Sound Investment in Research Infrastructures – More Than Just a Money Game?
More and more scientific organisations, educational establishments and firms are joining forces as part of wide-ranging research and innovation strategies across Europe. Such initiatives require the injection of capital, so it is vital to assess the ROI (Return On Investment) for all concerned, as well as the potential economic repercussions of such business clusters for the regions where they are implanted. However, analysis of these projects cannot and should not stop there. A recent examination of a Grenoble-based collective highlights the crucial social and entrepreneurial impact that such a combining of expertise can have on a region. The numbers game is important, but does not paint the full picture. The pooling of scientific, academic and corporate expertise in a given area is known as a Territorial Innovation Model and may take a variety of forms, from industrial districts, and innovative milieus, to regional innovation systems, new industrial spaces, and regional clusters.
The ultimate objectives of such a research and innovation strategy are to promote coherent and structured investment, to provide a much-needed catalyst for research and innovation, to support economic development, and to try to reduce differences in terms of economic health between various regions. The EU is an especially relevant case in point, where distinct disparities remain between member countries and areas.
Making investments while generating wealth
The first questions that any laboratory, educational establishment or firm will be asking itself before committing to these kinds of collaborative efforts are entirely understandable – what’s in it for us and what benefit will the local region derive from such an initiative? Plain and simple though this may seem, the reality is anything but. Buying into a research and innovation project requires long-term investment, investment for which participating members will want a financial return in the future. On a local level there will also be the hope or indeed expectation of employment being boosted. On a more conceptual level, the proliferation of Territorial Innovation Models also serves to advance the debate on the usefulness of organisations signing up to a particular research and innovation strategy. Finally, the question also remains of how public funds could or should be injected into such projects, especially given the potential repercussions according to the success or failure of the initiative.
Weighing up the pros and cons
The notion of a business-based cluster by definition involves a combining of expertise but also a certain degree of competition. Generally speaking, state-owned set-ups have proven to be especially useful for start-ups due to the availability of a skilled workforce, benefits from external economies, and reduced transaction costs. Depending upon the type of Territorial Innovation Model chosen, a number of potential takeaways and drawbacks exist. On the plus side, the R&D activity of member firms will be boosted, wealth creation encouraged, concentration of a cluster within a specific region will aid innovation, and the presence of nearby universities and schools of management will help the local economy. On the downside, less skilled workers will suffer from the influx of new talent, technology transfer cannot always be guaranteed regardless of how localised the project, and regulatory, distributional and political obstacles to performance must be surmounted.
Taking the Grenoble Litmus Test
A recent study has been conducted based upon cooperative models in operation in the Grenoble area. The main aim is to make recommendations to policy-makers as to how best to approach such set-ups, identify the available options, delve deeper into the investment issue and see how best to measure success. The first model under microeconomic analysis comprised a consortium of eight partners under the moniker “GIANT” (Grenoble Innovation for Advanced New Technologies). The impact of the initiative was measured in terms of direct employment, student spending, earning by alumni, spending by visitors to the area, the total budget of the eight partners, entrepreneurship impact and the overall local effect. From the initial €2.81 billion investment, the positive repercussions were numerous – 7609 positions created, 25757 incoming students, 217000 alumni, 56416 visitor days, and an annual total economic impact of €3.2 billion. In addition, 5700 additional jobs were created by spin-offs created by entrepreneurial alumni.
Timing and measuring investment
The GIANT project is not the only approach available to organisations wishing to sign up for Research and Innovation initiatives. In Grenoble alone there also exists a localised cluster that represents a broader form of Territorial Innovation with its various pros and cons. However, whatever the structure adopted, certain decision-making steps are crucial. Performance indicators need to be created that consider the economic, social and entrepreneurial impact of such a set-up. The time between making an investment and starting to receive a return on that investment is also essential. Finally, tools need to be developed that will enable potential partners to compare the different models before deciding in which to participate. Money clearly matters within the whole equation but choosing the right kind of partners, partnership and conditions for sound investment is arguably just as important.
This article draws inspiration from the paper Grenoble-GIANT Territorial Innovation Models: Are investments in research infrastructures worthwhile, written by Laurent Scaringella and Jean-Jacques Chanaron and published in Technological Forecasting & Social Change 112 (2016).
Laurent Scaringella is an assistant professor of Strategy and Innovation at Rennes School of Business, France. His research interests include His research interests include the management of innovation, knowledge management, entrepreneurship, geographical economics, and organisational design.
Jean-Jacques Chanaron is an affiliate professor of People, Organisations and Society at Grenoble Ecole de Management, France. His research interests include Economics and Technology Management.
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