Thursday 21 November 2019

Manufacturers more innovative if they get state support

Colm Kelpie

IRISH-based manufacturing companies receiving government support for innovation sell more cutting-edge products than those that don't, a conference will hear today.

Innovative sales increased on average by 5pc in firms into which state aid has been pumped over the past 20 years, according to research by Warwick Business School professor Stephen Roper.

The findings will be unveiled at a conference hosted by the Economic and Social Research Institute (ESRI) in Dublin today on innovation and public policy.

Prof Roper said evidence suggested companies receiving financial support to develop new products knew how to successfully translate that into sales.

But he also found that the majority of state aid went into companies with already established R&D departments.

"It seems as if policymakers in Enterprise Ireland and IDA like giving money to companies that have R&D departments," Prof Roper told the Irish Independent.

"There might be some reason for that, like transparency. If you're giving money to a company where they don't have a formal R&D structure, the money can just disappear into the business."


Prof Roper said observations were made concerning about 3,000 manufacturing companies. The aim of the research was to examine the effectiveness of public innovation support to companies.

He also studied the legacy effect from the policy to determine whether state aid boosts a company's capability to innovate in the long term.

The research found strong evidence that firms receiving state aid produced a higher standard of innovative products in the long term.

"Companies are receiving public support in period one, that's enabling them to innovate so that they have a better product portfolio," Prof Roper said.

"When they come to innovate in the next period, they are innovating off the back of that better product portfolio."


Professor Nola Hewitt-Dundas, of Queen's University Belfast, will examine the data base of patents in Ireland since 1976, with comparisons made with Singapore as it is a similarly sized open economy.

Patenting has increased rapidly in both jurisdictions since the early 1990s, reflecting the growth in R&D investments.

Professor Iulia Siedschlag of the ESRI and Trinity College will present the links between innovation investment, innovation output and productivity in services.

The research found that service enterprises that invested in innovation were more likely to be large enterprises, enterprises with exporting markets and enterprises with higher innovation capability.

Smaller businesses and foreign affiliates had a higher innovation investment per employee.

Irish Independent

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