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RISE - RTOs in the service economy

Synthesis report , workpackage 2

Research and technology institutes and


the service economy - A functional
perspective on innovation related services
Brigitte Preissl
DIW - Deutsches Institut für Wirtschaftsforschung
Direct line: +49 30 89 789 237
Email: bpreissl@diw-berlin.de

A final report of RISE: RTOs in the service


economy - Knowledge infrastructures,
innovation intermediaries and institutional
change
RISE reports may be downloaded from:

s
http://centrim.bus.brighton.ac.uk/go/rise/

RISE coordinator: Dr Mike Hales


CENTRIM - The Centre for Research in
Innovation Management
Direct line: +44 1273 642190
Email: M.Hales@brighton.ac.uk

This report constitutes a deliverable specified in the


RISE work programme
Contract number: SOE1-CT98-1115
Funded under the TSER programme by the European
Commission, DG Research

Date: December 2000


Research and technology organisations
in the Service Economy (RISE)

Final Report WP2

Research and Technology Institutes and the Service Economy

A functional perspective on innovation related services

Summary prepared by
Brigitte Preissl (DIW)

based on country analyses by

Thor Egil Braadland, Morten Fraas (STEP)


Margarida Fontes, Mureil Pádua, Rui Carvalho (INETI)
Sander Kern /TNO/STB)
Lennart Norgren (NUTEK)
Jeff Readman (CENTRIM)
Ulrich Wurzel, Anja Dresenkamp (DIW)

Berlin
December 2000
Table of Contents

1 Introduction .................................................................................................................................... 3

2 The evolution of the concepts of RTIs and their role in innovation................................................. 5

3 RTIs and KIBS firms in national innovation systems...................................................................... 9

4 RTIs, KIBS and innovation service functions: Survey results ....................................................... 17


4.1 Sample selection............................................................................................................... 17
4.2 The questionnaire ............................................................................................................. 18
4.3 Survey results ................................................................................................................... 19
4.3.1 Characteristics of the sample population .......................................................................... 19
4.3.1.1 Types of Organisation ................................................................................ 19
4.3.1.2 Size ............................................................................................................ 21
4.3.1.3 Employees.................................................................................................. 22
4.3.1.4 Affiliation .................................................................................................. 23
4.3.2 Funding structures in RTIs and KIBS ............................................................................... 23
4.3.3 Composition of Output ....................................................................................................... 28
4.3.4 Competition in research markets ........................................................................................ 34
4.3.5 Service functions ................................................................................................................ 36

5 Indicators for institutional and functional orientation.................................................................... 44


5.1 The design of the set of indicators .................................................................................... 44
5.2 Institutional and functional orientation in RTIs and KIBS................................................ 50
5.3 Correlation between indicators ......................................................................................... 76

6 Country summaries ....................................................................................................................... 97


7 Conclusions.................................................................................................................................. 107
References ......................................................................................................................................... 86
Appendix 1: Questionnaire................................................................................................................... 109
Appendix 2: Indicators and typologies ................................................................................................. 110
Tables
1 Surveys on RTIs and KIBS firms by RISE country teams ............................................................ 18
2 Size of organisations in % of respondents..................................................................................... 22
3 Sources of funding in % of budgets and turnover (averages) ........................................................ 24
4 Average share of foreign and domestic sources in total budgets in % ........................................... 28
5 Average shares of labour input dedicated to... (in %).................................................................... 29
6 Importance of output categories for research institutes ................................................................. 33
7 Importance of output categories for KIBS firms .......................................................................... 34
8 Competitors: share of all respondents that are competing with .................................................... .35
9 Factors providing competitive advantage...................................................................................... 36
10 Service functions - Share of all respondents that offer this service
function in %................................................................................................................................. 41
11 Ranking of service functions according to relative frequency of supply ....................................... 44
12 Attribution of variables to indicators............................................................................................. 49
13 Indicator results for four countries - % of all respondents included in the indicator..................... 51

Diagrams
1 KIBS-Orientation.......................................................................................................................... 52
2 Institutional Dynamics .................................................................................................................. 54
3 Public Orientation ......................................................................................................................... 57
4 Research Orientation..................................................................................................................... 59
5 Institutional Orientation ................................................................................................................ 61
6 Academic Orientation ................................................................................................................... 63
7 Policy Orientation ........................................................................................................................ 65
8 Service Orientation ... .................................................................................................................. .67
9 Technology Orientation ................................................................................................................ 69
10 Functional Diversity...................................................................................................................... 71
11 Functional Dynamics ................................................................................................................... 73

Figures
1 Innovation Service Functions........................................................................................................ 39
1 Introduction

The RISE project (Research and Technology Organisations in the Service Economy) looks at
the role of RTIs (Research and Technology Institutes) in innovation. This role changes in
response to changes in processes of innovation and due to modifications in funding and the
subsequent adjustments of the functional orientation of RTIs. In a simultaneous process,
innovating firms express more varied needs for innovation related services, and RTIs adapt to
requests of high applicability of their research results. In delivering services to enterprises,
however, RTIs compete with providers of knowledge intensive service firms (KIBS). At the
same time, service firms have become serious competitors for RTIs in contract research for
public bodies. An increasing range of service inputs to innovation and a greater service
orientation of RTIs are the two trends that mark processes of innovation in a service
economy. These trends can be observed from the demand side (focussing on firms that adopt
RTI/KIBS services) or from the supply side (focussing on RTIs/KIBS that provide innovation
related services). This paper takes the second perspective1.

Providing a definition of RTIs that is valid for all countries on an institutional basis was
difficult because of the diversity of RTIs in Europe. Concentrating on public sector research
as the main characteristic would have excluded British RTIs. In some countries most of the
research that is relevant in the present context is allocated in universities, in others, including
universities would not have made sense. Therefore, in a broad approximation, all
organisations have been included which provide output that is relevant for innovation and
which have a ‘public mission’. This includes publicly as well as foundation supported entities
and excludes private business firms. Usually these organisations rely on public funds for part
of their budgets2. The difficulty to define RTIs according to institutional criteria underlines
the need to describe and categorise them rather according to what they do and – in this case –
what they contribute to innovation than according to ‘what they are’. However, in order to
address a meaningfully assembled sample population, an institutional definition was needed,
which subsequently was to be substituted and complemented by a functional one. On the
basis of the broad criterion of ‘providing services that are related to processes of innovation’
each country team selected the organisations that fulfil this condition. Unfortunately, this
rather humble ‘definition’ of RTIs resulted in units of research that do not match statistical

1
The first perspective is at the centre of another workpackage of the RISE project that deals with innovation
clusters (see Denhertog/Whalley 2000).
2
In the UK a group of RTIs, the so-called Research and Technology Organisations (RTOs) have been completely
privatised, and thus are seen as KIBS firms in this text. However, due to their history and ‚mission‘ and to their
current status, they occupy a position between RTIs and KIBS. .

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categories, and thus, no statements on the representativity of samples was possible. In
addition, different organisations were relevant in each country – for example, the Swedish
sample includes no university institutes, while universities are a main group in the Dutch
sample, and the German sample comprises only a specific group of university institutes, so-
called An-Institutes. Hence it would be misleading to aggregate the data into a ‘multi-country
sample’.

This report will start with a short outline of the discussion on RTIs in national innovation
systems which will position the research undertaken in this work package of the RISE project
in a wider context (chapter 2). Seven country teams have contributed to the analysis by
providing reports on their national systems of innovation (NIS) and the institutional
configuration of RTIs. The following countries are included in this part of the study:
Germany, Italy, the Netherlands, Norway, Portugal, Sweden and the UK. A short summary of
NISs and R&D configurations is contained in chapter 3. More in-depth analyses have been
provided for six countries (the above, except Italy). Here postal surveys in RTIs (and partly
also in KIBS) have been conducted in order to retrieve information that could not be obtained
from official statistics. The surveys focussed on activities of RTIs, their configuration of
budgets, clients, types of output and functions exercised in innovation processes of their
clients. The two main purposes of the surveys were to map changing institutional and
organisation settings in the provision of innovation related services and to generate a
typology of service providers that focuses on functional rather than institutional distinctions.
Survey results will be presented in chapters 4; in chapter 5 these results will be transformed
into indicators that serve as a basis for RTI and KIBS typologies. Chapter 6 will present
summaries of country reports. Finally, conclusions will be drawn with respect to changes in
innovation systems and processes of innovation, and to the methodology adopted to monitor
these changes (chapter 7).

To a large extent the units of research in the RTI part of our samples overlaps with public
sector research institutes which have been the object of another TSER project (see Senker et
al. 1999). Their definition of public sector research comprises institutions “...for which the
major source of funds is public; and which are in public ownership or control (or have
converted to private ownership since 1980); and which aim to disseminate their research.”
(Senker et al. 1999, p.3). The parentheses solve the problems with British RTOs that are a
sort of hybrid between ‘public’ and ‘private’3; and the clause about dissemination

3
Thus, British RTOs are being treated as ‚public‘ in the Senker report and as ‚private‘ in this report.

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corresponds with the ‘public mission’ term in the RISE definition. Strictly speaking, this
definition of public sector research would exclude most of the RTIs in Germany, because
either public funds are not their main source of finance (as in some Fraunhofer institutes) or
because they are not in public ownership or control, since usually RTIs are organised as
‘registered associations’, and an important feature is their strict independence from
government control. Despite the restrictive definition, all these RTIs have been included in
the German part of the public sector research project (see Schimank/Winnes 1999). This hints
at similar problems with a general definition of RTIs as in the RISE project. The focus of the
Senker project is much narrower than that of RISE, because empirical investigation
concentrates on human genetics research only.

The identification of KIBS firms is less controversial. They are defined as companies which
provide knowledge intensive business services that are supporting innovation, such as
engineering firms, software providers, consultancy firms, training and human resource
management and development as well as firms specialising in technical analysis and testing.
The more difficult part was the compilation of address material for empirical research, since
in most countries no comprehensive company registers exist for service industries. This also
made it difficult to assess the degree of representativity of the KIBS samples.

2 The evolution of the concepts of RTIs and their role in innovation

National innovation systems (NIS) differ with respect to their institutional configuration.
Public, semi-public and private organisations contribute in varying intensity to the generation,
diffusion and application of knowledge. It is this institutional diversity which has stimulated
the debate about the systemic nature of innovation systems, their ‘optimal’ configuration in a
historically given economic context and measures to improve systemic efficiency (Nelson
1993, Edquist 1997). The attention of researchers and policy makers alike moved from
processes of creation of knowledge to its diffusion and, at the present stage, to the absorption
or implementation of knowledge in innovating companies. Reaching and maintaining high
levels of R&D expenditure seems to be a major concern in many economies (see, for
example, the indicator system of the EU for science and technology, EU Commission 1997).
Enhancing the diffusion of knowledge in order to guarantee a wide-spread use of state-of-the-
art technology and to give access to new technology also to those firms which do not generate
it themselves, induced the creation of agents to enhance technology transfer (see Abrahamson

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et al. 1997). The difficult balance between promoting the diffusion of knowledge (with the
possibility to create positive external effects) and the legitimate protection of the copyrights
of its creators stimulated debates on spillovers and their effects on R&D and innovation
activity (see, for example, Levin, Cohen and Mowery 1987). Process re-engineering and
organisational adjustment became key issues in the implementation of new technologies. The
success of a technological innovation seems to depend to a large extent on how the
technologies on which it is based are used. This implies the integration of new technologies
into existing routines as well as the adjustment of organisational patterns and procedures to
technological paradigms. Services involved in all three dimensions of technology and
innovation, the generation, diffusion and adoption of knowledge, are provided either by the
innovating company itself or by other actors in the NIS. RTIs and KIBS firms belong to these
groups of actors.

There are strong arguments for public support of R&D and thus, also of the institutions that
provide it (for a review of the literature, see Farina/Preissl 2000). There are basically three
ways in which the output of RTIs enters processes of innovation: via publications and
publicly accessible documents, via training of personnel and via industry contracts. These
mechanisms as well as processes of production and innovation themselves create spillovers
which enhance innovation activities in national economies. The support of knowledge
creation which would not have occurred in a market context, because the outcome of the
relevant R&D is too uncertain, not directly profitable, or costs are too high to be borne by a
single enterprise, is one of the aims of public innovation policies. Stimulating the diffusion of
knowledge by making it publicly accessible is another. In most countries, thus, financing
R&D with money from government sources was a well-established pillar of economic policy.
However, doubts concerning the efficiency of this kind of support in terms of innovation
activities induced and their success have led to a reconsideration of the mechanisms and
institutions of public R&D support. Furthermore, budget deficits have forced governments in
Europe to look for more efficient ways to promote innovation. A re-organisation of public
sector research has thus been initiated in many European countries (for an extensive
documentation, see Senker et al. 1999). RTIs are increasingly funded on a project or
programme basis, and not on an institutional basis. Thus, basic research whose results are
open for the general public will be reduced (or conducted only in projects with a limited
duration and scope), and contract research becomes more common. The main reason for this
is to make funding organisations have a greater influence on the research agenda (and the
outcome) (see also Senker et al. 1999, p.30). This holds for public as well as private sponsors

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of research projects. Cuts in basic funding, doubts about the efficiency of publicly funded
institutions and the need to make research in RTIs more directly useful for enterprises have
led to pressure on RTIs to increase the share of industry contracts in their activities4.

It has been argued that the relationship between RTIs5 and industry has changed due to the
specific features that characterise a knowledge society (Jacob et al. 2000). Jacob et al. provide
a list of these features:

• transdisciplinarity: expertise from more than one discipline is necessary to


provide comprehensive solutions to practical problems;
• collaborative partnerships: researchers and practitioners engage in an iterative
dialogue from the definition of the problem to the implementation of a solution;
• heterogeneity of organisations in the market for knowledge production;
• strong need for experts who are able to translate academic knowledge into
applicable solutions of practical problems, and to take practical problems and
knowledge from productions sites as an input for advancement in theory;
• stimulus for research comes primarily from practitioners’ problems and not from
academia. (Jacob et al. 2000, p.255.)

The authors argue that these characteristics of a knowledge society lead to relationships
between industry and RTIs that are based on partnerships, in which participatory research,
dialogue, interaction and collaboration (Jacob et al. 2000, p.257) prevail over a simple
transfer of knowledge in codified form. The typical problems of relationships between RTIs
and industry, timing, control over research processes and property rights, can thus be
overcome.

The identification of a knowledge society goes along with the transition from a
manufacturing to a service economy. Thus, it is being argued in this paper, the relationship
between RTIs and industry that focuses on the joint creation, transfer and exploitation of
knowledge will also reflect the specific characteristics of a service economy, i.e., the
emphasis of services as inputs to innovation and the presentation of RTIs’ output as services
to various groups of clients. However, interpreting the industry-RTI interaction in terms of
contracts between service provider and client takes away some of the rather harmonious view

4
In a quite contradictory way, evaluation procedures in German RTIs have led to a strong pressure to increase
academic output, thus to do less project work and publish more articles.
5
The authors use the term ‘academies‘ which, however, seems to be very close, if not undistinguished from RTIs
in this paper.

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of the Jacob paper. The role of the client in a market relationship is more dominant with
respect to control over the process, appropriation of outcomes and definition of the service
than a partnership concept suggests.

Another aspect of the service perspective on innovation and RTIs is competition in service
markets. It must be assumed that RTIs do not only compete with each other in the provision
of innovation-related services, but also with private service firms or KIBS. The impressive
growth of these services in most European countries in the last ten years (see Rubalcaba-
Bermejo 1998 and OECD 1999), has led to the assumption that they must play an increasing
role in supporting innovation processes in their client firms. It is one of the concerns of the
RISE project to explore the fields in which RTIs and KIBS firms are competitors and to
investigate the division of labour between them. Therefore, in some countries, the surveys on
innovation related service functions included KIBS firms6. The contribution of KIBS to
innovation has been widely discussed in the past (see, for example, Miles / Kastrinos et al.
1994, DenHertog/Bilderbeek 1997, Preissl 1998, Farina /Preissl 2000, Windrum/Tomlinson
1999, Strambach 1997, Wood 1997). So far, the literature has concentrated on the reasons,
why firms have increased their use of external service providers (see also Beije 2000). This
report contributes to the debate by providing more evidence on the functions in which KIBS
support innovation processes and the competitive ground they share with RTIs. However, the
small samples of the RISE surveys do not allow to estimate the order of magnitude of the
KIBS participation in innovation for the economy as a whole.

The following analysis concentrates on five hypotheses that are central for the RISE agenda:

(1) National innovation systems show a large variety of institutional forms of innovation
service providers. Landscapes of NIS actors are changing in response to new patterns
of innovation and as a consequence of new R&D and innovation policies.
(2) Processes of innovation increasingly require services which go beyond traditional
R&D tasks. These services can either be provided by RTIs, by KIBS firms or by the
innovating company itself. RTIs and KIBS firms compete in markets for innovation
related services.
(3) One of the key elements of innovation support in the service economy is the efficient
provision of innovation related services (as opposed to technology transfer which
characterises previous stages of economic development.

6
These countries were: Germany, Sweden, and the UK; in the Netherlands, KIBS firms were part of the gross
sample, but response rates were too low to proceed with any statistical evaluation.

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(4) Service orientation and budget constraints require a reconsideration of national R&D
strategies and innovation support policies.
(5) Innovation patterns that are characteristic for service economies are shaped by the
configuration and operational features of NIS; thus, to a certain extent trajectories of
RTI / KIBS development will be country-specific. However, common trends in the
functioning of markets or the organisation of production will have an impact on the
harmonisation of innovation service provision.

These hypotheses are reflected in a series of institutional and functional characteristics of


innovation service providers. From a micro (supply) perspective, these characteristics will be
analysed using national surveys of RTIs / KIBS firms. The macro perspective will be covered
by NIS reports. The hypotheses have guided the generation of questionnaires and indicators;
they also are at the centre of the comparative perspective on country results.

3 RTIs and KIBS firms in national innovation systems

In the specific national innovation systems (NIS) of each country, there are organisations that
provide innovation related services in the public and semi-public as well as in the private
domain (for extensive analysis of NISs in Germany, Italy, the Netherlands, Norway, Portugal,
Sweden and the UK see Rickert 1999, Farina/Solimene 1999, Leyten/ Limpens 1999,
Leyten,/Whalley/Limpens/Kern/denHertog 1999, Hauknes/Näs/Solum/ Orstavik 1999, Fontes
1999, Norgren 1999, Hales 1999a and 1999b). Despite their institutional diversity, these
organisations can be identified as RTIs and KIBS firms in each NIS report. Almost all the
reports show how R&D expenditures are distributed between the different actors and which
share is attributed to public and semi-public RTIs. The UK and Dutch reports try to estimate
the RTI and KIBS shares of outsourced or extramural R&D. A large part of the NIS reports is
also dedicated to descriptions of research institutes that can be classified as RTIs and their
changing roles, i.e. they diagnose diminishing public core funding and a growing dependence
on industry contracts. However, KIBS firms are not covered in any of the reports. Their R&D
activities should be documented in statistics on business R&D, but in many countries these do
not give data on R&D in service industries. Another difficulty of capturing statistically the
role of KIBS in NIS is the fact that R&D statistics might show R&D in service industries, but
not R&D provided by service firms on behalf of their clients (see Revermann/Schmidt 1999).
The following chapter gives an overview of RTIs and KIBS and their roles in NISs.

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Norway
The Norwegian R&D performing system is a tripartite system; with corporate R&D
accounting for about 47% of national R&D performance, higher education institutes (HEI)
accounting for about 27% and a conglomerate sector of public and private contract R&D
institutions with 26% in1997. The autonomous technological and industrial contract R&D
institutes, account for about 15% of national R&D). In national discourse on R&D and
innovation policies the institute sector is recognised as a third major R&D performing sector,
alongside the HEI sector and business enterprise R&D.

The R&D institutes are dominantly funded by public sources. National business enterprises
funded slightly less than 25% of the R&D expenditures. The governmental regulation
specifies that funding of the ”public” but autonomous R&D institutes generally combines
three types of funds, (1) core grants, to be used to general competence enhancement at the
specific institute, (2) strategic programs directed at competence building at a specific institute
in a pre-selected scientific or technological area and (3) funding of other programmes and
projects, allocated to the institute on the basis of scientific, technological or practical merit.

The SINTEF group is the largest R&D performing organisation in the institute sector, with a
total employment of about 1 700, and an annual budget of about 1,5 billion NOK. The
dominant position of the SINTEF Group in the Norwegian institute sector is clear from the
fact that the SINTEF Group accounted for nearly 54% of total income of the technological
industrial R&D institutes in 1998.

Industry-based and -organised R&D institutions play an important role particularly in less
research-intensive industries. However, they represent only a small share of the overall R&D
performance; accounting for less than 8% of R&D in the technological and industrial contract
R&D institute sector. They are organised more strongly along an industry perspective than
on the basis of fields of technology or technological orientations. Broadly speaking, while the
research orientation of the technological RTIs is emphasised, these industrial RTIs are rather
more strongly oriented towards development work related to the specific industries in
question.

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Italy
In 1996, the national R&D expenditure was distributed in the following way: RTIs 16%,
universities 22%, Government 4% and enterprises 58%. Universities received the largest
amount of public funding for research (42% in 1996), while the share of RTIs was 39.5%.
One specific feature of the Italian NIS is that Italian universities are usually concerned with
teaching and researching, but they have poor relations with industry.

Since 1989, most of the Italian public institutions and organisations other than universities,
which have research and technology as their core mission, have been included in a single
broad group in the public administration called “comparto di ricerca” (57 institutes). The only
two other public RTIs not included in this group (for administrative reasons) are ENEA and
ASI. The most important institution is the CNR. It carries out research in many scientific
areas, including socio-economic and humanistic research. CNR has about 7,500 employees
and it is organised in 195 institutes and 121 centres. In 1997, the total budget of the CNR was
1,318 billion Lire, most of which (1,183 billions, 90%) was represented by Government
transfers, only 55 billion (4%) were funded by the private sector.

The second most important research institution (on the basis of R&D expenditure) is ASI,
which promotes scientific and technological programs for the national aerospace industry.
ENEA has the functions of supporting scientific research and of providing knowledge
intensive services. It was established as a nuclear research centre, but since the abandoning of
this field, it has concentrated on environmental research and new sources of energy. Two
large institutes work in the field of physics (INFN and INFM), they are closely related to
universities, having the task to transfer academic knowledge to firms and to co-ordinate the
national physics policies. They are mostly publicly financed. The last large research
institution is ISS (Higher Institute of Health), which promotes and co-ordinates national
projects of research in the area of public health. It also has other important functions of
testing and framing drugs and technical food standards.

These institutes share human resources and scientific structures with universities, and, for this
reason, they carry out the largest part the transfer of technological knowledge from the
academic to the firms’ world. They could be the bridging institutions in the Italian system,
because they are deeply rooted both in universities and firms. The problem is that many of
them had to face an oppressive bureaucracy. Only the reorganisation now under way can give
them the deserved key role.

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Netherlands
R&D investment in the private sector is characterised by the fact that the greater part is
concentrated in five large multinationals (Akzo, DSM, Philips, Shell, and Unilever). They are
responsible for about 45% of all private R&D in the Netherlands. The Netherlands has a
relatively large public research infrastructure of which the large technological institutes, TNO
and the universities form the heart.

In 1996, total R&D-outsourcing by Dutch firms, universities and research and technology
organisations amounted to 1.2 billion EURO. About 54% of this amount went to RTIs and
universities, while about a fourth of the national funds for outsourcing of R&D went to co-
operation with other firms.

As opposed to the fact that private R&D is almost exclusively internally financed, R&D at
RTIs and universities are almost exclusively publicly funded. The public sector represents a
fairly large part of the total knowledge flows in the NIS: it is almost as high as the internal
investments in the R&D of firms. Through an increase in outsourcing of R&D by 25%,
private firms are primarily responsible for the growth of knowledge flows. Universities and
research and technology organisations have lost market share to private firms. In 1995, 64%
of all outsourcing of Dutch private R&D went to national public research and technology
organisations and universities. In 1996 the share was only 52%. Whether this trend is
structural, remains to be seen, but the service sector is growing rapidly.

Portugal
The Portuguese NIS report concentrates on the biotech sector. There is a diversity of
organisations that conduct R&D in biotechnology and biotechnology-related fields and offer
research and technology services. The origin of most of these organisations is government
laboratories and universities, with whom they often share a substantial part of their human
resources. Several government laboratories can be classified as RTIs. Additionally we find a
plethora of semi-private organisations, including centres closely associated with the
university and centres that have a more private form of governance (usually having a "private
non-profit" status).

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In addition to RTIs, a small number of dedicated biotechnology firms (DBFs), which can be
classified as KIBS, have started to provide R&T services in biotechnology. Most of these
firms are "academic spin-offs", created by young graduates/ post-graduates or, more rarely,
researchers, to apply knowledge or technologies obtained in public research organisations
directly or indirectly to the innovation system. Several DBFs are active service providers -
whether services are the firms' main business, an activity that adds value to the product sold, a
cash-raising business pursued while a product is being developed, or a strategy to raise
clients' awareness and open up new markets. In conducting these activities, some of these
DBFs are performing a critical "technological intermediary" role between RTIs and
established firms. The DBFs can act as a translator of competencies and generally contribute
to increase the interactions within the biotechnology system. However, due to their still very
small numbers, the DBFs impact on the system is more potential than real.

Germany
Despite the large variety of research institutes, industry is still conducting most of the R&D in
Germany. Applied research and experimental development are almost entirely performed by
industry. The education sector possesses the next largest R&D shares. Industry-funded
research in universities has been rising since the 1980s, and interaction between companies
and universities intensified as a consequence. Important research institutes are: the
Fraunhofer institutes, the Max Planck Society, the Helmholtz Centers, the Federation of
Industrial Research Associations and An-Institutes, which are institutionally linked with
universities.

Similar to the main features of the German economy, the German Innovation System has
been characterised by a high degree of stability for the past decades. However, now the
division of labour among the research organisations, universities, government, and industry
seems to be in a process of re-organisation. Two events mark deep changes: Firstly, the
cutbacks in financial resources channelled from government to RTIs, and secondly, the large-
scale evaluation of research organisations mainly in the direction of assessing the output of
their research efforts. These processes appear to lead to an intensified competition for funds
and towards a greater rivalry among the organisations, because, in many cases it has been
questioned whether the quality and quantity of research results and the organisations’
missions justify public funding.

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The changes in the public R&D system and their rationale and motivation are not essentially
different from what happens in other European countries. The situation in Germany is further
complicated, however, by German unification. The merger of the two countries implied the
integration of two very different research systems and resulted in a substantial downsizing of
research capacities. Many East and some West German RTIs were closed down, others were
reduced to considerably smaller units.

Nevertheless, it seems likely that the distinct feature of the German Innovation System, the
existence of a very diversified body of research organisations with a highly developed
division of labour, is not going to be eliminated in the future, and continues to lay a
productive foundation for the development of technology transfer and of the German
economic system.

UK
A substantial part of research capacity in the UK is concentrated in private non-profit
organisations called RTOs; the majority of them are SMEs. Two types of research and
technology services organisations have merged to constitute the category of RTI; in the
current UK context, following privatisation and liberalisation during the 80s, a third type may
be added.

• Ex-research associations (RA-type)


• Contract research organisations (CRO-type)
• Liberalised government labs (LGL-type)

Research associations were associated with a specific sector in the broad sense of a product
type, an industry or a specific application domain for a technology. RAs (or 'co-operative
research associations') were founded - and government-funded - along industry-specific lines
to solve problems of collective concern in the sector, or on cross-sectoral lines to address
national and sectoral issues such as manufacturing efficiency. CROs specialise in a
technological field without necessarily having a dominant connection with any single
industry. R&D are performed for clients on a contract basis. CROs may have been formed as
spin-offs from R&D-intensive firms (for example, CRL was originally the Central Research
Laboratories of Thorn-EMI) or from public utilities (EA Technology in the electrical supply
sector). The RA trajectory has increasingly converged with the CRO-type as RAs have come

e:\preissl\rise\wp2\RISE-sept-00 14
to depend on contract funding, and the term RTI is now widely applied to both types. RTIs
perform collaborative (as distinct from co-operative) projects with consortia of members;
some are active within a familiar US model (members perform R&D themselves and pool
findings through the consortium, convened by the RTI), most are passive, i.e., the initiative
derives from a project steering group, and the RTI performs R&D, supported by funding,
labour, factory time, and under the supervision of the steering group.

Liberalised government labs (LGL-type RTIs) originated as government laboratories or


research establishments. LGLs in the UK have been required increasingly to fund themselves
on a contract basis during the 80s and eventually were made into cost-centre 'agencies' trading
in their own right, privatised, or in some other way brought into a market- or quasi-market
relationship as contractors with a Government customer and non-Government customers.
This trajectory also, therefore, converges in some respects with the CRO type. LGLs differ in
the amount of core revenue that still comes from government (e.g. the defence R&D agency
and the atomic energy agency maintain an effective core funding partly of standing contracts
for operational services to the military).

The size of the UK population of RTOs is difficult to estimate. There is no simple basis for
estimating how many RTOs of the CRO- or LGL-type that do not belong to the association
AIRTO, there are in the UK, either. The AIRTO members have been the reference group for
the identification for former RTIs that due to privatisation have become KIBS firms. In 1998,
the total turnover of the 46 RTOs that are AIRTO members, was £464m. The size of these
RTOs ranges from small (5 staff, turnover £0.25m) to large (650 staff, turnover £42m); the
distribution is skewed (average turnover £11.5m; median turnover £6.7m). In the market for
outsourced R&D, UK RTOs had around 58% of the UK market for extramural R&D in 1996.
In 1991 the total contract research market was estimated at £670m, made up as follows:
RTOs (AIRTO members) 28%, RTOs (non-AIRTO member) 9%, Universities 27%,
Research council institutes 15% and other public organisations 21%.

Sweden
In 1997, R&D expenditure was distributed as follows: universities 22%, government labs 3%,
manufacturing industry 61% and service industry (including industrial research institutes
which are not listed separately) 13%. Universities are the main performers of government
financed R&D in Sweden. There are about 20 government labs linked to different ministries.

e:\preissl\rise\wp2\RISE-sept-00 15
Industrially relevant research at institutes outside the university sector is very limited in
Sweden compared to other OECD countries. The Swedish semi-public industrial research
institute system has been built up and developed since the early 1940's and has become an
important, even if a small, part of the Swedish overall R&D-system. The “system” includes
around 25 small institutes in terms of employees.

The business sector is the largest R&D performer. The R&D activity is to a high degree
concentrated in the manufacturing industry. Within the manufacturing industry, the R&D
efforts are in turn concentrated on a small number of large manufacturing companies. In
1995, seven large groups (Ericsson, Volvo, Saab, Astra, Scania, Sandvik and Incentive)
accounted for 78 % of R&D expenditure by manufacturing industries.

The industrial research institutes can be characterised as RTOs since they provide R&T (or
innovation) services to industry. Also universities and government laboratories supply such
services to some extent. However, the order of magnitude of this contribution to service
provision is unknown and impossible to estimate. Services are the sector in the national
statistics where firms that provide innovation services, and semi-public R&D-institutes can be
found. This sector’s share of R&D expenditure in 1997 was 13%. However, not all service-
firms supply such services and the RTI-share of Swedish R&D seems to be over-estimated.
On the other hand in the R&D-statistics only firms with more than 50 employees are
included. It is reasonable to expect that many RTIs have less than 50 employees. This means
that the share given above in this sense under-estimates the RTIs’ share of R&D in Sweden.

4 RTIs, KIBS and innovation service functions: Survey results

Postal surveys of RTIs and KIBS firms in Germany, the Netherlands, Sweden, Portugal and
the UK were conceived according to a common scheme, however left a lot of space for
national diversity. A common questionnaire was used, however, some questions were added
by country teams and in some cases the wording (and the categories that structure the answers
in a multiple-choice form) have been adjusted to national peculiarities.

The survey for Norway has been conducted in the context of a broader research scheme, due
to the regulatory constraints which limit possibilities to repeat surveys with similar topics in a
short range of time. Therefore, Norwegian results cannot be directly integrated in the

e:\preissl\rise\wp2\RISE-sept-00 16
evaluation procedures presented here. The Portuguese survey focused on the biotechnology
sector only. This, together with the diversity of units covered in each sample limits the
possibilities of quantitative comparison. Often, qualitative statements and explanations
provide more accurate and meaningful results.

4.1 Sample selection


Table 1 gives an overview of size and coverage of the country surveys. The large difference
between the numbers of cases in the samples reflects the differences in the sizes of countries,
but also the difference in the overall number of institutions in each country which satisfy the
selection criteria. Here the different configuration and operational variety of NISs leads to
unavoidable heterogeneity. The unit of research was supposed to be the budgetary unit, i.e.,
entities that control and manage their own budgets. This criterion could not always be strictly
adopted, for example, if the unit would have been too large or too heterogeneous. In these
cases, other research units were defined.

The low number of cases for each country and difficulties in sample selection emphasise the
pilot character of the surveys. Hence, results for KIBS cannot be considered representative; in
the case of RTIs, coverage was more comprehensive and results can be generalised without,
however, claiming representativity in a statistical sense.

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Table 1
Surveys on RTIs and KIBS firms by RISE country teams

Country Team Organisations Sample size


covered
RTIs KIBS all
Germany DIW RTIs and KIBS 104 28 132

Netherlands TNO/STB RTIs 431) - 43

Norway STEP RTIs

Portugal INETI RTIs in the


biotechnology sector 2)
37

Sweden NUTEK RTIs and KIBS 19 32 51

UK CENTRIM RTIs and KIBS 20 13 33


1)
21 questionnaires contained enough information to be used to calculate indicators.
2)
KIBS were included in the qualitative part of the Portuguese report.

Response rates were surprisingly low in all cases, especially for KIBS; partly, this reflects the
generally low willingness of service firms to participate in survey activities, partly, obviously,
RTIs and KIBS firms found it difficult to respond to the aim of the survey, and to its content.
More intensive attempts to motivate potential participants might increase the response rates to
a certain extent7, another way of stimulating response might be a further cut in survey
questions, and a concentration on the essential institutional and functional variables.
Questions most likely to be cut out in a short version would be those on patents (Q11),
service delivery (Q12), co-operation (Q15 to Q17), and on competition (Q18 and 19). They
added evidence about the characteristics and the activities of the responding organisations,
but do not belong to the core areas of interest in RISE (see the basic version of the
questionnaire in Appendix 1).

4.2 The questionnaire


A questionnaire was drafted by the German team according to the central RISE hypotheses of
(a) an increasing importance of a functional perspective of RTI/KIBS activities and (b) a
possible intensification of competition between providers of innovation services in the public
and private domains. Standard variables, like size, budgets/turnover, funding structures and
affiliation are used to describe the units of research in their institutional dimension. In
7
In most teams there were no resources for an intensive follow-up of non-respondents, for example, in a
telephone survey.

e:\preissl\rise\wp2\RISE-sept-00 18
addition, detailed output categories and services in the context of innovation processes of the
RTIs’/KIBS’ clients cover the functional part of the characterisation of sample organisations.
Questions on the competitive environment, patterns of co-operation and acquisition efforts
deliver background material for the interpretation of data.

4.3 Survey results


4.3.1 Characteristics of the sample population
4.3.1.1 Types of Organisation

The units of research that have been analysed in the surveys show a large variety of
organisational forms. They can be private companies, semi-public or public entities, and
regardless of this distinction, they can be profit-making or non-profit organisations, and they
can be organised as associations, societies or foundations. The type of organisation often has
quite a strong impact on budget configurations and activities. It has to be compatible with the
mission and purpose of the organisations.

The German sample consists of 28 private companies (KIBS) (21% of the sample), 49 public
(37%), and 55 semi-public research organisations (42%). University institutes, which have a
special status and explicit research missions (An-Institute) have close connections with
universities, but they are legally separate units. Of the public organisations, some are
organised as foundations (6%) and about 10% are registered associations (eingetragene
Vereine, e.V.). However, also organisations that declared to be private belong to this last
group (they obviously have to be not for profit companies, since they would loose their status
as a registered association, if they made a profit). Most RTIs belong to larger research
societies, such as the Fraunhofer Gesellschaft, which give varying degrees of independence to
the individual RTI. Some RTIs have no affiliation to other organisations. The sample also
comprises RTIs that are directly linked with a Ministry or a business enterprise.

In the Netherlands, only RTIs were part of the sample, these include those that directly co-
operate with industry. The organisational forms are quite varied, 53% are public, 12% semi-
public, 7% private, 21% are foundations and 7% have another institutional form (related to
the gross sample of 43 cases). Of the RTIs in the sample, seven are academic research schools
that are higher education institutes, but co-operate closely with industry; some are university

e:\preissl\rise\wp2\RISE-sept-00 19
related research institutes and the rest are involved in more applied scientific research (for
example, TNO).

All RTIs in the Swedish sample are semi-public. The RTIs were identified from a list of 28
RTIs supplied by the Swedish association of research institutes (IRIS). In addition, the
sample comprises 21 so-called R&T firms, which provide innovation services. They will be
called KIBS here.

The science-based research institutes in Norway consist of six larger institutes and about 35
medium-sized or smaller research institutes. The dominant institute in the system is clearly
SINTEF. With its 1,4 billion NOK turnover in 1998 and 1.200 researchers, it is also the
largest research group in Scandinavia. Two large groups of RTIs can be distinguished
according to their research fields: technical industrial units and food-related units. The sample
consists of 30 technical-industrial units, 22 food-related units and 5 ‘others’.

The UK sample combines ‘business service companies’ and ‘not for profit companies’ in a
business enterprise sector. The government sector comprises institutions that are supported by
seven research councils for different fields of technological or scientific specialisation. In
addition, the higher education sector has been included, however, response rates were rather
disappointing in this section. Altogether, the UK survey population has been divided into six
categories: ‘government laboratory’(20% of the sample), ‘higher education institution’(13%),
‘public (government owned) enterprise’ (3%), ‘not for profit company’ (29%), and private
enterprise’ (42%). The first three are categorised as ‘public’, the other two as ‘private’.

The Portuguese RTIs covered the biotechnology sector only; they present four types of
organisation, university centres (40.5% of the sample), government laboratories (35.1%),
private non profit institutions (8.1%) and ministry departments or government organisations
(13.5%). Given the small numbers of private firms involved in service activities in
biotechnology or related fields, the survey did not include KIBS firms. So the focus was
exclusively on biotechnology RTIs.

The KIBS firms in all surveys in which they have been considered, included providers of
software, R&D services, technological analysis and testing, engineering services and
consultancy. In Germany, there was a larger group of data processing and software providers;
in Sweden KIBS were mainly providers of R&T services, i.e. software consultants, scientific

e:\preissl\rise\wp2\RISE-sept-00 20
R&D, technological R&D, medical R&D, mixed R&D, construction and other technological
consulting as well as testing and analysis.

4.3.1.2 Size

Table 2 gives an overview of the size distribution of RTIs and KIBS firms. While in the
Portuguese and Swedish sample small and medium-sized entities prevail, in Germany, there
is a bias towards larger organisations. Norway also has a high percentage of small institutes,
however, only researchers were counted, and the bulk of the cases falls into the category 10 to
49 (65% in 1999), i.e., they have to be allocated in the upper part of the category ‘small’.
Therefore, the results presented below might reflect the fact that -on average- more smaller
organisations contribute to these results in Portugal and Sweden and more larger ones in
Germany. The average size of units is rather high in Sweden (96 employees for RTIs and 124
for R&T firms in 1999) as well as in the Netherlands (173 employees in RTIs; not in Table
2). Academic and university institutes seem to be significantly smaller than other RTIs. KIBS
firms tend to be rather small, while more RTIs are found in the category ‘large’. It should be
kept in mind, however, that the indicator ‘small’ attributes to RTIs and KIBS that have up to
50 employees, i.e., the organisations in this category can be very small, but also span into
larger sizes of over 40 employees.

Table 2
SIZE of organisations in % of respondents

Small medium large

Germany public (RTIs) 21 44 35

private (KIBS) 79 21 0

Sweden public 42 47 11

private 73 17 10

UK public 22 11 66

private 48 30 22

Portugal public 57 29 14

Norway public 90 6 4

Germany, UK: compiled using a size indicator


Sweden: only employees: 1 to 50 employees = small, 51 to 200 = medium, over 200 = large.
Portugal: different categories

e:\preissl\rise\wp2\RISE-sept-00 21
4.3.1.3 Employees

Apart from the number of employees in an organisation, an important variable characterising


the workforce is its composition in terms of qualification. RTIs or KIBS firms with a high
share of scientists or engineers will provide other services than those with a high share of
technicians or support personnel. As a rule of thumb, it can be assumed that more technically
qualified personnel will support functions in innovation that are closer to implementation,
testing and construction than to research and planning. A larger share of engineers compared
to scientists hints at a more applied and technical orientation of the organisation.

The relation between scientists, engineers, technicians and other personnel varies not only
between countries, but also between organisations. The qualification levels are generally
high, and on average more than half of the personnel have a degree of a higher education
institute. These shares are rising, for example, in 1995 52% of the employees in Swedish
research institutes were either scientists or engineers. In 1999, this figure had risen to 60%. In
Portuguese biotech institutes the increase in the workforce between 1995 and 1999 was
entirely caused by a higher number of researchers, while the number of technicians remained
unchanged. This can either be the result of a change in orientation towards activities that
require more academic qualifications, or of a change in services provided. However, the
absence of personnel with low or medium qualifications can also be due to a division of
labour which allocates most work at the scientist level without giving the possibility to
delegate tasks to support staff. Changes resulting in higher shares of the academically
qualified workforce may therefore express a change towards a more pronounced research
orientation or a change in the division of labour within the organisation. However, in general,
the more research oriented RTIs held larger shares of scientists/engineers than others.

4.3.1.4 Affiliation

The affiliation of RTIs and KIBS can have a positive impact on the resources they can use,
however, it can also limit their sovereignty and control over research activities, funds and
entrepreneurial initiatives.

In the Netherlands 67% of the RTIs are affiliated with a university, 14% belong to larger
research societies (like TNO or TTI), 9% are independent, 5% are linked to a Ministry and
another 5% to other kinds of organisation. 74% of all German RTIs and KIBS are affiliated

e:\preissl\rise\wp2\RISE-sept-00 22
in one way or the other: 41% organisations belong to a research society, 28% are linked to a
university, 20% to a Ministry, 4% to enterprises and 6% to other institutions (some
respondents gave more than one affiliation). Most RTIs in Sweden and the UK are
independent; no patterns of affiliation emerge in the cases of Portugal and Norway.

About 44% of the UK organisations are independent, 24% are affiliated with other companies
and/or universities, 18% with a trade association, 27% with a Ministry or a government lab
(double nominations were possible).

4.3.2 Funding structures in RTIs and KIBS


One of the distinctive characteristics of RTIs is the composition of funds they rely on.
Budgets are usually covered by four sources of financing: basic institutional funding from
public sources, contract research for public entities, contract research for non-commercial
organisations (foundations etc.) and industry contracts. In many countries, institutional
funding is being cut back in favour of project or programme financing. Governments try to
gain better control over research content and resources, to intensify competition between
RTIs and to increase flexibility in the allocation of funds. As a consequence, the resources
available in RTIs for long-term basic research decrease. However, even private KIBS firms
do not rely entirely on industry contracts for covering their budgets, some of them do contract
work for government and/or non-governmental organisations. In a few cases (in Germany and
the UK), KIBS even received institutional funding from public sources. Sometimes, the
boundaries between RTIs (public) and KIBS (private) blur, if foundations or registered
societies underline their independence form government by emphasising that they are
‘private’.

In some countries, it proved difficult to get retrospective information on budgets. Hence, no


data were surveyed for 1995. Very few of the RTIs and KIBS rely on only one source of
funding, and a mixture seems to be quite common also for private entities. Table 3 gives an
overview for five countries.

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Table 3
Sources of funding in % of budgets and turnover (averages)

Institutional Public Non-com- Private


public contracts mercial org- industry
funding anisations Contracts
1995 1999 1995 1999 1995 1999 1995 1999

Germany
Public 70 67 19 19 3 2 9 13
Private 17 12 13 11 5 4 65 73

Netherlands
Public 50 49 28 28 10 8 13 18

Portugal
Public 44 42 49 52 1 2 6 3

Sweden
Public 12 30 9 51
Private 0 9 2 81

UK
Public 64 65 13 12 9 9 13 15
Private 5 4 29 21 7 6 53 67

There are considerable differences in the level of public institutional financing between
countries - with Germany and the UK at the high end, the Netherlands and Portugal
occupying a middle range, and Sweden at the very low end. The high share of around 70% of
budgets in German RTIs can be explained by the large number of public and highly
subsidised organisations in the sample (about 35% of the RTIs belong to this category). The
Swedish sample, on the other hand, does not comprise any government owned or controlled
organisations and no university institutes. However, even taking into account variations in
sample composition, the difference between Sweden and Germany hints at fundamentally
different concepts. If public contracts and institutional funding are taken together as ‘public
sources’, public research institutes in Germany and the UK show a wider gap, because British
institutes earn less from public contracts than their German counterparts. The Netherlands
move closer to the countries with higher public shares, but in Sweden still the public share in
budgets remains extremely low, and Portuguese RTIs cover almost their entire budgets with
funds from public sources. As a consequence, Swedish RTIs have high shares of industry
contracts, whereas, Portugal, Germany, the UK and the Netherlands only earned between 3
and 18 % of their income from this source in 1999. Not surprisingly, KIBS compete to a
certain extent with RTIs in the field of contract research for public and non-commercial

e:\preissl\rise\wp2\RISE-sept-00 24
entities, get little or no institutional funding and earn the bulk of their turnover from contracts
with industry.

The Norwegian survey used slightly different categories, here basic funding amounted to
16.4% of funding in 1999 (16.6 in 2000). However, this share differs considerably between
technical-industrial units with 11.6% (10.3% in 2000) and food-related units with 31.1%
(32.5% in 2000). Project income was comparatively high at 71.3% (77.4% in technical-
industrial units and 54.1% in food-related units) of budgets. ‘Stable assignments’ cover about
5% of average budgets, and 7.5% come from ‘other sources’.

Public institutional funding decreased in each country (except the UK, where there was a
slight increase for public institutes) between 1995 and 1999 in relative terms. In Portugal, this
has been compensated by a shift towards public contracts, and in the Netherlands and
Germany the decrease in public funds has been accompanied by higher shares in industry
contracts. Most RTIs expect the share of basic funding to go further down with most
substantial cuts being expected in the Netherlands (from 49 in 1999 to 43 in 2002) and in
Germany (from 67 in 1999 to 64 in 2002). Accordingly, industry contracts are expected to
gain a much higher impact in all budgets by the year 2002. Interestingly, this holds for both,
RTIs and KIBS firms, whereas neither of them believes that projects for public entities or
non-commercial organisations will have a much higher share in 2002. Hence, the two
innovation service providers will probably compete more fiercely for business contracts than
for public money in the future.

Results on the development of budget configuration for Portugal are influenced by the
different composition of samples in the years 1995 and 1999. In 1995 slightly less institutes
reported public financing as a source, however, he average share of this source was higher
(43.6% in 1995 against 41.7% in 1999). Contracts from government are the most important
source, it has increased substantially in the four years observed here. Projects for private
firms, on the other hand, have decreased considerably, in 1999 only 30.3% of RTIs
mentioned them as a source, in 1995 the figure had been 44.0%. The overwhelming part of
funds are from government sources, institutional funding as well as project based funding (on
average 92.3% in 1995 and 93.2% in 1999). However, a shift of sources of finance from
institutional funding to project based funding can be observed. In 1999 over 60% of the RTIs
that received institutional public financing covered more than 50% of their budgets from this
source. In the organisations which receive funds from other sources (non-commercial

e:\preissl\rise\wp2\RISE-sept-00 25
institutions and private companies), these sources cover less than 10% of budgets in the
majority of institutions. Their share very rarely is higher than 50%. Interestingly, less
institutes expect to receive funds from government sources in 2002. Those organisations,
however, which expect to receive public funds in 2002 do not think they will contribute less
to budgets than in 1999.

Swedish RTIs and KIBS did not give enough reliable information to analyse 1995 budgets.
However, some conclusions emerged from the survey: The average share of private funding
has not changed since 1995, however, for individual institutes there was more fluctuation.
This share is expected to rise to from 51% in 1999 to 55% in 2002 on the average. 30% of
RTIs’ budgets and 17% of R&T firms’ budgets have been financed by public contracts in
1999. Thus, it can be expected that RTIs and KIBS firms compete in this market as well as in
the market for industry contracts. However, only the analysis of functional variables will
show, how big the overlapping areas are.

In Germany, as in Sweden, the competition between KIBS and RTIs shows in the large
overlap in the categories ‘government funded projects’ and ‘projects for industry’. KIBS
firms that receive institutional public funding are a specific feature of the German R&D
landscapes. It can be assumed that these cases refer to ‘institutes for external industry
research’, an institution to promote industry related research in the East German New Länder.
They are organised as private limited liability companies, but are also likely to get
government subsidies. Another group might be foundations that consider themselves private
entities, but get some public support in addition to funds provided by the foundation.
Subsidies are given to start-up firms in R&D service industry that are supposed to
complement a poor R&D basis in (mainly East German) SMEs. This construction has been
chosen in order not to establish a new kind of publicly funded institution. Hence, these
organisations are expected to be financially independent in a few years time.
The situation in the UK is mainly shaped by the fact that traditionally semi-public research
institutes have been privatised. However, these ‘RTIs’ still earn a substantial part of their
budgets from public contracts. This share has decreased since 1995 and – as in other
countries, they rely more heavily on industry contracts, a field of activity in which they
compete with public or semi-public institutes.

Based on the configuration of budgets, ‘typical’ features of RTIs emerge, i.e., a still
substantial, but decreasing share of public funds. Whereas Dutch, German and Portuguese

e:\preissl\rise\wp2\RISE-sept-00 26
RTIs only have started to earn a larger part of their income from industry, in Sweden and
Norway, this share is already quite high. The figures on budget shares show a rather
traditional distinction between RTIs and KIBS with the former mainly working for the public
and the latter mainly working for the private sector. Changes in this distinction have been
rather incremental than radical in the last five years.

RTIs were traditionally focused on the context of NIS. With the emergence of European
research environment, mainly represented by contract research for the European Commission,
and a general trend towards international integration in many industries, it can be expected
that RTIs will open up their activities towards international markets.

In Norway about one quarter of the turnover of RTIs came from foreign sources in 1999.
However, in the technical-industrial units the share of foreign contracts was considerably
higher at about 40 %.

There is a trend of growing shares of international contracts in Germany and in Sweden. In


the Netherlands and in Portugal opposite trends could be observed between 1995 and 1999. In

Table 4
Average share of foreign and domestic sources in total budgets in %
Germany Netherlands Norway Portugal Sweden1) UK
1995 1999 1995 1999 1995 1999 1995 1999 1995 1999 1995 1999

domestic 94 89 71 76 n.a. 74,1 77 83 90 87 76 77

foreign 6 11 29 24 n.a. 25,9 23 12 10 13 21 22

1)
only RTIs

both countries, however, this trend is expected to be reversed: in the Netherlands a share of
28% of funds from foreign sources has been forecast for 2002. In Portugal this percentage is
estimated to be 20%. Internationalisation therefore seems to be important, however, as it
starts from a rather low level, RTIs and innovation service providing KIBS will for some time
be mainly focused on domestic clients. The UK remains the primary location source for
funding for all categories of organisations. However, this focus is much stronger for public
than for private types.

e:\preissl\rise\wp2\RISE-sept-00 27
4.3.3 Composition of Output

The functional characterisation of RTIs and KIBS can be based on output structures as one
determining variable. The respondents were asked to give the share of labour input dedicated
to four forms of output (contributions to the scientific community, public education, projects
for industry and policy consulting). They were also supposed to document changes between
1995 and 1999 and to give an estimation for the composition of output in 2002. This implies
the assumption that labour input dedicated to produce a certain kind of output will result in
this output in exactly the same proportion. This approximation is often used for the
measurement of service output due to the lack of ‘countable’ output units.

Table 5
Average shares of labour input dedicated to... (in %)

Contributions Public RD&T for Policy Other


to scientific education/ industry consulting activities
community training

1995 1999 1995 1999 1995 1999 1995 1999 ‘95 ‘99
Germany
public 46 43 21 20 15 17 18 20
private 16 19 21 17 50 48 13 15
25 21 12
Netherlan 44 41 20 20 19 -
ds
27 23 9
Portugal 58 54 18 4 4 2 1
Sweden
public 46 42 8 8 41 44 4(3.6) 4(4.4) 3
private 5 5 74 4 12
2 5 47
UK 12 13 56 36 27

Contributions to the scientific community are the main output of RTIs in all the countries
participating in the survey. In 1999, the average share of this category ranged from 41% of
total output in the Netherlands to 54% in Portugal. Even Sweden as a country with low shares
of public funding, contributes substantially to increasing the publicly accessible stock of
knowledge. The same holds for German KIBS which combine a low share of public funding
with a considerable output in form of scientific publications. While German, Dutch and
Portuguese RTIs dedicated between 20 and 25 % of their output to activities in the public
education system or for training purposes. This percentage was considerably lower in Sweden
(6%). Projects for industry amounted to slightly less than one fifth of the output in German,
Dutch and Portuguese and to more than two fifth in Swedish RTIs. With respect to projects

e:\preissl\rise\wp2\RISE-sept-00 28
for public entities, Sweden and Portugal differ significantly from the other countries, here
only 4% of output falls into this category, while in Germany and the Netherlands about one
fifth of output are dedicated to policy consulting. Obviously, in Sweden a large share of
public contracts and research for industry still allow to publish results. Compared with the
average share of public basic funding, relatively small parts of the research are dedicated to
scientific publications in Germany. Here, education and policy consulting take a larger share
than in other countries.

The configuration of output can be determined by the research fields occupied by the
organisations in the sample. Countries with a high impact of institutes that focus on industrial
productivity and technology are more likely to produce output for industry than those with
more institutes specialising in health, social sciences or spatial planning. Sixty % of the
Swedish sample specialises in ‘construction and other technological consultancy’, one third in
software consulting. There are no social sciences involved. In Germany, only 32 % of the
sample list ’industrial productivity’ as their specialisation, however, almost 60% engage in
‘natural sciences’, ‘health care’ and ‘social sciences’ have been given as research field by
about one fifth of the sample. The Netherlands show a more even distribution of
specialisation: 30% of the RTIs give ‘industrial production’ as their field, 25 % ‘health care.
‘Spatial planning’ has been given by 20% as their main research area, and 10% are engaged
in ‘social sciences’. No clear interpretation can be given with respect to the likely addressee
of output for research fields, such as ‘environmental protection‘, ‘agricultural production’,
‘energy’ and ‘other civilian research’. In the UK sample, private organisations are to a large
extent engaged in research on ‘industrial productivity and technology’, ‘environmental
protection’ and ‘defence’. Public entities showed no clear concentration on a specific field,
but were more often found in ‘space research’, ‘societal structures and relations’ and non-
target-oriented research’ than the private ones.

Almost all countries show a trend towards decreasing shares of scientific work and increasing
shares of innovation related services for industry. This trend is expected to continue over the
next few years. It is consistent with the expected growth of the share of industry contracts in
RTI budgets. Public education has become less important in the Netherlands as well as in
Portugal, while the share of policy consulting is likely to remain unchanged. RTIs in Sweden
expect the share of scientific contributions in their output to fall until 2002 (from 41,5% in
1999 to 365.9%), KIBS firms expect it to rise (from 5.2 to 6.5%). In the UK changes in the
configuration of output are particularly pronounced, large increases in output to industry

e:\preissl\rise\wp2\RISE-sept-00 29
between 1995 and 1999 went along with an equally impressive decrease in policy consulting.
In comparison, RTIs in Germany and Sweden show much more stable output structures. The
changes in Portugal are mainly due to differences in the samples between the two reference
years.

In addition to these rather broad output categories, a list of detailed output activities was
provided, and RTIs/KIBS were asked to state the relative importance of the subcategories.

Contributions to the scientific community are differentiated into three sub-categories: (1)
journal and book publications, (2) research reports for the general public, and (3) conference
contributions. There is no general preference for any of these sub-categories (see Table 6). In
Sweden RTIs consider research reports and conference contributions as more important as
books and journal publications. This underlines the results of the previous question which
characterises Swedish RTIs as focused on applied rather than on theoretical research. For
KIBS all three categories are of no or little importance; and publications are the least
important category. In Germany publications are by far the most important output for the
organisations in the sample, but also conference contributions occupy a high rank. A very
similar picture has emerged for the Netherlands. Here, the academic output in form of
publications is even more important than for German RTIs.

Contributions to public education and training were divided into (1) ‘internships and the
support of master theses’, and (2) ‘support of PhDs and postdoctoral qualifications’. Again,
there is not much difference between German and Dutch RTIs, in Germany internships were
ranked slightly higher in importance than doctoral theses, in the Netherlands the relationship
between the two categories was reverse. Internships as well as the training of doctoral and
post-doctoral researchers play a less important role in Swedish RTIs compared with the other
two countries documented in Table 6.

Projects for industry were further divided into: (1) ‘technology consulting/technology
transfer’, (2) ‘construction/testing’, (3) ‘process optimisation’, (4) ‘management consulting’
and (5) ‘certification‘8. All categories are attributed less importance than the contributions to
scientific community categories, with the exception of Sweden, where technology transfer
and construction score particularly high, even with respect to academic output. The ranking
put technology consulting and construction in the first two places in all three countries.

e:\preissl\rise\wp2\RISE-sept-00 30
Process optimisation only gained low-to-medium importance in Germany and the
Netherlands, it was considered much more important in Sweden. Here also certification
ranked slightly higher than in the other two countries. Process optimisation, management
consulting and certification are by far less important than technology and construction related
activities for RTIs in the three countries considered here.

With respect to projects for public bodies again, Germany and the Netherlands have to be set
apart from Sweden. In the first two countries, the formulation of programmes is slightly more
relevant than the other categories, programme implementation and programme evaluation. In
Sweden RTIs consider implementation as more important than the other two.

KIBS firms were only studied in Germany and in Sweden. Table 7 shows the results for
detailed output categories (the policy consulting categories are not detailed here, since the
importance attributed by KIBS firms was so low that further dis-aggregation did not make
sense). German KIBS firms show surprisingly high scores for publications and conference
contributions. Obviously, the presentation of research results plays a major role in marketing
for these firms. Whereas German KIBS contribute to a certain extent to public education
–more intensively by supporting internships than by engaging in post-doctoral qualifications,
these activities are ranked rather low in Sweden. Swedish KIBS present a strong dominance
of construction and testing services for industry, whereas the other industry related output
categories are much less important, and also score considerably lower than in German KIBS
firms. Management consultancy is ranked significantly higher in Germany than in Sweden,
and certification is marginal in both countries. German KIBS still attribute some importance
to internships and the support of master theses, but much less to doctoral qualifications. In
Sweden both categories score rather low, obviously, the firms do not consider to have a
function to fulfil in these fields.

An interesting distinction has been made for the Swedish sample between RTIs that compete
with R&T firms (the KIBS group selected in the Swedish sample) and those that do not. The
competing institutes claim a high importance of construction and testing services and the
optimisation of processes more often than the not competing ones; for technology consulting

8
The category ‘non innovation relevant services for enterprises’ yielded sensible results only for Germany, it will
therefore not be further evaluated here.

e:\preissl\rise\wp2\RISE-sept-00 31
the not competing RTIs show higher scores. Altogether, industry related output categories
were considerably more important to the competing RTIs than to the non competing ones.

e:\preissl\rise\wp2\RISE-sept-00 32
DIW

Table 6
Importance of output categories for research institutes
(% of respondents)

Forms of Output Germany Netherlands Sweden


low medium high low medium high low medium High
magazines, book publication 11 23 66 6 19 75 64 32 4
research reports for the public 26 49 25 33 39 28 26 26 48
conference contributions 12 36 53 8 33 59 10 64 26
internships, master thesis 17 24 59 31 19 50 48 32 20
PhDs and post-doctoral qualification 25 17 58 28 19 54 31 42 26
technology consulting / technology transfer 45 23 32 44 25 31 5 32 63
construction /testing 52 20 28 44 28 28 11 26 63
process optimisation 65 16 18 73 25 2 32 16 53
1)
management consulting 79 12 10 75 22 3 84 5 11
Certification 90 5 5 92 3 5 78 11 11
studies, formulation of programmes 55 21 24 44 31 25 68 32 0
support, realisation, implementation of 69 18 13 58 28 14 58 37 5
programmes
evaluation of programmes 65 23 11 56 28 16 89 11 0
Italics: estimation
1)
in Sweden this category was substituted by ‘operational services’.
.

33 e:\preissl\rise\wp2\RISE-sept-00
Table 7
Importance of output categories for KIBS firms
(% of respondents)

Forms of Output Germany Sweden


low medium high low medium high
magazines, book publication 43 18 39 97 0 3
research reports for the public 64 21 14 88 12 0
conference contributions 32 32 36 94 6 0
internships, master thesis 32 46 21 77 23 0
PhDs and post-doctoral qualification 75 14 11 94 6
technology consulting / technology 29 29 43 49 32 19
transfer
construction /testing 29 36 36 29 13 58
process optimisation 43 25 32 45 42 13
management consulting 50 25 25 74 19 6
Certification 75 14 11 83 13 3

4.3.4 Competition in research markets

Organisations that provide innovation services are increasingly faced with competition. Their
competitors may be organisations of the same type, but also actors from other backgrounds.
Table 8 shows that in all countries most of the RTIs and KIBS have competitors within their
own group of service providers, i.e., RTIs compete with RTIs and KIBS with KIBS. In
Sweden more RTIs and KIBS perceive competition from other organisations than in the
Netherlands and in Germany. Dutch RTIs compete most often with universities (the sample
comprises a large share of university institutes), and German Swedish RTIs often see
universities as their competitors. This is much less frequently the case with KIBS and
research departments in manufacturing companies.

One of the central hypotheses of this project is that RTIs and KIBS are competing to provide
innovation services. If we take the organisations’ own perception, we can see that in Germany
and Sweden RTIs see KIBS less often as their competitors than KIBS the RTIs.

e:\preissl\rise\wp2\RISE-sept-00 34
Table 8
Competitors: share of all respondents that are competing with ....

Germany Sweden Netherlands Norway 1)

RTIs KIBS RTIs KIBS RTIs RTIs

....RTIs 81 54 95 72 86 41

universities 75 50 89 72 88 34

KIBS 48 61 63 76 81

R&D departments 43 54 21 68 79 9
in
companies
1)
In the Norwegian survey the question was about ‘medium or strong competition’, there was no
distinction between KIBS and manufacturing companies.

For RTIs there is a clear distinction: universities and other RTIs are much more often
perceived as competitors than KIBS and private companies. For KIBS the distinction is not as
clear: here RTIs, universities and companies are mentioned equally often as competitors.
Most RTIs and KIBS in the three samples compete with institutions or service providers in
their own group. In the Netherlands a strong affiliation of RTIs with universities makes the
latter also an important competitor. In Norway about 55 % of RTIs stated that competition
with universities and other RTIs had increased over the last five years, but only 45 % felt that
competition from private firms and laboratories had become stronger.

RTIs and KIBS have been asked in which fields they see their main competitive advantages.

Most innovation service providers rely on their specialisation as a major source of


competitive advantage. The quality of work and experience gained from previous projects is
also an important factor. Research area and experience are slightly more important for RTIs
than for KIBS firms. The methods adopted distinguish RTIs in Germany and Sweden from
their competitors, but Dutch RTIs do not often attribute importance to this factor.
Surprisingly, cost advantages are more important for KIBS than for RTIs. Obviously, this is
due to the fact that KIBS face a harder price competition, and RTIs do not perceive the public
f u n d i n g t h e y r e

e:\preissl\rise\wp2\RISE-sept-00 35
Table 9
Factors providing competitive advantage

Germany Sweden Netherlands

RTIs KIBS RTIs KIBS RTIs

research area/
specialisation
98 44 100 90 95

methods 50 26 63 42 29

quality of
research
80 82 79 58 83

experience 52 46 95 90 88

cost advantage 33 44 16 23 20

confidentiality 11 11 - - 20

ceive as a means of achieving higher competitiveness by being able to realise lower service
prices. Whereas other factors, like multidisciplinarity or economies of scale were mentioned
only occasionally as additional sources of competitive advantage, the institutes’ independence
seems to be an important advantage for Dutch RTIs. For the kind of service provided by the
organisations in the samples, confidentiality does not seem to be a relevant factor.

In the Norwegian survey the relating question was formulated in a different way. Here
competitive advantage was mainly attributed to the qualification of personnel, to reputation
and to stable customer relations. Financing, market position and size were considered as
factors that rather created disadvantage. These results did not differ between technical-
industrial institutes and food-related institutes.

4.3.5 Service functions

In order to investigate the activities of RTIs and KIBS with respect to the functions they held
in the innovation processes of their clients, the innovation process has been dis-aggregated
into 10 functions, and the survey participants were asked, for which functions they offered
services. Before the results are presented, the terminology of ‘functions’ and ‘services’ as
adopted in this project should be explained: For the sake of simplicity and transparency, a

e:\preissl\rise\wp2\RISE-sept-00 36
model has been conceived, which presents the innovation process as a sequence of steps9 that
leads from an innovation idea and basic research through applied research, feasibility studies,
conceptual work, and planning to the implementation of a new production process or to the
market introduction of a new product (see figure 1).

While a firm is moving towards the realisation of an innovation, it faces a series of tasks
which are necessary to reach a successful completion of the process. Figure 1 illustrates the
role of service functions and service providers. The lower part of the graphic names the
innovation functions, and in the upper part possible service providers are listed. The
attribution of functions to service providers is only exemplary here, many other combinations
are possible. The innovation functions can be provided by an in-house department of the
innovating firm or as an external service: for example, the development of a new product
requires the study of the existing state of the art in the technological field, in which the
innovation is going to be realised; patents have to be investigated and possible solutions have
to be studied. The fulfilment of this task allows the firm to move on to more concrete
planning and development tasks. The function of guaranteeing a sound information basis for
the innovation can be exercised by the in-house R&D team or provided as a service of an
external R&D service provider. One type of service can serve more than one function, for
example, a consultant’s service package can comprise procedural development as well as
implementation. On the other hand, one function can be divided into more than one service, if
the construction of a prototype is divided into the development of tools and the actual
construction plan of the new product.

One of the core purposes of the surveys conducted within RISE was to find out in which
functions RTIs and KIBS contributed to innovation, whether there was an overlapping field
between the two groups of service providers, and whether service functions changed over
time. A list of ten functions was presented to those survey participants that had responded
‘yes’ to the question whether they supported companies in their innovation process.

9
This does not mean that any kind of ‘linear‘ model of innovation is being favored here, this picture is only used
to explain the relationship of functions and services in this project.

e:\preissl\rise\wp2\RISE-sept-00 37
DIW

Figure 1
Innovation Service Functions

consultancy

KIBS

suppliers

IT-department

R&D department

RTIs

research development design planning testing prototypes marketing

39 e:\preissl\rise\wp2\RISE-sept-00
Table 10
Service functions
Share of all respondents that offer this service function in %

Function Country Type of organisation

Private public all


Basic research G 32 60 54
Neth - 100 100
Swe 64 95 77
UK 56 100 68
Acquisition and G 63 65 64
study of Neth - 88 88
information Swe 11 26 55
UK 76 78 76
Feasibility G 58 57 57
studies Neth - 64 64
Swe 55 63 59
UK 84 56 76
Product G 45 67 62
/procedural Neth - 72 72
development Swe 93 95 94
UK 76 67 74
Planning, G 58 35 40
project and Neth - 32 8
personnel Swe - - -
management UK 84 56 76
Construction of G 58 51 52
prototype Neth - 44 44
Swe 50 58 53
UK 68 56 65
Testing G 40 60 55
Neth - 52 52
Swe 46 74 57
UK 80 89 82
Implementation G 50 46 47
of innovation Neth - 16 16
Swe - - -
UK 80 67 76
Documentation G 37 36 36
and Neth 28 -
certification Swe 21 11 17
UK 68 56 65
Introduction G 45 18 24
into the Neth - 4 -
marketplace Swe 36 21 30
UK 52 44 50

Respondents were asked to state whether they offered the respective service at all and
whether they thought the importance of the service would increase, decrease or remain the
same in the future. Table 10 gives the results for Germany, the Netherlands, Sweden and the
UK.

e:\preissl\rise\wp2\RISE-sept-00 41
The innovation functions that most frequently were supplied by RTIs in Germany, the
Netherlands and Sweden are ‘basic research’ and ‘product/process development’. ‘Testing’,
‘prototypes’ ‘feasibility studies’, and ‘information services’ take a middle rank, whereas
‘planning and project management’, ‘implementation’, ‘documentation’ and ‘market
introduction’ are positioned at the lower end of the frequency scale. In the UK, apart from
‘introduction into the marketplace’ all services are supplied by a large share of RTIs and
KIBS firms.

However, for some functions, there are considerable differences between countries. In the
Netherlands, a large percentage of RTIs engage in information research, in Sweden this is the
case only for about one quarter of the sample. All RTIs in the Netherlands offer basic
research as a service to companies, and only 60 % of German RTIs; documentation and
certification are not frequently supplied on the average, but still more than a third of the
German RTIs mentioned this service. In the Netherlands, more up-stream functions
(preparatory functions as well as construction and planning functions) clearly prevail against
the more down-stream ones (implementation and marketing). In the UK, RTIs concentrate on
basic research, product development, testing and the acquisition of information, for KIBS
feasibility studies, product development, project management, testing and implementation are
the fields, where most respondents are active. Thus, the overlapping between RTOs and KIBS
is most obvious in product development and testing. The category ‘product/process
development’ has been separated into ‘product development’ and ‘process and organisational
development’ in the English questionnaire. This proved to be wise, since there are remarkable
differences between the categories: 89% of RTIs and 80% of KIBS offer product
development as a service, but only 44% of RTIs and 72% of KIBS offer process and
organisational development. In the UK, there is a clear division of labour between public and
private organisations. The differences in the shares of RTIs and KIBS that offer a particular
service are much higher here than in other countries. It can therefore be concluded that
functional profiles differ more significantly between the two groups of service providers in
the UK than elsewhere.

RTIs and KIBS in Germany are much more different in terms of services they provide than
RTIs and KIBS in Sweden. However, this result is partly determined by the composition of
the samples: in Germany RTIs cover a much broader range of institutes, more diverse types
of institutional arrangements and a broader set of research fields. In Sweden, the RTIs in the
sample are more directly focused on industry-relevant research, and the sample does not

e:\preissl\rise\wp2\RISE-sept-00 42
include university research institutes. For example, in Germany there is a clear division of
labour between RTIs and KIBS with respect to basic research: it is quite common for RTIs,
but KIBS firms are not very likely to supply it. In Sweden the two types or organisations do
not show much difference in the provision of this service function. Whereas in Germany RTIs
are found more often than KIBS in the preparatory functions of innovation (the first three
service functions), service supply in realisation functions (the next four categories) is almost
equally strong in both types of organisation. However, KIBS dominate in the functions that
are closer to the market (the last three). For Sweden no such pattern exists.

Table 11 ranks the service functions for the two types of providers in both countries. The
service function with the highest percentage of suppliers in the sample is ranked 1st. The
differences in the ranking scores mark the degree of deviation between RTIs and KIBS.

Table 11
Ranking of service functions according to relative frequency of supply

Function Ranking
Germany Sweden UK
RTIs KIBS RTIs KIBS RTI KIBS
Basic research 3 7 1 2 1
Acquisition
and study of 2 1 5 8 3 3
information
Feasibility
4 2 3 3 5 1
studies
Product/ product product
procedural dev. 2 dev. 2
development
1 4 1 1 process dev. process dev.
6 4
both 4 both 3
Planning,
project and
8 2 - - 5 1
personnel
management
Construction of
5 2 4 4 5 5
prototype
Testing 3 5 2 5 2 2
Implementation
6 3 - - 4 2
of innovation
Documentation
7 6 7 7 5 5
and certification
Introduction into
the marketplace 9 4 6 6 6 6

e:\preissl\rise\wp2\RISE-sept-00 43
5 Indicators for institutional and functional orientation
5.1 The design of the set of indicators

The usual method of characterising RTIs selects a set of institutional variables, such as size,
share of public funding, research fields. In the following we would like to present a more
differentiated scheme which uses functional along with institutional characteristics (for
example, output categories, acquisition efforts, innovation service functions) to find ‘typical
patterns of RTIs. In addition, RTIs and KIBS are analysed together, in order to discover
similarities and differences. The generation of indicators and typologies has been inspired by
Laredo (Laredo 1999). The work of Laredo is based on the analysis of government labs in the
field of human genetics. He uses the term ‘research collectives’ to express the fact that the
outcome of research processes is the product of teams hat operate in a certain context rather
than of individuals. These research collectives are often allocated (or identical with) ‘labs’.
The dimensions on which labs are characterised are: the endowment with resources, a
production profile, and organisational, management and strategic styles (Laredo 1999, p. 8-
10). The research of the Laredo group resulted in the generation of ‘activity profiles’ based on
‘relative involvement’ in training, academic, industrial and clinical activities (Laredo 1999, p.
82 –89). The main configurations presented are: ‘Teaching and research’ (focusing on
training and academic activities) and ‘socio-economic’ (focusing on industrial and clinical
activities). Since Laredo’s scheme has been conceived for human genetics research, it could
not be adopted directly for our analysis. The surveys of the RISE project dealt with a much
greater variety of research units, and the country-specific results could not be included in one
data set without venturing into methodological swamps, and would have resulted in wiping
out essential features of country-specific differences. Hence a slightly different approach was
taken here.

A set of indicators has been produced from the survey data in order to reduce the complexity
of data and to arrange the material in a way which gives immediate information on
institutional and functional orientation of RTIs and KIBS. The indicators reflect RISE
hypotheses and prepare the identification of ‘types’ of organisations. Indicator values provide
information about relative positions. They combine data from several questions that
contribute to describe a complex phenomenon. The following indicators were generated:

e:\preissl\rise\wp2\RISE-sept-00 44
Institutional dimension

A first set of indicators describes the units of research in terms of their institutional
configuration. Apart from variables that indicate size and institutional affiliation, these
indicators comprise data that refer to the organisations’ size, statutory mission and
constitutional rationale.

 Size: Obviously, many aspects of output and service provision as well as performance of
an organisation may depend on its size. The size indicator serves to check these
influences in a straightforward way. Higher scores in the indicators mark larger
organisations.
 Institutional dynamics: This indicator expresses the dynamics of growth in terms of
number of employees and budget of the organisation. It will allow to match changes in
the composition of output and /or acquisition efforts and the role in innovation services
with trends in the organisations’ institutional features. Higher scores characterise
organisations that either grow faster or do not decline as quickly as others.

 Public/private orientation: In many countries, RTIs have a public mission: they are
supposed to create knowledge and make it accessible to the public, either via publications
or via the education system. The indicator will show to which extent RTIs (and in some
cases also KIBS) in the sample fulfil this mission. Organisations with high scores will
have large shares of public funding and distribute their research results mainly directly
towards public users or publicly accessible channels.

 Academic orientation: RTIs derive a large part of their reputation from academic
excellence. In some countries their performance is subject to academic evaluation. As part
of the scientific community, RTIs compete for academic reputation; however, their
academic achievements do not always correspond with the needs of customers in the
industry sector. Although academic achievements are the basis for fulfilling functions in
technology generation and technology transfer, they can therefore be in contradiction with
activities and principles that aim at serving a more application oriented clientele.
Research results gained in the context of an academic community are mostly published
and, thus, directed to the scientific community and to the general public. Hence, RTIs
with a strong academic orientation tend to contribute to the innovation system as a whole
and to serve pre-competitive phases of innovation preparation rather than processes of
innovation in individual companies. KIBS also might show academic orientation to a
certain extent, as they try to enhance their knowledge base and keep in touch with

e:\preissl\rise\wp2\RISE-sept-00 45
progress in technological knowledge by contributing to the output of the scientific
community.
The indicator summarises variables which emphasise the academic nature of the output.
It shows to which extent the need to be more market oriented affects academic outcome;
however, it also shows how far KIBS try to strengthen their reputation by providing
academic output. High scores are associated with university links and output mainly for
the scientific community.

 Policy orientation: Some RTIs serve government rather than industry. They produce
reports for the general public or for government institutions. It can be assumed that for
some RTIs the share of activities dedicated to this kind of function is greater than for
others. Highly scoring organisations have links with Ministries, are to a large extent
funded by institutional support or publicly financed projects and produce policy
consulting as their main output.

 International orientation: Globalisation and European integration promote international


co-operation in markets for goods and services and also in research. RTIs have
traditionally been rooted in NISs, therefore they usually are not oriented towards
international markets or clients. In recent years, however, two phenomena drive RTIs
towards international activities: the increasing international orientation of research
activities of industry clients (partly induced by transnational merger activities) and the
distribution of research funds via institutions at the European level. Those organisations
that work for foreign markets will find it easier to remain competitive under increased
market pressure. High scores mark organisations with strong international links10.

Functional dimension

Indicators for functional orientation concentrate on the organisations’ activities. They ask
what the RTIs and KIBS ‘are doing’, whom they serve and what their main output is.

 Research orientation: The functions of an RTI can concentrate on the provision of


research results for the general public. These results are mainly dedicated at enhancing
the existing stock of knowledge; application of this knowledge is a secondary function. In
this case, the RTI will have a high share of academics in its workforce, produce output for
scientific publications or provide basic research for innovation in firms. Research

e:\preissl\rise\wp2\RISE-sept-00 46
orientation is also visible in the choice of co-operation partners in other research institutes
or universities. High scores show a bias towards research output as against service
functions to industry.

 Service orientation: A hypothesis to be tested in this project is that RTIs will become
more service oriented in order to sell their competencies in the market for innovation
services. The indicator tries to document these processes by looking at funding structures,
non-academic (service) staff and the composition of output. High scores express a high
service element in the activities of the organisation.

 Functional diversity: this indicator describes the degree of specialisation of


organisations. A high functional diversity indicates that the RTIs or KIBS can serve many
purposes and many clients, i.e., they contribute to more than one function in the
innovation process, and deliver output to up-stream and downstream phases in the NIS.
RTIs and KIBS with a wide range of types of output and of innovation functions will
score higher here than those with a more concentrated set of core activities.

 Functional dynamics: The indicator checks whether organisations are changing their
functional orientation. Do RTIs and KIBS assume new functions? Do they think that
certain functions will increase or decrease in importance in their service portfolio? High
functional dynamics indicate significant changes in output mix over the period of
observation (1995 to 1999 and 2002) and in the relevance attributed to innovation service
functions.

 Technological orientation: One of the characteristics that set RTIs of a specific type apart
from others might be the degree of technology orientation in their output mix and service
functions. From the hypothesis that the innovation process increasingly requires services
other than technological R&D, it might be expected that RTIs move towards a lower
technology orientation by assuming a wider range of management, training or marketing
functions. High indicator scores hint at a decisive technology orientation.

A ‘toolset’ for the construction of indicators from raw data is given in Appendix 2. In the
process of evaluation, and especially when trying to interpret indicators, some problems with
the formulation of questions became evident. For instance, the 'international orientation' of
the organisations was only measured using the share of foreign clients and customers, which
in a number of cases must be misleading, as organisations having academic links with

10
This indicator does not measure academic linkages or individual co-operation of researchers (e.g., international
co-authorship.

e:\preissl\rise\wp2\RISE-sept-00 47
international partners were classified as ‘not internationally oriented, when they did not have
‘clients’ abroad. A modification of the questionnaire will thus be necessary, and the indicator
at present only covers part of the international orientation. The following table shows the
attribution of variables to indicators.

Table 12

Indicator Variables

size number of employees, budget


institutional dynamics changes in: number of employees, budgets
KIBS orientation budget mix, acquisition efforts
public/private orientation funding, output mix (static and dynamic indicators)
academic orientation links, funding, output mix
policy orientation links, funding, output mix
international orientation branch offices, foreign sponsors
research orientation share of academics, output mix, innovation functions, co-
operation
service orientation non-academic staff, links, funding, output details
functional diversity output mix, innovation functions, co-operation
functional dynamics innovation functions, output mix
technology orientation output mix (details), innovation functions

tional links an organisation might have. The indicator 'institutional dynamics' could not be
calculated for 'young' organisations as the reference data for 1995 is lacking, and there seems
to be a substantial number of them, especially in the KIBS samples. The question concerning
the ‘importance of service functions’ was obviously misunderstood by some respondents.
Instead of stating the future importance of the service unction for their own business
strategies or output, they gave their opinion about the development of the service in general.
In future surveys the question should be re-formulated.

Thus, the construction of indicators shed light on possible and sensible revisions of the
questionnaire. It turned out that the category ‘very high’ seldom occurred in the indicator
scores. It was therefore merged with the ‘high’ scoring cases into one category ‘high’ (of
course, this can also be an effect of a very low number of cases available for certain
indicators and certain countries). Ideally, the methods of calculating the indicators should
have been reformulated and margins as well as scoring schemes should have been adjusted in
order to grasp variation in the cases more adequately. However, since all RISE teams worked

e:\preissl\rise\wp2\RISE-sept-00 48
with the same toolset at different points in time, this kind of revision was not possible without
putting the very tight time schedule into jeopardy. Therefore, we stuck to the harmonised
indicators and decided to live with some rather ‘skewed’ results, i.e., indicators which place
most cases in the ‘very low’ and ‘low’ categories only.

On the other hand, the composition of samples and the data that resulted for the set of
questions in the survey were consistent with most of the indicator results. Indicator values
were surprising at times, but not implausible, although some revisions in the indicator design
as well as in the questionnaire might lead to more precise results (see chapter on
methodological conclusions below!).

5.2 Institutional and functional orientation in RTIs and KIBS

Indicators were calculated by four countries, Germany, the Netherlands, Sweden and the UK.
Some indicators could only be calculated in one or two countries, since the data quality did
not allow to produce meaningful results. Norway presented a smaller set of similar indicators
based on their survey material. Thus, the data were used to produce as much information as
possible regarding the content of the individual indicators without being able to follow the
formal procedures the other countries had agreed upon. In the case of Portugal it did not make
much sense to work with the indicators, since due to the concentration on the biotech sector
there would not have been enough variance to justify using a very formal evaluation scheme.
A compilation of the results obtained by each of the four countries that worked with the
indicators is given in Table 12. The number of cases included in each indicator varies from
indicator to indicator in all countries, since in cases where the data were not complete often
the indicator could not be calculated and the number of relevant cases was thus reduced (see
Appendix 3 for information on sample sizes for indicators).

Due to the small number of cases in the Netherlands, Sweden and the UK, the presentation of
categories in percentages overstates the actual importance of results in terms of significance
for the NIS.

e:\preissl\rise\wp2\RISE-sept-00 49
Table 13
Indicator results for four countries
% of all respondents included in the indicator

Indicator Country very low low medium high


privat public Privat public privat public Privat public
e e e e
KIBS G 48 37 33 23 15 27 4 12
orientation Neth 48 29 19 5
Swe 11 19 47 52 32 19 21
UK 0 0 0 0 35 100 65
Institutional G 25 56 6 17 31 19 38 9
dynamics Neth 29 0 29 42
Swe
UK 38 38 0 0 43 38 19 25
Public G 75 23 18 73 7 4 0 0
orientation Neth 0 19 76 5
Swe 82 58 14 42 4 0 0
UK 55 0 35 33 10 67 0 0
Research G 14 1 57 43 25 45 4 11
orientation Neth 14 14 33 38
Swe 12 0 33 5 48 26 11 69
UK 25 0 50 0 20 50 5 50
International G 61 66 18 21 14 10 7 3
orientation Neth 29 52 14 0
Swe 55 42 24 37 14 21 7 0
UK 23 33 15 67 46 0 15 0
Academic G 75 9 14 33 7 49 4 10
orientation Neth 5 19 24 53
Swe 93 0 4 84 4 16 0 0
UK 82 0 9 0 5 50 5 50
Policy G 75 53 18 35 7 13 0 0
orientation Neth 38 47 14 0
Swe 86 26 7 58 3 16 0 0
UK 61 33 26 44 13 22 0 0
Service G 4 3 54 34 29 30 14 9
orientation Neth 14 57 19 10
Swe 0 0 14 11 57 68 29 21
UK 0 0 13 13 26 63 61 25
Technology G 13 39 30 14 35 20 22 27
orientation Neth 19 19 14 38
Swe 3 0 24 5 21 16 52 79
UK 4 0 8 22 12 11 76 67
Functional G 15 7 37 42 37 37 11 13
diversity Neth 0 33 52 15
Swe 19 0 22 21 33 58 26 21
UK 8 0 4 22 20 33 68 44
Functional G 0 1 82 81 14 18 4 0
dynamics Neth 43 29 29 0
Swe 0 0 0 47 46 32 54 21
UK 0 0 33 75 52 25 14 0

e:\preissl\rise\wp2\RISE-sept-00 50
KIBS orientation

Information on the sources of financing (industry vs. public funds, and contract-based vs.
institutional funding) as well as on efforts for the acquisition of contracts in terms of labour
expended deliver the input for this indicator. The data show the diversity of orientations
between countries (see also Figure 3). Whereas in Germany and in the Netherlands the
orientation of the organisations in the sample towards providing business oriented services is
generally low, Sweden and the UK show more KIBS and RTIs with a medium or high KIBS
or business service orientation. A clear distinction emerges between RTIs in Germany and the
Netherlands, and their counterparts in Sweden and the UK. In the first two countries, RTIs are
clearly not business oriented. In Sweden KIBS orientation of RTIs ranges from low to high
with a slight tendency to the low and medium side; in the UK the business orientation of RTIs
concentrates entirely in the medium range. Surprisingly, in Germany the business orientation
seems to be higher in RTIs than in KIBS firms themselves; in Sweden and the UK the
comparison between RTIs and KIBS comes closer to what might have been expected, here
KIBS range at the higher end of the scores, with a distinct bias towards high business
orientation in UK KIBS, and a more distributed scoring in Sweden, however with a clear
skewness towards the higher end. The likelihood of a competitive relationship between RTIs
and KIBS in business oriented functions therefore seems to be greatest in Germany, whereas
there is a more distinct division of labour in Sweden and the UK.

In the UK high KIBS orientation is found as often in small as in medium sized and large
KIBS firms. (The number of RTIs for whom this information can be gained is too low to
make any meaningful statement). Relatively more large than small organisations show a high
or very high KIBS orientation in Germany.

The Swedish report differentiates between RTIs and R&T firms (KIBS) that compete with the
other group and those that do not compete. A slightly greater percentage of the not competing
RTIs shows a low KIBS orientation than of the competing ones. Competing R&T firms (or
KIBS firms) have a much higher incidence in the high score categories than their not
competing counterparts. Thus, competition seems to drive RTIs and KIBS into greater
business orientation.

KIBS or business orientation has been identified for Norwegian RTIs as ‘a high and/or
increasing degree of single projects as share of their total income’. The indicator is thus not as

e:\preissl\rise\wp2\RISE-sept-00 51
comprehensive as the one used by the other countries. Slightly more than 43% of RTIs had a
medium business orientation (with higher shares in the technical than in the food-related
group). 36% were categorised as ‘weakly’ and 20% as ‘highly’ business oriented.

Institutional dynamics11

Institutional dynamics, i.e., the growth perspectives of an organisation in terms of


employment and budget volumes are low in German RTIs; in the KIBS sample many more
respondents showed a medium and high score for this indicator. In the UK there is not much
difference between RTIs and KIBS, but ‘very low’ dynamics occur quite often; on the other
hand, a considerable number of organisations reach medium and high scores for the indicator.
The Dutch contains many RTIs with ‘very low’ institutional dynamics but, at the same time, a
large share of ‘medium’ and ‘highly’ dynamic cases. Due to difficulties to gain retrospective
data on most institutional features that are at the core of the indicator, no information is
available for Sweden. The majority of RTIs and KIBS (about 60%) in the UK show ‘medium’
or ‘very high’ institutional dynamics, ‘very low’ dynamics have been measured for 38% of
RTIs and KIBS.

In the UK institutional dynamics is relatively greater in large organisations. This holds for
RTIs as well as for KIBS. In Germany small organisations show more often than medium
sized and much more often than the large ones high institutional dynamics. Almost 70% of
the large units appear in the category ‘very low’ institutional dynamics. This corresponds
with the trend in Germany to downsize large research institutes for reasons of efficiency and
cost saving. In Sweden the difference between competing and not competing RTIs and KIBS
is again considerable. 91% of the competing RTIs are in the categories ‘high and very high’,
and only 17% of the non competing ones.

11
No graphic representation.

e:\preissl\rise\wp2\RISE-sept-00 52
D1
Germany - KIBS Orientation Netherlands - KIBS Orientation

50
50
40
40
30
%
30
%
20
20
10
10
0
very low low medium high 0
very low low medium high
RTI 37 23 27 12
KIBS 48 32 14 4 Netherlands RTI 48 29 19 5
Indicators Indicators

Sweden - KIBS Orientation UK - KIBS Orientation

60 60

50 50

40 40

% 30 % 30

20 20

10 10

0 0
very low low medium high very low low medium high
Sweden RTI 47 32 21 UK RTI 0 0 25 0
Sweden KIBS 11 19 52 19 UK KIBS 0 0 32 59
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 53
D2 Germany - Institutional Dynamics Netherlands - Institutional Dynamics

60 45
50 40
35
40
30
% 30
25
%
20 20
15
10
10
0 5
very low low medium high
0
Germany RTI 56 17 19 9 very low low medium high
Germany KIBS 25 6 31 38 Netherlands RTI 29 0 29 42
Indicators Indicators

UK- Institutional Dynamics

50

40

30
%
20

10

0
very low low medium high
UK RTI 38 0 38 25
UK KIBS 38 0 43 19
Indicators

e:\preissl\rise\wp2\RISE-sept-00 55
Public orientation

Public orientation, i.e., functions of RTIs and KIBS that are directed at the general public or
at ‘clients’ in the ‘public’ or ‘government’ sphere, is surprisingly low in German as well as in
Swedish RTIs and KIBS, with a slightly lower score for KIBS in both countries. In the
Netherlands, most RTIs range in the medium category of public orientation. Only
organisations in the UK correspond to a certain extent to our expectations: here KIBS are
much more often found at the lower end of policy consulting activities, whereas RTIs tend
more frequently to a medium intensity. For RTIs, thus, the Netherlands and the UK are
similar and quite distinct from the other two countries.

Small RTIs and KIBS in Germany tend to show very low public orientation, whereas the
larger ones are more frequently characterised by low public orientation, however,
independently of size, public orientation never reaches ‘high’ or ‘very high’ scores. For KIBS
in the UK there is no noticeable difference between large, medium and small units with
respect to public orientation. In Sweden the ‘not competing’ vs. ‘competing’ dichotomy does
not show any differences for this indicator for RTIs. Among the R&T firms none of the not
competing firms reach ‘medium’ scores, whereas this is the case for 12% of the ones
competing with RTIs. Obviously, competition with RTIs is allocated in fields that are in the
public domain.

Research orientation

Research orientation is mostly low to medium for RTIs and KIBS in Germany and the UK.
However, KIBS score significantly lower in the UK. Dutch RTIs are more often highly
research oriented than their German or English counterparts. Swedish RTIs show by far the
highest share of cases with high research orientation.

No difference exits in the UK between small, medium and large organisations with respect to
research orientation. In Germany more small organisations show a low research orientation
than medium and large ones. Due to synergy and scale effects, larger RTIs and

e:\preissl\rise\wp2\RISE-sept-00 56
D3
Germany - Public Orientation Netherlands - Public Orientation

80
80
70
60
60

% 40 50
% 40
20 30
20
0 10
very low low medium high
0
Germany RTI 23 73 4 0 very low low medium high
Germany KIBS 75 18 7 0 Netherlands RTI 0 19 76 5
Indicators Indicators

Sweden - Public Orientation UK - Public Orientation

100 70

80 60
50
60
% 40
%
40 30
20
20
10
0 0
very low low medium high very low low medium high
Sweden RTI 58 42 0 0 0 33 67 0
UK RTI
Sweden KIBS 82 14 4 0 55 35 10 0
UK KIBS
Indicators
Indicators

e:\preissl\rise\wp2\RISE-sept-00 57
KIBS can set aside more resources to dedicate to research activities. In Sweden, more of the
RTIs that compete with KIBS show a high and very high research orientation, the majority of
the not competing RTIs ranges in the medium category.

The Norwegian report has identified institutes with ‘weak, medium’ and ‘strong’ research
orientation. The indicator is based on a ‘comparatively large share of researchers and a large
share of activities oriented towards scientific publications’. It can thus be compared with the
indicator described above. The research orientation is rather weak in Norwegian RTIs: 43%
of all institutes (57% of the technical-industrial and 15% of the food-related institutions) are
to be found in the category ‘weak’, and only 27% in the category ‘strong’ (14% technical and
46% food-related). Research orientation is, thus, considerably stronger in food-related than in
technical institutes.

International orientation

The indicator which captures ‘international business orientation’ by documenting contract


research for foreign clients and foreign branch or representative offices, shows a ‘very low’ to
‘low’ internationalisation in all countries with only few distinctions: German KIBS and RTIs
are the least internationally integrated. Whereas English RTIs also concentrate almost entirely
on the domestic market, KIBS in this country are much more often working for foreign
clients. One reason for this could be the size of the country, in comparison with, for example,
Sweden and the Netherlands. This does not explain, however, the differences between the
English KIBS on the one side and German and Swedish KIBS on the other. Here, differences
in the attractiveness of the domestic customer base (i.e., the presence of a large clientele of
flourishing manufacturing companies) in Germany and in the UK might be an explanation.

e:\preissl\rise\wp2\RISE-sept-00 58
D4
Germany - Research Orientation Netherlands - Research Orientation

60
40
50 35
40 30
25
% 30
% 20
20
15
10 10
0 5
very low low medium high
0
Germany RTI 1 43 45 11 very low low medium high
Germany KIBS 14 57 25 4 Netherlands RTI 14 14 33 38
Indicators Indicators

Sweden - Research Orientation UK - Research Orientation

70 70
60 60
50 50
40 40
% %
30 30
20 20
10 10
0 0
very low low medium high very low low medium high
Sweden RTI 0 5 26 69 UK RTI 0 33 67 0
Sweden KIBS 12 33 48 11 UK KIBS 25 35 10 0
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 59
D5 Germany - International Orientation Netherlands - International Orientation

70 60
60
50
50
40 40
%
30 % 30
20
20
10
0 10
very low low medium high
0
Germany RTI 66 21 10 3 very low low medium high
Germany KIBS 61 18 14 7 Netherlands RTI 29 52 14 0
Indicators Indicators

Sweden - Interantional Orientation UK - International Orientation

60 70

50 60
50
40
40
% 30 %
30
20
20
10
10
0 0
very low low medium high very low low medium high
Sweden RTI 42 37 21 0 UK RTI 33 67 0 0
Sweden KIBS 55 24 14 7 UK KIBS 23 15 46 15
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 61
More small than medium-sized and large RTIs and KIBS show a medium or high
international orientation in the UK as well as in Germany. In Sweden organisations that
compete with KIBS or RTIs more often show a medium or high international orientation,
whereas the not competing ones remain mostly in the lower categories.

Academic orientation

The indicator for academic orientation comprises links with universities, contributions to the
scientific community and teaching/education functions. Countries with a large share of
university linked institutes in their sample will therefore have a larger share of RTIs with
academic orientation than the others.

Hence, the very high academic orientation in the Netherlands. The high scores in the case of
English RTIs is somewhat deceptive, since the sub-sample for which the indicator has been
calculated consists of only six cases, anyway – all six score in the medium and high ranks.
German RTIs show most frequently a medium academic orientation, however with more than
40% of the institutes in the low and very low categories. For KIBS firms academic orientation
is not a relevant feature.

German RTIs and KIBS tend to have a weaker academic orientation, if they are small
organisations; relatively more of the larger entities show higher scores. The explanation for
this is probably not far from that for the higher research orientation of larger organisations,
i.e., the existence of synergy effects and economies of scale. The very low academic
orientation in English KIBS is independent of size. This also holds for English RTIs.

Policy orientation

A large share of contract work for Ministries or a direct link or subordination to government
institutions generates high scores for policy orientation. Policy orientation is generally quite
low in the sample of the four countries considered here. Only RTIs in the UK

e:\preissl\rise\wp2\RISE-sept-00 62
D6 Germany - Academic Orientation Netherlands - Academic Orientation

80
60

60 50

40
% 40
% 30

20 20

10
0
very low low medium high
0
Germany RTI 9 33 49 10 very low low medium high
Germany KIBS 75 14 7 4 Netherlands RTI 5 19 24 53
Indicators Indicators

Seden - Academic Oientation UK - Academic Orientation

100 100

80 80

60 60
% %
40 40

20 20

0 0
very low low medium high very low low medium high
Sweden RTI 0 84 16 0 UK RTI 0 0 50 50
Sweden KIBS 93 4 4 0 UK KIBS 82 9 5 5
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 63
seem to engage to a larger extent in policy consulting. In all the other countries most RTIs
remain in the range of low or very low scores. This reluctance is more pronounced for KIBS
than for RTIs.

In Norway ‘policy orientation is recognised by important relations to universities and high


and /or increasing public funding’. Technological institutes have a low to medium policy
orientation, whereas food-related institutes tend to have a medium to strong policy
orientation. Intensive co-operation of many technical institutes with universities goes along
with very low shares of public funding. Food-related institutes have a higher share of public
funding and also often relations with the academic world.

In the UK small RTIs and KIBS are more likely to be found in the low categories for policy
orientation, and the larger ones might at least reach medium scores for this indicator. The
same is true for Germany, however, differences between the two types of organisation are not
large here. Differences between competing and not competing RTIs and KIBS in Sweden are
not significant.

Service orientation

Service orientation focuses on those functions that are not R&D, but rather serve more
downstream phases of the innovation process, such as implementation, maintenance, testing
and prototyping. High scores indicate that RTIs and/or KIBS diversify their activities towards
providing a more comprehensive service package to innovating firms.

Service orientation is relatively low in the Netherlands and in German KIBS firms, and much
higher in Swedish and English RTIs and KIBS. Contrary to our intuition, in Germany some
KIBS firms seem to be even less service oriented than RTIs (58% KIBS in the ‘low’ and
‘very low’ categories, against 38% RTIs); however, 14% of KIBS firms

e:\preissl\rise\wp2\RISE-sept-00 64
Germany - Policy Orientation Netherlands - Policy Orietentation
D7
80
50

60
40

% 40 30
%
20 20

10
0
very low low medium high
0
Germany RTI 53 35 13 0 very low low medium
Germany KIBS 75 18 7 0 Netherlands RTI 38 47 14
Indicators Indicators

Sweden - Policy Orientation UK - Policy Orientation

100 70
60
80
50
60
% 40
%
40 30
20
20
10
0
very low low medium high 0
very low low medium high
Sweden RTI 26 58 16 0
UK RTI 33 44 13 0
Sweden KIBS 86 7 3 0
UK KIBS 61 26 22 0
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 65
also show a ‘high’ service orientation. In the UK more than 60% of KIBS firms show more
often ‘high’, about a quarter ‘medium’ service orientation. English RTIs are found more often
in the medium range (63%), and less often in the ‘high’ range (25%). RTIs with medium to
high service orientation reflect the strategy of combining academic work with relevance for
industry purposes in Germany which is manifest in the construction of Fraunhofer institutes.
The low number of service oriented organisations in the Netherlands corresponds to their
higher academic orientation and the strong presence of university institutes in the sample. In
Sweden there is a slight difference between RTIs and KIBS with the latter belonging more
often to the highest range of service orientation, and the former concentrating in the medium
range. This leads to the conclusion that in service related innovation functions a substantial
number of RTIs and KIBS in Sweden with ‘medium’ and ‘high’ service orientation (around
90% of the sample) face intensive competition, while in Germany the field where competition
might be an important feature is only relevant for about 40% of RTIs and KIBS with a
medium or high service orientation.

Service orientation is more often ‘medium’ or ‘high’ in competing than in not competing
RTIs and KIBS in Sweden. Slightly more medium and large RTIs and KIBS show a medium
or high service orientation than smaller ones in Germany. No size-related variation of the
indicator could be found in the English results.

Technology orientation

Some organisations’ output mix and the service functions that they offer, show that their
functional orientation is technological rather than managerial or marketing oriented. There is
no clear common pattern for technology orientation in the countries considered here. More
than in other indicators, cases are distributed over the different intensity ranges. In Germany
RTIs tend to have a lower technology orientation than KIBS, however, still more than a
quarter of RTIs in the sample appear in the ‘high’ score category of the indicator. In the
Netherlands, there is a bias towards medium and high scores, how ever, almost 40% of the
sample are located in the ‘very low’ and ‘low’ categories. Swedish RTIs and KIBS differ
slightly from the other two countries, since they show the most obvious technology
orientation with more than three quarters of RTIs and more than half of KIBS in the highest
category. More than two thirds of RTIs and three quarters of KIBS in the UK have a high
technology orientation.

e:\preissl\rise\wp2\RISE-sept-00 66
D8
Germany - Service Orientation Netherlands - Service Orientation

60 60
50
50
40
40
% 30
% 30
20
20
10

0 10
very low low medium high
0
Germany RTI 3 34 30 9 very low low medium high
Germany KIBS 4 54 29 14 Netherlands RTI 14 57 19 19
Indicators Indicators

Sweden - Service Orientation UK - Service Orientation

70 80
60
60
50
40 % 40
%
30
20 20
10
0
0 very low low medium high
very low low medium high
0 11 68 21 RTI 0 13 63 25
Sweden RTI
Sweden KIBS 0 14 57 29 KIBS 0 13 26 61
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 67
Small and large KIBS in the UK have more often reached high and very high scores for
technology orientation then medium sized firms. In Germany large firms are slightly more
likely to have high or very high technology orientation than medium or small firms. Swedish
RTIs that compete with KIBS tend to be more technology oriented than the not competing
RTIs. The situation is more diverse for KIBS. Here almost 40% of the not competing firms
are in the lower categories (13% ‘very low’, 27% ‘low’), and 60% in the high and very high
range (38% and 25%), non in the ‘medium’ field. The KIBS that compete with RTIs stretch
from ‘low’ (20%) over ‘medium’ (40%) to ‘high’ (27%) and ‘very high’ (13%).

In the Norwegian study technology orientation describes a ‘unit with low and/or shrinking
shares of activities aimed at scientific publications, and with emphasis on practical
developmental work in companies and/or supplying customers with module-based solutions’.
The results again show a clear distinction between technical institutes and food-related
institutes; while the former have a large share of cases with medium to strong technology
orientation, the latter are more often to be found among the institutes with weak technology
orientation.

Functional diversity

One of the RISE hypothesis is that with the changing nature of innovation and the new
service requirements that accompany these changes, RTIs will be forced to diversify the
services they offer their industrial clients. The indicator shows the degree of diversity in the
output and the supply of service functions as well as the range of co-operation partners for
RTIs and KIBS.

Most RTIs and KIBS are to be found in the middle range, however, German organisations
tend more to the lower, Swedish and Dutch organisations to the higher end. More RTIs than
KIBS show a high functional diversity in Germany as well as in Sweden. Interestingly, KIBS
are much more often than RTIs to be found in the ‘very low’ category in both countries. In
the UK, the situation differs from that in the other countries. Here, more KIBS firms show a
high functional diversity than RTIs, and in both groups a substantial number of cases has high
or very high scores for the indicator.

e:\preissl\rise\wp2\RISE-sept-00 69
D9 Netherlands - Technology Orientation
Germany - Technology Orientation

40 40
35
30 30
25
% 20
% 20
15
10
10

0 5
very low low medium high
0
Germany RTI 39 14 20 27 very low low medium high
Germany KIBS 13 30 35 22 Netherlands RTI 19 19 14 38
Indicators Indicators

Sweden - Technology Orientation UK - Technology Orientatation

80 80

60 60

% 40 % 40

20 20

0
0 very low low medium high
very low low medium high
Sweden RTI 0 5 16 79 RTI 0 22 11 67
Sweden KIBS 3 24 21 52 KIBS 4 8 12 76
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 71
Not competing Swedish KIBS show a slightly greater tendency for functional diversity than
the competing ones; the opposite is true for RTIs. High functional diversity is more often
found in medium-sized and large German RTIs and KIBS than in the small ones. On the
contrary, in the UK, the smaller RTIs and KIBS present more often ‘high’ and ‘very high’
scores than the medium and large ones.

Functional dynamics

This indicator is based on the hypothesis that the functional orientation of RTIs and KIBS is
changing over time. It measures the degree at which organisations are subject to these
changes. Most RTIs in Germany and the Netherlands scored ‘low’ or ‘very low’ for
functional dynamics. In Germany this is also true for KIBS. In Sweden, however, only RTIs
are mainly to be found in the lower categories, while KIBS show ‘medium’ and even more
often ‘high’ functional dynamics. Functional dynamics is predominantly low in RTIs in the
UK, and mainly ‘medium’ in KIBS firms.

No relation between size and functional dynamics has emerged form the German data. N the
UK, indicator values are slightly higher for large and medium-sized than for small KIBS.
Competing KIBS firm in Sweden rank more often in the ’medium’ and ‘high’ fields than the
not competing ones. The same is true for RTIs, although at a slightly lower level.

e:\preissl\rise\wp2\RISE-sept-00 72
Germany - Functional Diverstiy Netherlands - Functional Diversity

D10 50
60

40 50

30 40
%
20 % 30

10 20

0 10
very low low medium high
0
Germany RTI 7 42 37 13 very low low medium high
Germany KIBS 15 37 37 11 Netherlands RTI 0 33 52 15
Indicators Indicators

Sweden - Functional Diversity UK - Functional Diversity

60 80
50
60
40
% 30 % 40

20
20
10
0
0 very low low medium high
very low low medium high
Sweden RTI 0 21 58 21 RTI 0 22 33 44
Sweden KIBS 19 22 33 26 KIBS 8 4 20 68
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 73
Germany - Funcitional Dynamics Netherlands - Functional Dynamics
D11
100 45
40
80
35
60 30
% 25
40 %
20
20 15
10
0 5
very low low medium high
0
Germany RTI 1 81 18 0 very low low medium high
Germany KIBS 0 82 14 4 Netherlands RTI 43 29 29 0
Indicators Indicators

Sweden - Functional Dynamics UK - Functional Dynamics

60
80
50
60
40

% 30
% 40

20 20
10 0
0
very low mediu high
very low low medium high
0 47 32 21
RTI 0 75 25 0
Sweden RTI
Sweden KIBS 0 0 46 54 KIBS 0 33 52 14
Indicators Indicators

e:\preissl\rise\wp2\RISE-sept-00 75
5.3 Correlation between indicators

All teams attempted to group organisations in their samples according to the scores for
functional and institutional indicators using statistical cluster methods. However, these
attempts did not lead to significant results. Thus, a less formal way was adopted by using
simple cross tabulation of indicators, which gives some more evidence concerning RISE
hypotheses. Since some indicators show a considerable amount of overlapping, only a few
will be analysed in this chapter. For example, policy orientation and public orientation as well
as academic orientation and research orientation cover similar phenomena and can be treated
by choosing just one indicator. The central hypotheses are based on the existence of
trajectories that go from mainly publicly funded institutions to mainly contract and industry
funded institutions in one dimension and from basic research mainly for the scientific
community to innovation related services in the other dimension. This leads to the following
assumptions:

• the more KIBS oriented organisations are, the less research oriented
• the more KIBS oriented organisations are, the more service and technology oriented
• the more KIBS oriented organisations are, the more internationally oriented
• the more research oriented organisations are, the less service and technology oriented

The necessary information for cross-tabulation was available for three countries. (Sweden,
Germany and – incompletely - the UK). The differences in sample sizes, institutional
backgrounds and emerging profiles make an aggregated analysis of all three countries
inadequate. However, the results show important variations between countries.

a) KIBS orientation and research orientation

To support the hypotheses that a high KIBS orientation usually goes along with a low
research orientation, a significant number of cases should be found in the upper right and the
lower left boxes of the following tables. An agglomeration of cases in the central areas would
indicate that a considerable number of organisations combine high KIBS orientation with
high research orientation.

e:\preissl\rise\wp2\RISE-sept-00 76
Sweden
Research KIBS orientation
orientation

Very low Low Medium High Very high

Very low 1 1

Low 2 4 4

Medium 2 5 8 1 1

High 1 4 5 2 1

Very high 2 1
n=45

Germany
Research KIBS orientation
orientation

Very low Low Medium High Very high

Very low 4 1

Low 30 13 13 4 1

Medium 15 14 15 8 2

High 1 5 4 1 1

Very high
n=132
UK
Research KIBS orientation
orientation

Very low Low Medium High Very high

Very low 1 3

Low 4 6

Medium 1 3

High 2 1

Very high
n=20

In Sweden only one quarter of the cases supports our hypotheses, three quarters seem to
belong to a category of organisations that combine both orientations without having a strong
profile in any of the two directions. 17% are allocated in the medium range for both
indicators. A low or medium KIBS orientation is combined with all degrees of research
orientation for a very large number of RTIs and KIBS. On the other hand, a medium and high
research orientation matches with all parameter values for KIBS orientation for an equally

e:\preissl\rise\wp2\RISE-sept-00 77
large number of organisations. Thus, no clear pattern emerges from the combination of the
indicators.

The German data show an even less conclusive result. Here only 8% of the cases are allocated
in the expected cells, 36% present low and very low KIBS as well as research orientation.
‘low’, ‘medium’ and ‘high’ research orientation are combined with all categories of the KIBS
indicator, however, with a bias towards the lower scores.

In the UK almost half of the cases match the high KIBS/low research orientation hypothesis.
However, 70% of the sample show ‘low’ or ‘very low’ research orientation, combined with
medium or high KIBS orientation. Only in one case (5% of the sample) ‘medium’ KIBS
orientation links with ‘medium’ research orientation. Therefore, this result seems to be due
mainly to the generally low research activities in the English organisations.

Results from the Norwegian survey which are based on a different methodology, show that in
about one fifth of the cases strong/weak research orientation goes along with weak/strong
KIBS orientation. Quite often, weak research orientation is combined with weak and/or
medium business orientation. In only about ten % of the cases, medium research orientation is
combined with medium KIBS orientation. Thus, no convincing pattern emerges from the
data.

b) KIBS orientation and service orientation

Organisations which receive a substantial part of their funds from industry contracts and
projects for public and non-government institutions are expected to show a high share of
services in their output and a strong presence in innovation services delivered to firms. Hence
one would expect an agglomeration of cases in the upper left and the lower right cells of the
tables as well as on the diagonal axis . (A certain amount of auto-correlation is inherent in the
following tables, since both indicators contain information on budget shares from industry
contracts). This combination has not been analysed for the UK, hence there are only two
countries to be compared in this case.

e:\preissl\rise\wp2\RISE-sept-00 78
Sweden

Service KIBS orientation


orientation

Very low Low Medium High Very high

Very low

Low 1 3 1

Medium 3 10 9 4 2

High 3 7 2

Very high
n=45

Germany

Service KIBS orientation


orientation

Very low Low Medium High Very high

Very low 18 8 4

Low 19 17 12 2

Medium 9 6 12 9 3

High 4 2 4 2 1

Very high
n=132

Again, Swedish RTIs and KIBS do not follow the expected pattern, i.e., only 4% of the
sample show the combination of high KIBS and service orientation or low scores in both
indicators. However, more than a quarter appear in matching categories, which seems to be
consistent with the hypothesis. The picture is confused by the fact that ‘medium’ service
orientation goes along with all categories of KIBS orientation.

German RTIs and KIBS show the same strong matching along the diagonal fields (37%), but
also in the cells that most adequately support our hypothesis. However, there is a considerable
agglomeration in the low score fields for both indicators. The asymmetry of the high and low
score frequencies shows that the type of RTIs and KIBS in the sample focus on activities
within the research and policy community rather than on market related activities.

e:\preissl\rise\wp2\RISE-sept-00 79
c) KIBS orientation and technology orientation

It has been assumed that organisations with a high KIBS orientation are likely to also be quite
technology oriented. Since most of RTIs and KIBS in the samples are working in technology
or science related fields, and the indicator variables are not very strong in approximating
‘technology’, the correlation is not expected to be strong in this case. Data were only
available for Germany and Sweden for the two indicators. The relevant cells are those in the
upper left and lower right corners as well as the central (‘medium/medium’) box.

Sweden

Technology KIBS orientation


orientation

Very low Low Medium High Very high

Very low 1

Low 1 3 4

Medium 2 2 2 2

High 2 5 4

Very high 4 4 1
n=37

Germany

Technology KIBS orientation


orientation

Very low Low Medium High Very high

Very low 22 11 5 1

Low 9 5 5 1

Medium 9 7 8 2 1

High 8 7 10 4 1

Very high 2 3 4 5 2
n=132

About 30% of the Swedish sample fall in the category of organisations that support the
hypothesis. However, there is also a lot of variation in the rest of the cases so that no clear
trend can be observed.

e:\preissl\rise\wp2\RISE-sept-00 80
In Germany, again, the low KIBS orientation of a large part of the sample influences the
cross-tabulation results. Hence, 35% of the cases show the expected pattern of low KIBS and
low technology orientation, and only 10% fall in the ‘high/high’ category (6% combine
‘medium’ scores for both indicators).

d) KIBS orientation and international orientation

The traditional geographical scope of RTIs and of most service firms focuses on the domestic
market. Clients are either found in the national policy system or in the range of local
companies. With the internationalisation of R&D activities and of service markets, but also as
a result of a stronger orientation towards industry clients, a diversification into international
markets might be expected. However, data for the internationalisation indicator have already
shown that only a few RTIs and KIBS have already realised a significant international
presence. Data are only available for Germany and the UK.

UK

International KIBS orientation


orientation

Very low Low Medium High Very high

Very low 2

Low 2 1

Medium 6

High 2

Very high
n=13

Germany

International KIBS orientation


orientation

Very low Low Medium High Very high

Very low 41 22 18 5

Low 6 8 8 5

Medium 3 1 5 2 3

High 2 1 1 1

Very high
n= 132

e:\preissl\rise\wp2\RISE-sept-00 81
The UK sample shows indicator values that hint at a support the hypothesis; in about 60% of
the cases high KIBS orientation goes along with medium or high international orientation.
However, the very small sample does not allow to draw bold conclusions for the UK as a
whole.

In Germany the already familiar picture of low KIBS scores is combined with an equally
skewed allocation of organisations in the lower categories, as far as international orientation
is concerned. Insofar, it is not surprising that the majority of cases is found in the ‘very low’
and ‘low’ cells of each indicator (58%). High KIBS orientation is also combined with low
and very low international orientation in 10 cases (8%), an indication that the weak
international integration is also an important phenomenon in the more business oriented
organisations.

e) Research orientation and service orientation

The hypothesis which guides this chapter is based on the perception that RTIs either
concentrate on the more research and academically oriented functions and are, thus, far away
from the more application and implementation oriented services for industry clients. Hence,
we expect to find a large number of cases in the lower right and upper left cells.

Sweden

Service Research orientation


orientation

Very low Low Medium High Very high

Very low

Low 1 1 4 1

Medium 2 8 7 10 1

High 2 4 4 3

Very high
n=48

e:\preissl\rise\wp2\RISE-sept-00 82
Germany

Service Research orientation


orientation

Very low Low Medium High Very high

Very low 19 10 1

Low 4 23 19 4

Medium 1 13 18 7

High 6 7

Very high
n=132

The Swedish data do not confirm the hypothesis. Here only 6% of the respondents fall in the
expected categories. Organisations with low, medium and high service orientation stretch
over all categories of research orientation. On the other hand, medium service orientation
matches with low, medium and high research orientation.

The German table is characterised by a concentration of cases in the ‘low’ and 'medium’
ranges for both indicators. Thus, the cells that support the hypothesis remain almost empty:
only 8 % of the RTIs and KIBS combine low service orientation with high research
orientation or vice versa. A large number of organisations combine low and medium research
orientation with medium or low service orientation (55%). Considerably less cases are to be
found in the medium and high categories (24%). Hence, a high research orientation seems to
be hard to combine with a high service orientation.

f) Research orientation and technology orientation

Since the generation of technology is supposed to belong to the more downstream R&D
areas, whereas research orientation focuses on the upstream side of R&D, it can be assumed
that organisations with a high technology orientation will not at the same time show a high
research orientation. However, a strong research orientation might also endow an organisation
with the necessary knowledge to provide high quality technology services. Again, only data
from Sweden and Germany were available for this part of the analysis.

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Sweden

Technology Research orientation


orientation

Very low Low Medium High Very high

Very low 1

Low 3 2 4

Medium 3 3 3

High 4 5 9 1

Very high 2 2 3 2
n=47

Germany

Technology Research orientation


orientation

Very low Low Medium High Very high

Very low 25 13 1

Low 3 8 6 3

Medium 13 11 3

High 2 9 16 3

Very high 6 8 2
n=132

More than 30% of the RTIs and KIBS in Sweden are allocated in the high and very high
scores for both indicators, i.e., they combine excellency in research with a strong technology
orientation. If the medium categories are included, almost 60% of the sample combines both
orientations. Hence, a good combination seems to match at least a medium to high research
expertise with a medium or high technology competence.

The results of the correlation analysis shows that the crude division of organisations in highly
specialised categories does not meet the picture presented in the surveys. In order to be
competitive in innovation service markets or in R&D evaluation procedures, RTIs as well as
KIBS have to combine service, research and technological competencies. In every country
there are some cases of organisations with a highly specialised profile, however, the very

e:\preissl\rise\wp2\RISE-sept-00 84
nature of the organisations that supply innovation services seems to imply a broader set of
relevant qualifications and competencies.
The Norwegian technology policy aimed at this combination of high expertise in research as
well a in technology generation. However, the survey results for this country do not show
promising results in this direction. Only about 17% of the institutes show a strong or medium
research as well as a strong or medium technology orientation. About one third are strong in
one indicator and weak in the other.

6 Country summaries

The individual country studies contain a much wider variety of information on the
development of innovation services, RTIs and KIBS12. In order to complement this report
with some country specific detail, summaries of individual reports will be presented in
this chapter.

Germany

The following results are derived from the survey which is at the centre of the empirical work
in this workpackage, but also on case studies and on the institutional analysis of the German
innovation system (see Rickert 1999) as well as on a specific cluster study, concerned with
innovation in the automotive supplier sector (see Preissl 1999). The material derived from
these sources shows that the national innovation system is characterised by a large variety of
institutional forms of innovation service providers with specific patterns of interaction.

The survey data and the case studies, give evidence to support the thesis that innovation
functions adopted in innovating firms (demand perspective) and innovation services/service
products (supply perspective), cover fields of activity that are much wider than just the
performance of traditional R&D tasks.

The relevant services – if not supplied in-house by the specialised departments of the
innovating company - are provided by a multitude of organisations that combine different

12
See WP2 counrty reports on the RISE server.

e:\preissl\rise\wp2\RISE-sept-00 85
institutional and functional features and employ different modes of interaction with their
clients/customers as well as with other co-operation partners.

The patterns of interaction between the different organisations range from extremely
competitive to strongly co-operative, sometimes these patterns change over time or during
different stages of innovative activities.

The material derived from the postal survey, case studies and a specific cluster study shows
that the German national innovation system is characterised by a large variety of institutional
forms of innovation service providers with specific patterns of interaction. Out of the 132
postal survey respondents 28 are KIBS and 104 are RTIs (49 public organisations and 55
semi-public or publicly supported organisations). 33.3% of these organisations rank as small,
39.4% are medium-sized and another 27.3% of the respondents are large.13 Concerning size
the difference between the two categories of private versus public and semi-public
organisations (KIBS vs. RTIs) is most obvious. More than a third of the respondents are
linked to a research society such as the Leibnitz-Gesellschaft, the Max-Planck-Gesellschaft
and the Fraunhofer-Gesellschaft. Other entities are linked to universities, to a ministry, other
institutions or to business enterprises. While nearly all private organisations generate their
financing mainly from projects for the industry, the public and semi-public organisations
heavily rely on public funding and generate major proportions of their financing based on
government contract research.

Innovating companies more and more rely on the possibility of outsourcing innovation-
related functions which previously were performed in-house. This, of course, only holds true
for innovation-related activities not directly linked to the core competencies of the respective
companies. Factors contributing to the outsourcing tendencies are ongoing specialisation due
to the steady splitting-up of previously coherent areas of knowledge and technology and the
merging of previously independent and non-interrelated technology areas. Additional drivers
are the opportunities resulting from the rapid development of information and communication
technologies and the emergence of differentiated markets for innovation-related service
activities, partly due to de-regulation measures in a number of relevant fields in the major
industrial countries.

13
Small: up to 50 employees, budget of DM 0.1 to 7 million; medium-sized: 51 to 200 employees,
budget of DM 7.1 to 25 million; large: over two hundred employees, budget of over DM 7 million.

e:\preissl\rise\wp2\RISE-sept-00 86
The postal survey data and the case studies give evidence to support the thesis that innovation
functions adopted in innovating firms (demand perspective) and innovation services or
service products (supply perspective), cover fields of activity that are much wider than just
the performance of traditional R&D tasks – and that the institutional perspective in analysing
innovation-related services should be complemented by a functional one.

However, private, public and semi-public innovation service providers differ with respect to a
number of service functions. Public and semi-public RTIs are much more involved in basic
research leading to innovation, than their private competitors (KIBS). On the other hand, the
survey data reveal that private innovation service providers are much more active in the
application of new knowledge and technology within innovating companies and especially in
marketing-related service functions.
In general there are only minor differences concerning the judgements of the respondents
from RTIs and KIBS on the relevance of certain innovation-related service functions
expected for the future. The respondents consider the delivery and assessment of innovation-
related information as the service function most important in the years to come, followed by
the market introduction of new products or processes and product and process development.
This might reflect the RTIs’ and KIBS’ growing awareness of the fact that not only the
innovating companies as their customers, but also the RTIs and KIBS themselves have to
adjust to market dynamics. It seems, that these and other services are equally relevant for
most of the innovative activities in companies – independently of the localisation of the
respective innovation process on the continuum from basic research to market introduction. In
many areas of activity, competition between RTIs and KIBS will become even more intense
during the years to come.

The relevant services – if not supplied in-house - are provided by a multitude of organisations
that combine different institutional and functional features and employ different modes of
interaction with their clients as well as with other co-operation partners. The patterns of
interaction between the different organisations range from extremely competitive to strongly
co-operative, sometimes these patterns change over time or during different stages of
innovative activities. RTIs and KIBS co-operate with their clients or other partners mostly via
joint projects, working groups and transfer of skilled personnel. 40% of all respondents
claimed to have mainly long-term co-operation agreements with their partners. On average
33% of the respondents reported on the predominance of singular cases of co-operation, while
11% of the respondents have unlimited co-operation agreements (either explicit of implicit).

e:\preissl\rise\wp2\RISE-sept-00 87
Interestingly, both RTIs and KIBS, expect to devote more resources (time and finance) to
acquisition activities in the future. This again indicates that competition in their fields of
activity gets harder and that there is a growing awareness also among RTIs that they have to
react to market demand or have to sell their services more aggressively. The increasing
involvement of traditional publicly funded or supported RTIs in competitive, market-oriented
activities is also a result of financial restrictions due to budget cuts and fiercer competition for
government contracts. Another reason are demands for more business orientation, ‘flexibility’
and contribution of the research organisations’ activities to the competitiveness of the
national economy, again reflected by the modes of financing the RTIs’ activities.

A significant difference between private innovation service providers on the one hand, and
public or semi-public organisations on the other, was detected with regard to five out of the
12 indicators applied. Private innovation service providers can easily be distinguished from
their public or semi-public competitors on the basis of their size, the institutional dynamics,
public/private orientation and their academic as well as research orientation. It is important to
note that the percentage of private innovation service suppliers with medium, high and very
high institutional dynamics is much higher than the respective percentage figures for RTIs.

The empirical findings outlined above lead to a number of general conclusions. First, the
paradigm of technology transfer as a major bottleneck and area of concern for R&D policy
makers, seems to be rather outdated now. The model of the service economy, in contrast to
this, seems to offer a new perspective on science and technology policy. It is much more
suitable, when it comes to business enterprises’ innovation activities and innovation-related
policy initiatives.

The Netherlands

The majority of the RTIs in the Dutch sample is public. These mainly concern university related
research schools and institutes. A more balanced picture would have appeared, if all the TNO and
former DLO institutes had returned the questionnaire. Regarding the number of employees and
turnover most of the non-academic organisations show very high figures. An exception is the
academic medical centre of Leiden University (Leids Universitair Medisch Centrum) with 500
employees (full-time equivalents). RIVM, Gastec, the TNO institutes and former DLO institutes

e:\preissl\rise\wp2\RISE-sept-00 88
have also the highest turnover figures of the sample, ranging between Euro 30 million and Euro
55 million (RIVM exceeds even Euro 150 million).

Regarding the funding sources we can identify one main development. FKIBSt of all the share of
public funding decreased slightly since 1995, and this decrease is expected to continue towards a
level of approximately 43% of the total budget in 2002. An increase in the share of private
funding (from approximately 13% in 1995 to 21% in 2002) by performing contract research for
industry is expected to leverage the effect of decreasing public funding. The other sources of
funding, i.e. contract research for non-profit organisations and for government, seem to stay more
or less at the same level.

Regarding the overall funding a slight increase in national funding can be identified between 1995
and 1999, but this share is expected to reach the same level in 2002 as in 1995 of approximately
72%. These figures seem to illustrate an expected increase in internationalisation and market-
orientation in the forthcoming years for most of the RTIs (see also the sections on ‘competition’,
‘competitive advantage’ and ‘acquisition activities’).

The picture that evolves from the service function data on what kind of services are being
provided in the innovation process and the relative importance of these apparently fits the
traditional RTI scenery. The most frequently mentioned functions are the more academic and
technical ones, including performing basic research and development activities For most of the
functions and their importance the development anticipated in future years is mainly rising. This
can be viewed as remarkable as one of the assumptions of the RISE project has been that new
service functions in the innovation process will win importance vis-à-vis the traditional ones. But
especially these traditional ‘services’, e.g. basic research, product development and
prototyping/testing, are the most relevant and strongly rising services.

At the regional and national level just a few competitors exist for Dutch RTIs. As contrasted with
the international competitive arena, where the majority of the respondents identify over 10 direct
competitors. Among every category of competitors the number of identified competitors is usually
less than 5. The intensity of competition rises as the RTIs are moving up from the regional
towards the international competitive arena. It is most severe between RTIs and universities and
between RTIs and non-profit organisations: medium to high. Competition with commercial
service providers and industry is mostly regarded as having a low intensity.

The average of the proportion of working time spent on acquisition is approximately 9,5%. One
exception is a university-linked research group that spends 40% of total working time on

e:\preissl\rise\wp2\RISE-sept-00 89
acquisition of contracts and is even anticipating a future rise! The majority of the respondents
expect a rise in the near future of the RTIs acquisition activities. Additional comments by
respondents regard the changing dynamics of the ‘research market’: declining government
financing, increasing search for commercial funding, internationalisation of the RTIs’ research
activities, new foreign competitors in the Netherlands, privatisation of RTIs etc. In combination
with these comments, the results seems to confirm the actual process of rising market-orientation
of most RTIs from a low basis.

Sweden

Compared with KIBS-firms the output of the RTIs is to a much larger share concerned with
scientific activities and contributions. The output of KIBS-firms primarily concerns projects
for industry. Such projects are also important to the institutes. The comparison of the content
of industry projects show that institutes and firms to a large extent carry out the same kind of
activities in these projects, i.e. the output profiles in relation to industry projects overlaps.
Another finding is that the services of the institutes and firms to a large extent overlap when
related to innovation functions. This overlap is located to the “up-stream” research and
development functions of the innovation process. Only a few institutes and firms provided
“down-stream” services related to near-market functions of the innovation process.

The findings of overlapping service profiles lead to the hypothesis that Swedish industrial
research institutes are not moving into the realms of service firms, but that KIBS-firms are
moving into the traditional areas of research institutes, i.e. research and technological
functions of the innovation process. However, the study does not show if services related to
one function, e.g. research, have the same content and quality when supplied by institutes and
firms respectively. That a service is related to the research function does not necessarily mean
that the provider of the service is performing research.

The identified overlaps in output and functional service profiles indicate the fields of services
where industrial research institutes and KIBS-firms may compete. A rather large share of the
institutes also stated that they compete with KIBS-firms and many regard the competition to
be strong. Also a large share of the firms competes with research institutes, but most of them
regard the competition to be weak. However, we do not know which of the activities and
functions that are under competitive pressure. We do not know which services

e:\preissl\rise\wp2\RISE-sept-00 90
(output/functions) that are under competitive pressure and the size of those parts within the
total activities of each institute. Also we do not know how large a share of the institutes
activities that are exposed to competition and whether the competitive relation concerns some
particular type of client, e.g. SMEs. However, the study indicates that competition is taking
place in research and technology areas and not in activities related to near-market functions of
the innovation process.

The differences of profiles between institutes that compete with KIBS-firms and those that do
not and between firms that compete with institutes and those that do not are rather small in
most aspects studied. This indicates that it is not the content of activities and services that
determine, if industrial research institutes compete with KIBS-firms. A hypothesis is that
what determines the existence of competition is simply the existence of institutes and firms
within the same field or innovation cluster. If both kinds of service providers exist then they
also compete at least to some degree. Thus the relation between industrial research institutes
and KIBS-firms should be analysed in the context of innovation clusters. In such a setting it is
possible to determine the existence or non-existence of industrial research institutes and
KIBS-firms.

The study has generated some other methodological conclusions. Some of the questions in the
questionnaire are too coarse: specified output and functional categories conceal crucial
differences in the content of activities and of services related to innovation functions. It is
also questionable to treat the institutes (and the firms) as one group since they differ largely in
activity and functional profiles.

Norway

The size of the science-based research institute sector in Norway is quite immense, compared
to the size of the economy. About 9.600 persons – or one out of each 200 Norwegian
employee - are working in one of the 38 Norwegian institutes14. The last ten years, Europe
has experienced a profound growth in private technology-based business service
consultancies. These services are technological, they are external sources to innovating
companies, they are often knowledge-intensive and they are development- or research
oriented. These services have in other words much in common with science-based research

14
Employment statistics 1998, source: National employment register, SSB/STEP Group

e:\preissl\rise\wp2\RISE-sept-00 91
institutes. This paper explores how Norwegian science-based research institutes position
themselves to enter this new competition.

A major result is that competition from private industry is much less strong than we expected,
and that competition from other academic or semi-academic institutions, like universities or
research institutes are stronger than from private industry. Only 10 percent of the institute
units report that they experience medium or strong competition from private firms or
laboratories. A very small share of the total sample reports strong competition from private
industry units; 2 percent.

We assume that major competition from private knowledge suppliers is on gaining single
projects, and that increased competition may reduce institute income from projects over time.
We found that one third of the surveyed units had not experienced any change in project
income at all the last five years, while slightly less than half of the respondents said they had
experienced little or substantial increase. Only eleven - or each fifth institute unit - reported to
have experienced reduced project income as share of total budgets over the last five years. In
other words, more institute units report increase in projects than decrease. It must be noted,
however, that stable or increased project income may also be a result of changes funding
structure form public authorities.

One reason for the relatively low competition may be that the institutes hold a high academic
profile. We have seen that there is an overall trend in share of employees with PhD increasing
faster than the overall activity measured in researcher man-year and income. Many units
report that their major competitors are universities and research institutes.
To enlighten the role of academia further, we investigate ‘research orientation’ as one of
several research institute functions, to see how institutes position and orient themselves today.
A problem is that research institutes are not a homogenous group. In the survey, therefor, we
distinguish between ‘technical-industrial units’, ‘food-related units’ and ‘other units’. We
found that food-related institute units have more defined orientations than technical-industrial
units have: They have a medium to strong research orientation, a medium to strong policy
orientation, a weak technological orientation and a weak/medium business orientation; in
other words, they carry many signs of basic academic research institutes. The technical-
industrial units, however, do not seem to have been able to position them equally clear; they
appear in a more hybrid form, lost between being pure applied researching units,

e:\preissl\rise\wp2\RISE-sept-00 92
technological consultants and basic researcher units. The only orientation they appear to be
clearly defined in is the technological one.

Portugal

The Portuguese science and technology system went through some changes in the last two
decades. A structure based on universities and government laboratories expanded and
diversified through the creation of relatively autonomous (and partly self-funded) university
research centres and the setting up of a number "technology transfer" organisations, leading to
the set-up of an "layered" institutional model, in which organisations located closer to
industry are supposed to act as an “interface” to those conducting knowledge production
activities. This process was driven by a combination of factors: the need for compensating for
cuts in public research funding; a growing interest among new generations of researchers on
applying their accumulated knowledge and political pressures towards a greater economic
impact of investments made in research.

Two major differences in the configuration of this new type of research organisations regards
a greater emphasis on self-funding and a greater industry-orientation. Institutions with a semi-
private status (combining private and public shareholders) and whose income was supposed
to derive largely from technology-based service activities, namely industry-oriented ones,
became more frequent. However, they remained greatly dependent on public funds, if not on
direct government funding, at least on contracts in the context of government programmes.
These features are particularly evident in biotechnology, where a substantial part of the RTOs
was established already within the new framework.
This move towards a greater privatisation of the R&T infrastructure was not necessarily
paralleled by an increase in the market for R&T and other innovation services in the
biotechnology field. This situation brought problems to organisations required to be partially
or totally self-funding, which some attempted to solve by resorting to other sources of
income: contracts with public organisations; use of government mechanisms to support
RTO/firm R&T projects; greater focus on performance of pre-competitive research supported
by national and European RTD programmes. In this context, more research oriented
organisations had to conciliate the often contradictory objectives of scientific achievement
and effective response to industry needs; while organisations focused on "technology

e:\preissl\rise\wp2\RISE-sept-00 93
transfer", more limited in the range of alternative sources, often experienced serious financial
difficulties.

The market constraints also precluded expansion of the number of private suppliers of R&T
and other innovation services in biotechnology. The closer approximation to KIBS are new
biotechnology firms (NBFs), mostly research spin-offs, that offer technological services, as
well as a mix of technological and specialised business consultancy (on market opportunities,
strategic positioning, IPR issues, commercialisation strategies), often as a cash-raising or
market-opening side business. A parallel role is played by a small group of highly qualified
value-added resellers of (mostly imported) equipment and systems, which assist companies in
the identification and implementation of the process technologies more adequate for their
needs. However, the recent launch of a couple of firms that offer a service of intermediation
in technology transfer and/or firm creation, may indicate that the market is registering some
expansion.

The activities performed by RTOs were object of a more in-depth analysis through a survey
conducted in the beginning of 2000. Although questionnaires were mailed for the whole
range of organisations operating in the field, the responses were strongly biased towards the
upstream area, the sample being mostly composed of university centres and units of
government laboratories. One of the outcomes of the survey was the functional profiling of
the respondent RTOs. Four functional profiles were built and further characterised on the
basis of questionnaire data on organisational demographics, strategy and partnerships. One
interesting conclusion is that the profiled RTOs can be mapped in a "continuum" as follows:

Group 1 Group 2 Group 3 Group 4

Downstream functions Balance downstream / upstream No service functions

Non-technical/Implement. Mix Non-technical / R&T Mainly R&T No service functions

Activities with industry No activities w/industry

Balance + Production / + Diffusion Knowledge + Production of Knowledge

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This confirms the presence of a range of organisations with different types of focus, while the
parallel distribution of the various attributes along the continuum, is consistent with the idea
that more downstream functions and less emphasis on exclusively R&T services is associated
with a lower emphasis of production knowledge, the pattern changing as we move upstream
in functions and in organisational orientation. However, the analysis also uncovered some of
the distortions of the Portuguese system: the majority of RTOs emphasise production of
knowledge over diffusion, even in groups focusing on downstream functions; public funding
is always more important than private funding, although contract funding is usually more
important than direct government funding; income from services for industry (when it exists)
is very low; relationships with RTOs are more important than these with firms (majority of
cases); there is a low incidence of incentives to establish relationships with industry and a low
patenting record.

The profiling exercise also enabled a better understanding of RTOs behaviour regarding the
options opened to research organisations in a policy context characterised by an emphasis on
two (potentially conflictual) objectives scientific quality and industry orientation - and in a
economic context characterised by low industrial involvement in biotechnology.

One profile encompasses a group of organisations definitively oriented to knowledge


production, getting only occasionally (if ever) involved with industry. Two others are
composed of "mid-range" institutions, located in an intermediate position and attempting to
harmonise the two objectives. One of these focus more decisively on the production of
knowledge, putting some efforts in fulfilling the scientific quality objective, but also trying to
keep some industry oriented activity, although it concentrates on provision of R&T services.
The other is more decisively industry oriented in strategic terms and has a more intense
pattern of relationships with industry, the constituent RTOs going beyond the sole provision
of R&T services and offering a range of other functions (although there is still a prevalence of
knowledge production activities). Finally, there is one profile whose elements concentrate on
downstream functions, appearing to be well connected with industry. However, knowledge
production still prevails over diffusion in a substantial proportion of RTOs and only half of
them associate actual activity with industry with a strategic industrial orientation. This is a
puzzling group, which may testify to the contradictions of RTOs that attempt to focus on the
support of more downstream stages of the innovation process.

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The fact that "technology transfer" organisations were almost completely absent from the
sample precluded us to address their activities. However additional evidence from studies
about these organisations, as well as from interviews with RTO managers and partners in
collaborative RTO-firm projects, allowed us to draw an image of organisations striving to
find their space and, with a few notable exceptions, not being very successful. In fact, most
"technology transfer" organisations appear to experience difficulties in fulfilling their role in
the institutional model, due to problems of competencies and resources, the lack of adequate
strategies and a deficient integration in the innovation system, which leaves the field of
downstream innovation and "competence improvement" services insufficiently covered. This
is corroborated by a variety of sources, who refer to the scarcity of people or organisations
with the necessary skills to assist researchers and/or firms in the conduction of the process of
transformation of knowledge on marketable products or efficient processes and on in-house
competencies. However, parallel evidence from a couple of cases of working associations
between research centres and "interface" organisations shows that despite true contextual
difficulties it is possible - with persistence and adequate human resource policies and
governance mechanisms - to take steps towards a great industrial interest and participation in
biotechnology application.

The research suggests that, instead of an effective division of labour and an extensive
interaction between the various elements of the system, we find a predominance of originally
research-oriented RTOs which end-up trying to cover a wider range of functions, not always
in the most efficient way; while these RTOs that opted for focusing decisively on upstream
scientific activities are unlikely to see their results become useful for industry; and while only
a few among these RTOs expected to offer services (technical or non-technical) associated
with implementation of innovation are performing their role. Additionally, there is no
evidence supporting the view that private suppliers - e.g. KIBS firms - are extensively
replacing or complementing RTOs in the latter area. We can therefore speak of a gap in the
system, which is located downstream, between applied research and innovation. The presence
of this gap and the fact that existing organisations and mechanisms of governance are
inadequately addressing it, is an indication that there is a deficiency in terms of the provision
of innovation services. A mix of demand and supply problems is behind the gap. There is,
obviously, a basic demand problem associated with the low awareness of biotechnology
among potential users and the limited technological competencies and innovation orientation
of a substantial proportion of the clients for R&T and other innovation services in this field.
But there is also an associated supply problem, which can be described as an incapacity of

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supply side organisations to contribute to increase the technological awareness and
absorptive capacity of industrial firms and therefore to increase technological demand.

A pertinent question is whether some of the missing functions would be more efficiently
performed by private actors, who have, over public ones, the advantage of being prepared to
share the risks associated with the adoption of a new technology and have the pressing need
to achieve results. However, the limited demand is obviously an obstacle for entry by this
type of actors, given the risks involved. So far, only a small number of NBFs and a few
consultants act at this level (and the first often because the services provided are a
complementary cash-raising activity). However, some recent cases of collaboration between
NBFs and RTOs in intermediation and technology transfer are starting to show that maybe a
combination - or even an hybridisation - between profit and non-profit organisations can be a
more appropriate instrument to address this situation. This leads us to suggest that new
mechanisms may be required to improve this type of connections and promote
complementarity of efforts.

United Kingdom

The UK RISE survey, ‘Profiling Research and Technology Services in the UK’, which was
sent out in May 2000. The objective of the RiSE survey was to profile organisations that
supply services to innovating companies. The UK survey sampled four institution categories:
business service firms and not for profit firms (private organisation types) and Government
laboratories and universities (public organisation types). The sample is too small to provide
any extrapolation to the larger UK service provider population. However, we surveyed a
sufficient number of AIRTO members (22% of all AIRTO members responded). Significant
findings are discussed below.

No organisation category works significantly with both industry and the scientific community
expect, perhaps, universities. Total hours devoted to industry work grew from 10% in 1995 to
35% in 1999 while work with the scientific community fell from 30% to 17% of total hours
during the same period. Industry funding, however, only increased by 1% during this time.
Private type organisations work primarily with industry and, to a lesser extent, Government
policy makers.

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Non-commercial collaborations were important to public organisation types but not to
business service firms. Commercial collaborations were important to all four-organisation
categories. Spot contracts are not important to any organisation category indicating that the
nature of delivering research and technology services cannot be bought in ready made
formats.

Examples of highly important non-commercial collaborations include:

• Universities and Government labs collaborate on pre-competitive projects

• Universities attend conferences with other universities.

• NFP firms work on pre-competitive projects with large manufacturers and SMEs

Highly important commercial collaboration types include:

• University contracts with large manufacturers and SMEs.

• NFP firms contracts between large manufacturers and other NFP firms.

• Business service firm contracts with SMEs and large manufacturers

Collectively, public and private organisation types offer the full gambit of innovation
services. Services offered by private type organisations were clustered around developmental,
post-research functions. Over 50% of NFP firms ranked the same five service functions
highly important. Business service firms ranked only one significant important service
function (i.e. product development services). Government labs and universities ranked basic
research highly important. Neither public nor private organisation types engaged in the more
market-oriented innovation services.

Government Labs and NFP firms anticipate demand to increase for two services while firms
expect demand to increase for three services. Demand was expected to increase for
implementing innovation services for universities, NFP firms and firms. Government labs and
universities reported that basic research would increase in the future while firms expect
acquiring information services to grow.

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Organisations were grouped into three service categories based on the range of services
offered:

• Technical development service providers include feasibility studies, project


management and the construction of prototype services.

• Information service providers include information gathering and collection services,


documentation (such as patenting services) and, to a lesser extent, introduction to the
market place services.

• Organisational change service providers include process and organisational change


services and management consultancy services.

All organisation categories ranked large manufacturers and SMEs low as competitors in
services. Not for profit organisations were ranked medium to highly important as a
competitor by three of the four organisation categories. All four-organisation categories
reported highly important the following competitive advantages: expertise in R&D and
technology, working relations with clients, and quality of work. Marketing and research in
management scored low to medium significance by all respondents.

The project considered a set of institutional and functional typologies to characterise key
orientations. The profiles were formulated using various weighted variables based on the
survey questions. The share of organisations demonstrating high institutional orientations is
presented in Table 1. Table 2 presents the share of organisations showing high functional
orientation.

Table 1. High and very high orientation institutional profiles

Share of high and very high orientation for each organisation type
Institutional Kibs Public International
dynamics
Public 25% 55% 25% 0%
Private 19% 68% 0% 11.8%

Public and private organisations demonstrated similar institutional orientations for


institutional dynamics and kibsification (moving towards business service characteristics).
Public and private organisations showed very similar service orientation and to a lesser extent

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functional diversity and technology orientation. Not surprisingly, public type organisations
were publicly oriented than private types (although a significant number were not publicly
oriented).

Table 2. High and very high orientation functional profiles

Share of high and very high orientation for each organisation type
Research Service Functional Functional Technology
orientation diversity dynamics orientation
Public 67% 76% 44% 0% 66%
Private 5% 77% 69% 15% 78%

Questions remain about how far we can use the results to shed any light on even a small
portion of the UK innovation system. The supply of explicit services that support innovation
processes may or may not be a significant part of the largwe innovation system; our findings
only characterise organisations.

7 Conclusions

7.1 RTIs, KIBS and innovation systems

In the following the results of this report will be presented in three dimensions: the structural
and operational development of RTIs in different countries, the relationship between KIBS
and RTIs, a functional perspective on RTIs and KIBS as innovation service providers.
Finally, consequences for innovation policy will be outlined.

1) The features shared by all RTIs in the different country samples are: the combination of
public and commercial sources of funding and the combination of academic research
with applied research and other innovation related activities. Whether public or private
funds, academic or service oriented activities prevail, depends on institutional factors.
However, these factors show considerable variance between countries.

In the Netherlands, university-based institutes and a few large institutes that are considered
“of national importance” dominate the picture. Hence, academic orientation is high, whereas

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service and KIBS orientation are comparatively low. Germany shows a variety of semi-public
and public as well as university-affiliated institutes. A distinctive feature is the organisation
of RTIs in large research societies. This configuration guarantees a relatively high
institutional and financial stability for RTIs of this type. In the UK RTIs have been privatised
and become KIBS – like research and technology organisations (RTOs) with a high service
orientation. However, institutes that remained public or semi-public tend to have high
academic and research orientation and higher business and service orientation than their
counterparts in other countries. Swedish RTIs are semi-public and have a stron business
orientation, and a rather low academic and research orientation. The Norwegian configuration
of RTIs is dominated by one very large semi-public organisation. Most RTIs are semi-public,
however, they show a relatively low share of public funding on the average. There are
considerable differences between the two main groups, food-related RTIs on the one hand
and technical industrial ones on the other. In Portugal RTIs in the biotech sector are semi-
public, however with a high public involvement and a slow opening towards industrial
markets.

2) A common characteristic of all RTIs is a decreasing share of public funding in their


budgets and, consequently, an increase in industry contracts. Differences between
countries occur with respect to the intensity of the phenomenon and the impact of this
development on output and functional orientation.

Germany and the Netherlands show the most pronounced cut in public funding (between 6
and 7 % from 1995-2002). Accordingly, both countries expect industry contracts to become
much more important. A trend from publicly supported to more market related orientation can
also be seen in an increase in the share of foreign contracts in RTIs budgets. This trend is
quite pronounced in Germany and Sweden, and more subdued in the UK. The Netherlands
and Portugal show an opposite trend of falling foreign shares in their revenue between 1995
and 1999.

The changes in funding structures are reflected in output configurations. Decreasing public
funds resulted in a relative fall in contributions to the scientific community and to public
education in all countries (except the UK). Policy consulting fell sharply in the UK (from
1995 to 1999) and remained unchanged in the other countries.

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3) Changing sources for funding and the corresponding shifts in output have led to an
intensification of competition between KIBS and RTIs.

The diversification of innovation services provided by RTIs takes place with varying speed
and intensity in different countries. It is stimulated by increasing demand for more
comprehensive innovation services clients in industry and by claims for a greater relevance of
publicly supported institutes for industrial innovation. Processes of increasing business
orientation or ‘Kibsification‘ have be initialised institutionally through the privatisation of
public or semi-public RTIs (as in the UK), through a diversification of service offers of RTIs
within the same institutional context (Sweden, Netherlands) or through the generation of
private spin-offs from RTIs (Germany, Portugal). The functional orientation of RTIs differs
less from that of KIBS in the UK than in other countries. Swedish RTIs have also moved
towards KIBS in instiutional and functional terms, but have maintained a strong research
orientation at the same time. In Germany shifts towards a greater service and business
orientation of RTIs are only marginal. This is to a large extent due to strict legal limits to
changing the statutory basis of RTIs. The spin-offs from RTIs that are supposed to overcome
the regulatory restrictions that RTIs face, are offering complemenatry services to those of the
RTI they originate from.

KIBS are increasingly applying for contracts from public entities, and thus enter a field where
they face competition with RTIs. This marks a diversification in KIBS markets and a change
in the service needs of public institutions. Obviously, also in policy consulting, service
markets and the specific form of output they offer become more important.

4) The move of RTIs to a greater business and market orientation only affects those services
that can be directly appropriated by a certain (private or public) client. Services which
address the general public, like the diffusion and publication of research results or
contributions to the education and training system still remain under the public domain
of RTIs. KIBS firms only engage in these latter services as far as they can use them as a
marketing tool.

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In each country, RTIs face the problem of expanding industry related services and of
maintaining a high level of competence with respect to basic research at the same time. In
addition, in some fields acknowledgement in the scientific community seems to depend on
experience in the practgical application of research results in industry. The relative weight
given to academic/research related activities on the one hand and business/service oriented
activities on the other depends on the instiutional characteristics of RTIs in each country. The
need to combine the generation of new knowledge in open-ended research scenarios with
targetted research that promotes innovation in industry, will continue to shape RTI
configurations. Thus, from the perspective of NISs, greater business orientation of RTIs leads
to the question of where to allocate the academic research that is required to keep up high
levels of competence in the economy as a whole. Different solutions seem to have emerged in
the countries considered in this report. The ‘German solution‘ relies on a limitation of market
oriented activities of RTIs and their delegation to KIBS spin-offs, without, however, giving
up synergy effects from combining basic with applied research. At the other end of the
spectrum, the ‘English solution‘ results in a clearer division of labour between market
oriented privatised RTIs (RTOs) and basic research in public institutions. The contributions
of KIBS firms to the generation and diffusion of knowledge concentrate on conference
presentations rather than publications, because the purpose of these contributions is to
establish a strong presence in the public instead of gaining reputation in the scientific
community.

5) The innovation services provided by RTIs and KIBS go well beyond traditional R&D
services. RTIs are slightly more often found in the up-stream segments of innovation
processes (research, product/process devfelopment), KIBS in down-stream functions
(testing, implementation, marketing). For RTIs the diversification into new service
functions is motivated by the demand for comprehensive service packages as a condition
for gaining industry contracts rather than by strategic considerations regarding service
portfolios.

In Sweden and the UK, KIBS and RTIs are much closer with respect to the service functions
they supply than in Germany and the Netherlands, where the division of labour is still more
pronounced. Competition between KIBS and RTIs is likley to be fiercer in service functions
that are provided by a large share of both RTIs and KIBS firms. Although, RTIs clearly
dominate basic research in general, there seems to be quite intense competition in this

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function between RTIs and KIBS in Sweden and the UK, but not in Germany. In Germany
and Sweden competition is predominantly stimulated by KIBS firms that venture into the
traditional domains of RTIs, whereas in the UK, it is characterised by an expansion of RTIs
into business management activities.

6) Innovation policy faces the challenge to support the supply of efficient packages of
innovation services to industry and to enhance and improve the stock of knowledge
available and accessible for the public in quantitative and qualitative terms. Efficiency of
knowledge creation, diffusion and application will play a central role in the provision
and distribution of public research funds.

Institutional reforms in the statutes and operating rules of publicly supported RTIs mark the
attempt of innovation policy to increase the efficiency of knowledge supply (also for reasons
of budget control) and to render RTIs more flexible with respect to service demands from
industry. In this sense, institutional change will support the shift of functional profiles
towards more comprehensive service packages. However, hybrid organisations that combine
knowledge generation, diffusion and down-stream innovation services seem to guarantee the
exploitation of synergy effects better than highly specialised institutions. Innovations policies
reflect this concern, but are still essentially shaped by country-specific NIS configurations
and historically developed institutional solutions in research policy.

7.2 Methodology

Sample selection

The organisation of sample selection in a two tier system with functional criteria and an
identification form institutional lists is at the same time one of the strong as well as one of the
weak points of the methodology adopted here. It allowed to cover the whole variety of
institutional forms of innovation service providers and thus does not limit the functional
analysis by selecting only a limited set of institutionally described actors. On the other hand,
the identification of RTIs and relevant KIBS firms proved to be difficult, and questions as to
whether o include software firms or university chairs were completely left to the individual
teams that decided on the basis of the functional criterion. This procedure resulted in a very

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diverse configuration of samples that already reflects the functional division of labour in
NISs. This proved to be rather problematic, since the country surveys could not be integrated,
the structure and institutional diversity of the samples already determined the result to a
certain extent (e.g., inevitably high academic orientation in samples with a high share of
university institutes). The sample sizes were also quite heterogeneous; while in some
countries it proved difficult to identify a substantial number of RTIs (Sweden, Netherlands) in
others, there was a large number of cases that required random sampling (Germany). These
differences are partly due to the size of countries, partly to the configuration of NISs. A
representative evaluation of data (based for example, on population size or R&D expenditure)
in one data set comprising four countries would have led to a further up-weighting of the
German sample and a down-weighting of those of the smaller countries. The results would
thus have been dominated by the German case. Attempts to construct such a respresentative
four country data set also showed that a lot of the variation which lies in country-specific
results would have disappeared and the picture would have been extremely difficult to
interpret.

RTIs have usually been identified via lists provided by Ministries or associations. The
identification of KIBS proved more difficult, because no company registers exist for service
companies in most countries. Firms had to be identified through registers provided by
industry associations or assembled from different official or non-official sources.

Concluding from these strengths and weaknesses, it seems that a sample selection on the basis
of functional criteria is more difficult to handle, but provides a lot of additional insights.
However, it is of limited value for international comparisons. In order to make this functional
approach useful for further projects, a greater effort should be made to reduce heterogeneity
of the samples.

Sample coverage

The low response rates and the limited number of cases in gross samples for some countries,
limited the use of complex statistical evaluation procedures. In the cases in which only part of
the sample population answered the relevant question, the number of cases in each sub-
sample (derived by dividing the sample between RTIs and KIBS) often was too low to make
a sensible statement, let alone claim validity for the country as a whole. Therefore, the

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surveys have undoubtedly the character of pilot studies serving to test the methodology of
functional mapping. The results are thus to be seen as indicative.

Unfortunately, KIBS firms could only be included in three countries, hence the original
purpose of the RISE project to observe the relationship between RTIs and KIBS could only
be fulfilled to a limited extent. However, this did not affect the test of a functional analysis of
RTIs in the other countries.

The Portuguese sample is biased by its concentration on the biotechnology sector, hence
some of the results will be specific to this sector and not comparable with those of the
samples which cover the economy as a whole. In Portugal KIBS were not part of the survey,
however, information on their relevance for the biotech sector and their activities was gained
from other sources.

The Norwegian survey did not follow the sample selection criteria adopted by the other RISE
teams. Therefore, the cases have been identified exclusively on an institutional basis, no
KIBS were included. Some questions that have been asked in the RISE-specific surveys do
not appear at all the questionnaire, others are formulated differently. Hence, the Norwegian
results can only be compared at a qualitative level.

Survey method

Postal questionnaires seemed to be the right instrument to compile the data. However, in the
German survey a large number of respondents used the possibility to phone the research team
and ask for explanations on how to deal with certain questions. In the future, response rates
might be improved by sending out the questionnaire again to reluctant participants, by
telephone inquiries about reasons for non-response, and by increasing motivation through an
on-line answering scheme. Low response rates for KIBS were attributed by some teams to the
fact that one questionnaire was used for both, RTIs and KIBS, and that this questionnaire was
shaped predominantly for a ‘typical’ RTI, and KIBS-related formulations were printed after
RTI-specific questions, and thus difficult to identify at first glance for KIBS respondents. For
future surveys of this kind, separate questionnaires should be used. The concentration on one
type of innovation service provider will allow to be more focused with respect to the

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operationlisation of a functional approach and to further elaborate it with respect to other not
industry-related functions.

The questionnaire

The coverage of institutional as well as functional features and the necessary background
information on activities and economic context led to a complex questionnaire which –
according to feedback from respondents but also in the research teams’ own perception was
too long. A concentration on core variables and essential indicators to describe configurations
of budget, output, size and kind of organisation on the one side, and functional orientation on
the other should be sufficient. Some teams considered open questions asking for budget,
turnover or number of employees as problematic, since respondents are reluctant to reveal
this kind of information; giving an interval for these figures might be a better option. In
contrast to this, the determination of the fields of activity of RTIs and KIBS should be based
on an open question, since respondents did not find it easy to relate their fields of activity to
the given topics. Another problem was the degree of freedom that country teams had to adapt
the questionnaire to national peculiarities. However, most teams stuck to the default
questionnaire with only minor modifications, mostly in the specification of sets of given
answers.

Some questions should be reformulated:

Q2 Status of the organisation: should be specified according to ownership or legal


construction;

Q7 Research specialisation: to be formulated as an open question;

Q8 Sources of funding: non-governmental institutional funding (by foundations, industry


associations etc.) should be included

Q9 Output: a question concerning output created in co-operation with international


researchers should be added;

Q10 Detailed output categories: block 2 (Education and Training) and block 3 (Projects for
Industry) to be reconsidered;

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Q14 Service functions: functions should be listed in greater detail.

In order to arrive at categories that better match the situation of respondents, more in-depth
analyses of individual cases is necessary. Part of the efforts to improve survey methods and
the survey questionnaire should be dedicated to the study of the demand side (e.g., by doing
interviews in innovating firms to gain a more adequate list of innovation service functions).

Indicators and typologies

Broadly speaking, the indicators have proved to describe the different levels of orientation
reasonably well. However, modifications will be necessary to arrive at a more precise
measurement of the relevant phenomena. For example, it turned out that the changes that we
expected to happen between 1995 and 1999, were exaggerated; as a result, many cases were
attributed ‘very low’ or ‘low’ indicator values. This is not a problem in comparative analysis,
but a reformulation of the indicator designs could provide more differentiated results. The
adoption of the proposed method led to the identification of RTI/KIBS types according to
functional and institutional criteria. A much wider set of hypothesis might be tested with this
approach, however data quality and time constraints limited the generation of meaningful
results in the present case. Fine tuning of indicators and further refinement of the use of
functional variables for typologies might be promising improvements in the methodology
presented here.

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Norgren, Lennart (1999): RISE-WP2 - RTOs in the Swedish Innovation System.

Preissl, Brigitte (1998): Knowledge-Intensive Business Services and Innovation in Germany,


DIW - SI4S Report No. 5, January.

Senker, J. / Balázs, K. / Higgins, T. / Munoz E. / Santesmases, M. / Espinosa de los Monteros,


J. / Potì, B. / Reale, E. / di Marchi, M. / Scarda, A. / Sandström, U. / Schimank, U. /
Winnes, M. / Skoie, H. / Thorsteindottir, H. (1999): European Comparison of Public
Research Systems, TSER Project No. SOEI – CT96 –1036, Final report.

Windrum, Paul / Tomlinson, Mark (1999): Knowledge-intensive Services and International


Competitiveness: A four Country Comparison. In: Technology Analysis & Strategic
Management, 11,3, pp. 391 - 408.

Readman, Jeff, The supply of research, technology and innovation services in the UK.
Finding from the UK national survey, ‘Profiling Research and Technology Services in
the UK’, Brighton.

Revermann, C. / Schmidt. E.M. (1999): Erfassung und Messung von Forschungs- und
Entwicklungsaktivitäten im Dienstleistungssektor, Abschlußbericht, RWI –
Wissenschaftsstatistik im Stifterverband für die Deutsche Wissenschaft, Dezember.

Rickert, Christian: Technology Transfer in the German Innovation System.

Strambach, Simone (1997): Knowledge-intensive services and innovation in Germany - Final


Report, Stuttgart, July. University of Stuttgart - Institute of Geography.

Wood, Peter (1997): The strategic role of knowledge-intensive services for the transmission
and application of technical and management innovation (KISINN), Thematic
Network - Interim Report 1, June.

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RISE - WP 2
Questionnaire

The Contribution of Research Institutes and KIBS firms to Innovation Systems

I. Organisation

1. When has your research establishment been set up in its present form?

2. Is your establishment

• private
• public
• semi-public
• registered association
• a foundation

3. How many employees work in the establishment?

1995 1998 1999

Scientists/Engineers

Technicians

Other

4. What was your organisation’s total budget / turnover (i.e., institutional grants, contractual
research and other turnover) in

budget/turnover in mill. DM

o 1995
o 1998
o 1999

e:\preissl\rise\wp2\RISE-sept-00 111
5. Is the establishment institutionally linked to

o a university
o any other public research establishment
o other institutions (which ones? Please give details)
o a company
o a research society (e.g., the Fraunhofer-Gesellschaft) Which
one?...................
o a ministry

o independent / does not apply

6. Does your establishment have branch offices/ representative agencies/ representatives


in your own country and/or abroad?

o No
o Yes, in .............., How many: _____
o Yes, abroad, How many: _____

II. Research Areas

7. Please identify your key areas of activity from the list below.

Scientific Research
Infrastructural Measures and Spatial Planning
Environmental Protection
Protection and Promotion of Human Health
Energy Production and Distribution and its Rational Use
Agricultural Productivity and Technology
Industrial Production and Technology
industry focus
Societal Structures and Relations
Space Research
Non-Target Oriented Research
Other Areas of Civilian Research
Defence

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III. Financing

8. Please state the budget share allocated to each of the following areas (in %):

Budget share, in %

1995 1998 1999 2002

(Estimated)

Institutional public financing

Contracts from government institutions


(incl. Public research support on a project
basis)

Projects for other non-commercial


institutions (e.g., foundations)

Projects for private industry

Total 100% 100% 100% 100%

Domestic contractors

Foreign contractors (incl. EU)

Total 100% 100% 100% 100%

IV. Output
9. Please estimate the share of the work performed by your establishment for each of the
following types of output.

Output Share, in %
(main groups)

1995 1998 1999 2002


(Estimated )

1. Contributions to discussion
within the scientific community

2. Public Education/Training

3. Studies for Industry


4. Projects for public bodies or
Policy consulting

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10. Please list the relative importance of the following output types within each of the
individual main groups (on the basis of the work expended on each area).

Output Current Importance


Detailed Types
none low medium high
1. Contributions to discussion
within the scientific community
Magazine/book publications
Research reports for the public
Conference contributions
Other (please specify)
....

2. Public Education/Training
Internships, Diploma/Masters
theses
Doctoral and post-doctoral
qualifications
Other degrees (please specify)
...

3. Projects for industry 1)


Technology
consulting/technology transfer
(e.g., information, selection and
introduction of new
technologies, development of
standards)
Construction and testing of new
products and processes (e.g.,
design, testing, prototypes)
Optimisation of processes (e.g.,
Business Engineering, fault
analysis
Management consulting (e.g.,
organisational consulting,
project management)
Operational services
(maintenance, software support)
Certification
Other (please specify)
...

4. Projects for public bodies


(policy consulting)
Research reports, programme
formulation
Programme
support/implementation
Programme evaluation
Other (please specify)
1) including services for public sector and non-profit organisations (public
administration, health sector, universities)

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11. How many patents has your organisation registered?

o 1995
o 1999

12. In which form do you deliver services relevant for innovation to your customers

o transfer of know-how to the customer (consulting, training, techn. transfer)


o problem solving for the customer
o joint problem solving with customers

13. Do you work together with companies in innovation processes?

o Yes => Please go to Question 14.


o No => Please go to Question 15.

V. Support of companies in the innovation process

14. The phases listed in the table below describe the process from basic research to product
or process innovation in a company. Please state the services your establishment offers
to companies in the innovation process, the five most importantservices, as measured
on the basis of company demand, and the type of development you anticipate in the
future.

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Functions in the Service is Five most Development anticipated
innovation process being important in future years
offered services

falling unchange rising


d
1. Basic research
Procurement
2. Acquisition and study of
necessary information
3. Feasibility studies
4. Product
development/procedural
development
5. Planning, project
management, personnel
management
6. Construction of Prototype
7. Testing
8. Implementation of
innovation in the innovating
company
9. Documentation and
certification (patenting,
registration)
10. Introduction into the
marketplace
Other (please specify) ...

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VI. Interaction with co-operation partners

15. Please provide information on your co-operation partners and on the forms of co-
operation.

Partners in the co- Current Importance Forms of co-operation


operation process

High Medium Low Joint Working Personnel


projects groups, transfer*
seminars
Universities
Technical/colleges
Non-profit research
institutes
Service companies
specialised in
research
Manufacturing
companies
- including SMEs
Other ...
* Internships, temporary research and work placements of more than two weeks’
duration.

16. How stable are relationships?

Partners in the co- open ended long-term several spot contract


operation process contract contract individual
contracts
Universities
Technical/colleges
Non-profit
research institutes
Service companies
specialised in
research
Manufacturing
companies
- including SMEs
Other ...

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17. How do you establish contact with contractors and cooperation partners? (Please tick all
that apply)

o known from previous co-operation o Internet/database r esearch


o arranged by associations / through o own initiative
technology agencies, etc. o recommendations
o announcements in publications o replies to
calls/announcements
o on clients’ initiative o other means, i.e.,
o other listings _______________

VII. Conditions of Competition

18. How many competitors compete directly for your core business

(a) o in your region


o in the Federal Republic of Germany
o internationally?

(b) among
o non-profit research establishments
o universities
o commercial services companies
o manufacturing companies with research facilities?

(c) In your opinion, how intensive is competition


o in your region
o in the Federal Republic of Germany
o internationally?

among
o non-profit research establishments
o universities
o commercial services companies
o manufacturing companies with research facilities?

19. What are the competitive advantages of your establishment? (please tick)

o Institute’s research area or specialisation


o Institute’s working methods
o Demands on confidentiality
o Previous experience
o Cost advantages
o Quality of work
o Other

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20. What percentage of the working time of researchers (engineers) in your establishment is
spent on acquisition of contracts (on the average)

Average share:

Do you expect a rise or fall in these expenditures?

o rise
o no change
o fall

21. Are there any trends/changes in your establishment that you consider important and that
have not been mentioned here? Please describe them briefly.

Thank you for your co-operation. In the event that we may have any further
questions, please provide us with your name and the address of your establishment
in the space below.

We would be interested in receiving a summary of your research results.

o Yes
o No

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Appendix 2

Indicators and typologies

1. Outline of the method

In the following, a procedure is documented that uses a combination of simple indicators to


produce typologies of RTOs /KIBS along institutional and functional dimensions. The
method has been tested with German survey data and has then been extended to other survey
results. The aim is to provide synthesised information on the relationship between
institutional settings and the functional orientation of RTOs/KIBS15.

The set of indicators comprises:

institutional dimension

- size
- institutional dynamics
- public/private orientation
- academic orientation
- policy orientation
- international orientation

functional dimension
- research orientation
- service orientation
- functional diversity
- functional dynamics
- technological orientation

Each indicator contains information from a set of variables. This information has been
standardised using scores for supposed intensity scales so that quantitative and qualitative
phenomena can be aggregated. The main task was to keep the scoring consistent and
meaningful in the sense of the indicator aimed at. The intensities of ‘public orientation,
research orientation’, etc.’ are then used as features that constitute ‘types’ of organisations.

After a first examination of the data, indicators were constructed by attributing scores for the
information given in the questionnaire,; this was done by a simple 0 (minimum value) to 2
(maximum value) scale. Details for each variable / indicator are given below.

Table 1 attributes variables and questions in the survey questionnaire to the indicators (see
next page).

15
Many thanks to our data evaluation colleague Anja Dresenkamp, who did a great job in testing the indicators
and contributed substantially to improve them..

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Table 1
Composition of indicators

Indicator variables questions

Size number of employees, budget 3, 4


Institutional dynamics changes in: number of employees, 3, 4,
budgets,
KIBS orientation budget mix, acquisition efforts 8, 20
public/private orientation funding, output mix (static and 8, 9
dynamic indicators)
Academic orientation links, funding, output mix 5, 8, 9
policy orientation links, funding, output mix 5, 8, 9
international orientation branch offices, foreign sponsors 6, 8
research orientation share of academics, output mix, 3, 9, 14, 15
innovation functions, co-operation
service orientation non-academic staff, links, funding, 3, 5, 8, 10, 14
output details
functional diversity output mix, innovation functions, co- 9, 14, 15
operation,
Functional dynamics innovation functions, output mix 14, 8
Technology orientation output mix (details), innovation 10, 14
functions

2. Detailed description

(Q = question in the questionnaire)

A Institutional dimension

Size
Budget and employment Q3 and Q4
classification according to number of employees and budget volume in 1999 in three
categories small, medium, large. (see resulting distribution – to be presented in Milan)

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Institutional dynamics

This indicator describes the intensity of change in an institution, based on growth and changes
in output and orientation. High scores are given for growing organisations and for
organisations whose output and budget change towards service (KIBS) orientation.

number of employees Q3
growing between 1995 and 1999
threshold: 3% p.a. (+/- 0.5)
scores: growing (3% and more) 2.0
stable (0-2.5%) 1.0
declining 0

budget Q4
growing between 1995 and 1999
threshold: 5% p.a. (+/- 0.5)
scores: growing (5% and more) 2.0
stable (0 – 4.5%) 1.0
declining 0

Institutional dynamics
maximum scores: 4.0
minimum scores: 0

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KIBS orientation

This indicator shows how far organisations move towards characteristics of private service
firms.
budget mix Q8 (KIBS orientation)
(the indicator measures the degree of institutional change towards ‘KIBSification’)
growing share of c+d between 1995 and 1999
scores: moderate growth (< 10%) 1.5
growth (10 - < 15%) 1.75
substantial growth (>15%) 2.0

growing share of d between 1995 and 1999


scores: moderate growth ((< 10%) 1.5
growth (10 - < 15%) 1.75
substantial growth (>15%) 2.0
expected growth share of c+d between 1999 and 2002
scores: moderate growth ((< 10%) 1
growth (10 - < 15%) 1.25
substantial growth (>15%) 1.5

expected growth share of d between 1999 and 2002


scores: moderate growth ( < 10%) 1
growth ( 10 - < 15%) 1.25 substantial growth (>
15%) 1.5

growing share of f between 1995 and 1999


scores: moderate (0 - < 3%) 1.0
slight ( 3 – < 6%) 1.5
considerable ( 6 - < 10%) 1.75
substantial (> 10%) 2.0

expected growth of share of f 1999 - 2000


scores: moderate (0 - < 3%) 0.5
slight ( 3 – < 6%) 0.7
considerable ( 6 - < 10%) 0.85
substantial (> 10%) 1.0

acquisition efforts Q20


scores: low (0 – 5%) 0.5
relatively low (6 - 10%) 1.0
medium (11-20%) 1.5
relatively high (21-30%) 1.8
high ((> 30%) 2.0
expected decline -0.5
stability 0
growth 1.0

KIBS orientation
maximum scores: 12.0
minimum scores: 0

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Public orientation

The indicator measures the degree of ‘publicness’ of the respondent (highest scores for
entirely public organisations)

(a,b,c,d,e,f refer to the categories given in the questionnaire for each question, i.e., ‘a’ stands
for ‘institutional public financing’, ‘f’ for ‘foreign contractors’)

funding (static indicator) Q8

share of categories a, b, and c in 1999


scores: 60 < a < 100 1.0
30 < a < 60 0.5
10 < a <30 0.3
a < 10 0.1
a=0 0

60 < b < 100 1.0


30 < b < 60 0.5
10 < b <30 0.3
b < 10 0.1
b=0 0

60 < c< 100 0.8


30 < c < 60 0.4
10 < c <30 0.1
c < 10 0.05
c=0 0

funding (dynamic indicator), Q 8

growth of a+b between 1995 and 1999


scores: negative growth 0
stability 0.5
0 – 5% 1.0
6 –10% 1.5
11-15% 1.75
> 15% 2.0

expected growth of a+b between 1999 and 2002


scores: negative growth 0
stability 0.25
0 – 5% 0.5
6 –10% 0.75
11-15% 0.85
> 15% 1.0

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output mix (static indicator), Q9

shares of output in 1999


scores: 80 < a+b+d < 100 2.0
60 < a+b+d < 80 1.6
40 < a+b+d < 60 1.0
20 < a+b+d < 40 0.6
10 < a+b+d < 20 0.4
a+b+d < 10 0

output mix (dynamic indicator), Q9


a,b,c,d refer to 1,2,3,4 in Q9
growth of a+b+d between 1995 and 1999
scores: negative - < +10% 0
10 - < 20 % 0.5
20 - < 30 % 0.75
> 30 % 1.0

expected growth of a+b+d between 1999 and 2002


scores: negative - < +10% 0
10 - < 20 % 0.5
20 - < 30 % 0.75
> 30 % 1.0

Public orientation
maximum scores: 9.8
minimum scores: 0

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Academic orientation

existing links Q5

scores: university 1.5


public RTO 1.5
polytechnics 1.5
research societies:
Fraunhofer 0.5
Max-Planck 1.5
Helmholtz 0.4
WGL Leibnitz 0.7
firm 0
Ministry 0
Funding (static indicator) 1999 Q8
share of category a
scores: 60 < a < 100 2.0
30 < a < 60 1.5
10 < a <30 0.5
0 < a < 10 0
funding (dynamic indicator) Q8
scores: negative growth 0
stability 0.5
0 – 5% 1.0
6 –10% 1.5
11-15% 1.75
> 15% 2.0
output mix (static indicator), Q9
shares of output in 1999
scores: 80 < a+b < 100 2.0
60 < a+b < 80 1.6
40 < a+b < 60 1.0
20 < a+b < 40 0.6
10 < a+b < 20 0.4
a+b < 10 0
output mix (dynamic indicator), Q9
growth of a+b between 1995 and 1999
scores: 0 - < 10% 0.5
10- < 20% 0.75
> 20% 1.0
expected growth of a+b between 1999 and 2002
scores: 0 - < 5% 0.5
5- < 10% 0.75
> 10% 1.0

academic orientation
maximum scores: 9.5
minimum scores: 0

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Policy orientation

existing links
scores: university 0.3
public RTO 1.0
polytechnics 0.3
research societies:
Fraunhofer 0.8
Max-Planck 0.8
Helmholtz 0.8
WGL Leibnitz 0.8
firm 0
Ministry 2.0

funding (static indicator) Q8


share of category b 1999
scores: 60 < b < 100 2.0
30 < b < 60 1.5
10 < b <30 0.5
0 < b < 10 0

funding (dynamic indicator) Q8


category b
scores: negative growth 0
stability 0.5
0 – 5% 1.0
6 –10% 1.5
11-15% 1.75
> 15% 2.0

output mix (static indicator) Q9


share of category d in 1999
scores: 80 < d < 100 2.0
60 < d < 80 1.6
40 < d < 60 1.0
20 < d < 40 0.6
10 < d < 20 0.4
d < 10 0

output mix (dynamic indicator) Q9


growth of d between 1995 and 1999
scores: 0 - < 10% 0.5
10- < 20% 0.75
> 20% 1.0

Policy orientation
maximum scores: 9.0
minimum scores: 0

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International orientation

branch offices abroad Q6


scores: no 0
yes
one 1.0
2 or three 1.6
more than 3 2.0

financing from foreign contractors (static indictor) Q8


share of f in budget in 1999
scores: over 80 % 2.0
50 - 79 % 1.8
30 - 49% 1.5
20 - 29% 1.0
10 - 19% 0.8
0 - 10% 0.4
0 0

financing from foreign contractors (dynamic indictor) Q8


growth of share of f between 1995 and 1999
scores: negative growth 0
stability 0.3
0 – 5% 1.0
6 –10% 1.5
11-15% 1.75
> 15% 2.0

expected growth of share of foreign contractors


scores: 0 - < 3% 0.25
3 - < 5% 0.5
5 - < 10% 0.75
> 10% 1.0

International orientation
maximum scores: 7.0
minimum scores: 0

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B Functional dimension

Research orientation

Share of academics Q3
share of scientists / engineers in 1999
scores: 0 - < 5% 0
5 - <25% 0.5
25 - <50% 1.0
50 - <75% 1.5
> 75 % 2.0

output mix (static indicator) Q9


share of contributions to scientific community and public education in total output
scores: 80 < a+b < 100% 1.0
60 < a+b < 80% 0.8
40 < a+b < 60% 0.5
20 < a+b < 40% 0.3
10 < a+b < 20% 0.2
a+b < 10% 0

output mix (dynamic indicator) Q9


growth of a+b between 1995 and 1999
scores: < 2% 0
2 - < 10% 0.5
10 - < 20% 0.75
20 and more 1.0

expected growth between 1999 and 2002


scores: < 2% 0
2 - < 10% 0.5
10 - < 20% 0.75
20 and more 1.0

innovation functions Q14


scores: basic research 1.0
basic research among 5 most important 1.0
growing importance 0.5
declining importance - 0.5

co-operation Q15
links exist with universities, technical colleges, RTOs
scores: high importance 1.5
medium 1.0
low 0.5

Research orientation
maximum scores: 7.0
minimum scores: 0

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Service orientation

non academic employees


share of technicians/others in total employment
scores: >75% 1
50 - < 75% 0.8
25 - < 50% 0.5
10 - < 24 0.3
0 - - <10 0
links (Q4)
existing links with organisations
scores others look at specification
firm 2.0
research society
Fraunhofer 1.0
Max-Planck 0.5
Helmholtz 1.0
Leibnitz 0.7
Ministry 2

funding (static indicator) Q8

share of budget in 1999

scores: 90 < b+c+d < 100 1.0


60 < b+c+d < 90 0.75
30 < b+c+d <60 0.25
0 < b+c+d < 30 0
funding (dynamic indicator)
growth of b+c+d 1995 to 1999
scores: > 30 0.5
20 - < 30 0.35
10 - <20 0.25
< 20 0

expected growth 1999 to 2002


scores: > 30 0.5
20 - < 30 0.35
10 - <20 0.25
< 10 0
<0 -0.5
-
output details Q10
3. projects for industry
scores: low importance each 0.1
medium each 0.2
high each 0.3

innovation functions Q14


supply of innovation services

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scores: 1 – 10 plus any ‘other’ each 0.3

3 to 10 increasing each 0.1


3 to 10 decreasing each -0.1

Service orientation
maximum scores: 10.6
minimum scores: 0

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Functional diversity

output mix Q9
span of activities in output mix 1999
scores all four categories mentioned: 2.0
three 1.5
two 1.0
one 0

increasing number of categories between 1995 and 1999 1


expected increase between 1995 and 2002 1

innovation functions Q14

absolute number of functions supplied


scores: each function 0.2

co-operation partners Q15


diversity of co-operation partners
scores: each partner 0.1

Functional diversity
maximum scores: 6.6
minimum scores: 0

Functional dynamics

innovation functions Q14


scores: increasing importance each function 0.1
decreasing importance each function - 0.1

output mixQ9
development of span of activities in output mix 1999
changes in the relation between a+b and c+d between 1995 and 1999
scores: shifts > 2 - < 5% 0.5
5 - < 10% 0.75
10 - < 20% 1.0
> 20% 1.3

Functional dynamics
maximum scores: 6.6
minimum scores: 0

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Technology orientation

Q10, Q14

Static indicator

Q10, output mix; 3. projects for industry a, b


scores: none 0
low 0.5
medium 1.0
high 1.5

Q14, innovation functions


scores: product development 4 0.5
prototypes 6 0.5
testing 7 0.5
implementation 8 0.25

Dynamic indicator

scores: 4 increasing 0.25


6 increasing 0.25
7 increasing 0.25
8 increasing 0.25

Technology orientation
maximum scores: 4.5minimum scores: 0

Scores are added up for each indicator and each case and – according to the frequencies – five
intensity categories are formed:

very low
low
medium
high
very high

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