Brussels, 18 November 2010 1 Results from the IPTS Survey Activities Fernando Hervás Action leader Industrial Research and Innovation Knowledge for Growth Unit IPTS - Institute for Prospective Technological Studies Joint Research Centre (JRC) http://ipts.jrc.ec.europa.eu/
IRMA Survey Objectives Brussels, 18 November 2010 2 Objective: Business trends and factors for private R&D investment Structure: Annual Questionnaire Survey since 2005, addressing the 1000 EU companies of the Scoreboard Survey of Time-Series via email to the 1000 EU companies of the Scoreboard (spring-autumn 2009) Sector study & interviews: 2009/10 in three main energy sectors (solar photovoltaics, concentrating solar power and wind) Analysis of the results individually and via integration of the data and crossing with Scoreboard data (panel structure)
IRMA Questionnaire Survey Variables Brussels, 18 November 2010 3 Similar structure of the questionnaire, main subjects: Location factors Attractiveness of countries Expectations of changes R&D investment (incl. flows) YEAR=2005 YEAR=2006 YEAR=2007 YEAR=2008 POINT QUESTION VARIABLE QUESTION VARIABLE QUESTION VARIABLE QUESTION VARIABLE CORPORATE BACKGROUND 1 TOT_EMP 1 TOT_EMP 1 TOT_EMP 1 TOT_EMP 2 TURN 2 TURN 2 R&D_EMP 2 R&D_EMP R&D INVESTMENT 3 R&D_Y_N 3 TURN_PDT 3 TURN 3 TURN 4 IN_VS_OUT 4 R&D_EXP 4 TURN_PDT 4 R&D_EXP 5 R&D_EMP 5 IN_VS_OUT 5 R&D_EXP 5 R&D_INC 6 R&D_EXP 6 COOP 6 R_VS_D 6 R_VS_D 7 R&D_INC 7 COOP_REASONS 7 IN_VS_OUT 7 DRIVERS 8a DRIVERS 8 R&D_EMP 8 OUT_REASONS 8 AREAS 8b DRIVERS 9 AREAS 9 FUNDS 9 EU_POL 9 FUNDS 10 R&D_INC 10 DRIVERS 10a COUNTRY R&D LOCATION 10a COUNTRY_FACTORS 11 AREAS_INC 11 R&D_INC 10b COUNTRY_FACTORS 10b EU_COUNTRY 12 EU_R_VS_D 12 AREAS 10c NONEU_COUNTRY 13 NONEU_R_VS_D 13 EU_INC 10d COUNTRY_INC 14 NONEU_COOP 14 COUNTRY OUTCOMES 11 EXPECT 15 NONEU_SUBST 15 COUNTRY_FACTORS 16 DRIVERS 16 LEAST_COUNTRY 17 FUNDS 17 LEAST_FACTORS 18a COUNTRY_FACTORS 18b COUNTRY New subjects in the 2009 questionnaire: Impact of the crisis Innovation 18c LEAST_COUNTRY
IRMA Questionnaire Survey 2005-2009 Brussels, 18 November 2010 4 Response rates Pilot Survey 2005 Survey 2006 Survey 2007 Survey 2008 Survey 2009 593 in total (95 from Scoreboard companies) 185 (184 in the 2008 Scoreboard and 1 in the 2007 Scoreboard) Total responses Response rate in terms of number Response rate in terms of R&D investment 24.3% 23.1% 30.4% 30.4% Sample composition in terms of shares of R&D investment (only Scoreboard companies) High R&D intensity 47% 34% 41% 48% 48% Medium R&D intensity 37% 50% 46% 44% 44% Low R&D intensity 16% 16% 13% 8% 8% Sample composition in the Scoreboard High R&D intensity 47% 42% 37% 34% 36% Medium R&D intensity 38% 46% 50% 59% 55% Low R&D intensity 15% 12% 13% 7% 9% Difference Scoreboard - Survey High R&D intensity 0% 8% -4% -14% -12% Medium R&D intensity 1% -4% 4% 15% 11% Low R&D intensity -1% -4% 0% -1% 1% 110 118 130 9.4% overall (19% Scoreboard) 15.7% 11.8% 13.0% 18.6% n.a.overall (27% Scoreboard)
Impact of the crisis on R&D investment expectations Brussels, 18 November 2010 5 The 185 responding companies are responsible for R&D of almost 48 billion (over a third of the 1000 EU Scoreboard companies) R&D investment is expected to grow by 2% p.a. over 2010-12, half the amount of past year s survey The longer-term picture for subsamples shows the impact of the economic crisis in 2009 and a modest outlook for 2010: 12% 10% 8% 81 companies Survey* 319 EU Scoreboard c ompanies** EU GDP 6% nominal growth 4% 2% 0% -2% -4% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 estimate -6% year
Impact of the crisis on R&D management Brussels, 18 November 2010 6 More than half of the respondents made changes to the management of their R&D investments as a result of the economic crisis: Strategic: almost half of the respondents concentrated their research agenda via reallocation of resources (28%) or narrowing of focus (18%). Only 16% expanded their R&D agenda by branching into new areas. Operational: around 30% of companies changed the way they organised and allocated resources, by concentrating the main corporate R&D sites and outsourcing R&D work. More companies reduced resources at main corporate R&D sites (13%) than increased (8%) them. Around 40% of the respondents said there was no change in the management of their R&D investments.
R&D investment expectations by world region over three years (2009-12) Brussels, 18 November 2010 7 The respondents expect low R&D investment growth inside the EU (1%) Much higher growth is expected outside: China (17%) and India (9%), other European countries (9%) US and Canada (5%), the Rest of the World (2%). This leads to shifts: The shares carried out in China and India are around 5% The shifts are expected to be share of R&D investm ent for the 104 com p anies in the sam p le 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% share in 2009 expected share in 2012 relatively smooth 0% EU other European countries US and Canada Japan China India Rest of the World world region
R&D investment expectations by world region over seven years (2005-12) Brussels, 18 November 2010 8 A subsample of 63 companies expects a reduction of the R&D invested in the EU by ten percentage points (from 78% to 68%), due to higher R&D investment growth outside: 80% 70% 60% R&D investment share 50% 40% 30% 20% EU US & Canada China India 10% 0% 2005 2006 2007 2008 2009 2010e 2011e 2012e However, this is not a zero-sum game. For these 63 companies, nominal R&D investments are increasing between 2005 and 2012 in all world regions (and in the EU by 25%).
Drivers for R&D investment Brussels, 18 November 2010 9 The main drivers for increasing R&D investment are: Market pull Improving corporate productivity Technology push share of respondents rating the factor with strong or very strong influence 0% 20% 40% 60% 80% 100% Market pull Improving corporate productivity Exploiting technological opportunties (technology push) Competition from EU companies Product market regulation and other legal frameworks Competition from US/Japanese companies high R&D intensity medium R&D intensity Competition from Chinese/Indian companies low R&D intensity Source: The 2008 EU Survey on R&D Investment Business Trends, JRC-IPTS and DG-RTD, 2009 These results have been consistent over the three surveys 2006-8 and not addressed in 2009.
Drivers for R&D location Brussels, 18 November 2010 10 share of respondents rating the driver with strong or very strong influence 0% 20% 40% 60% 80% 100% Access to specialised R&D knowledge and results Proxim ity to other com pany activities High availability of researchers Reliable legal fram ew ork for R&D, e.g. Intellectual Property Rights Macroeconomic and political stability Proximity to technology poles and incubators Access to markets Access to R&D cooperation opportunities, including with regulatory bodies Access to public support for R&D Product market regulation Proxim ity to suppliers Low labour costs of researchers the most attractive country is the company's home country the most attractive country is NOT the company's home country Source: The 2008 EU Survey on R&D Investment Business Trends, JRC-IPTS and DG-RTD, 2009 Our econometric analysis indicates the following: - For the US as preferred location, labour costs and political stability seem to be taken as boundary conditions. - For other countries location, labour costs and political stability do seem to play a role for the choice of location.
Public policies for R&D Brussels, 18 November 2010 11 Tax incentives, product market regulation and other legal frameworks, direct public aid and European Technology Platforms are valued by all companies Companies in high R&D intensive sectors consider regulatory intervention and direct public aid more important than in the previous survey The main differences between sectors are: tax incentives are important for more than 75% of the respondents from high R&D intensity European Technology Platforms play a relevant role for almost half of the respondents from low R&D intensity sectors (mainly infrastructure-intensive ones) share of respondents rating the policy as highly or critically important 0% 20% 40% 60% 80% 100% Tax incentives Product market regulation and other legal frameworks Direct public aid from other sources Direct public aid from the EU European Technology Platforms Joint Technology Initiatives Policies that foster co-operation Indirect public aid Public procurement Policies that foster the exchange of human resources in R&D high R&D intensity medium R&D intensity low R&D intensity
R&D and Innovation Brussels, 18 November 2010 12 For 95% of the respondents, R&D is a relevant or highly relevant factor for innovation (this is not surprising given the sample) R&D investment constitutes over 85% of innovation investment for the companies in our sample Especially in the low R&D intensity sectors, the respondents expect greater increases in innovation investment than in R&D investment: expected changes in R&D or innovation over the next three years, p.a. 6% 4% 2% 0% expectated changes in R&D investment expectated changes in innovation investment high R&D intensity medium R&D intensity low R&D intensity sector group This probably reflects the relatively greater importance of non-r&d activities for innovation in these sectors, such as technology acquisition, training, product design and introduction
IRMA Interviews Brussels, 18 November 2010 13 - Approach: Combining sectoral expertise (energy solar/photovoltaics & wind) with up to ten personal interviews of key-industrialists: - Stock-tacking of the state of the art - Sectoral experts as door-openers and interview support - Combining Commission expertise with sectoral expertise to make it most interesting for companies to participate - Commission staff participating in interviews - Combined with a seminar including policymakers, industrialists and other stakeholders to wrap-up
Brussels, 18 November 2010 14 Thank you! Fernando.Hervas@ec.europa.eu http://iri.jrc.ec.europa.eu/
Drivers for R&D internationalisation Brussels, 18 November 2010 15 R&D as a determinant of competitive advantage (Griliches, 1998; Mansfield, 1965; Scherer, 1965) Asset exploiting vs. asset augmenting R&D strategies (Dunning and Narula, 1995; Kuemmerle, 1997) Technological strengths of the countries with respect to those of the company (Patel and Vega, 1999; Le Bas and Sierra, 2002) Lowering costs of qualified research, especially in emerging countries (UNCTAD, 2005) Institutional factors: public support to R&D, IPR system; quality of technological infrastructures; macroeconomic and political stability