
Companies receiving a capital loan from Tekes had on average grown by nearly 30% annually while the average growth rate for SMEs was 10%. Miettunen & Nissinen (2000)
The networking relating to R&D efforts would seem to increase company profitability. Niininen & Saarinen (2000)
Impact of projects funded by Tekes on differentiation of company products from products of rivals: Source: Tekes customer survey 2006 Impact of projects funded by Tekes on differentiation of company products from products of rivals DM 218475
03-2007 Copyright © Tekes % R&D projects in SMEs
Impact of projects funded by Tekes on differentiation of company technology from technology of rivals: Source: Tekes customer survey 2006 Impact of projects funded by Tekes on differentiation of company technology from technology of rivals % Research projects in large companies DM 218475
03-2007 Copyright © Tekes
The impacts of R&D projects are widely reflected in society: DM 218475
03-2007 Copyright © Tekes The impacts of R&D projects are widely reflected in society Investments Results Direct effects Impact on national economy and society
Tekes funding to companies relative to companies’ own R&D expenditure by region: DM 58620 and 218475
03-2007 Copyright © Tekes % Sources: Statistics Finland and Tekes Tekes funding to companies relative to companies’ own R&D expenditure by region
Commercial success of product development projects in SMEs by region: Commercial success of product development projects in SMEs by region % Source: Tekes customer surveys 2002-2006 DM 58620 and 218475
03-2007 Copyright © Tekes
Impacts on society of R&D projects funded by Tekes : Impacts on society of R&D projects funded by Tekes DM 218475
03-2007 Copyright © Tekes Source: Tekes customer survey 2006 %
Impacts of Tekes on the national economy and society: Impacts of Tekes on the national economy and society DM 218475
09-2006 Copyright © Tekes The great majority of Tekes’ impacts on the national economy and society arise from the improved productivity and business operations resulting from innovations, but the activities of Tekes also have direct social impacts.
Innovation creates success and growth: More information on the impacts of Tekes funding and examples of innovations and other project outputs are available at www.tekes.fi/eng/impact.html DM 218475
04-2007 Copyright © Tekes Innovation creates success and growth