Evaluation of TEKES funding for industrial R&D: An empirical study of 601 industrial R&D projects funded by the Technology Development Centre

The study was an independent part of a larger evaluation of the Technology Development Centre of Finland, TEKES. The evaluation was set by the Ministry of Trade and Industry of Finland to assess the role and significance of TEKES, the effectiveness of its activities and the internal and external efficiency of its organization. The study was based on a survey conducted among industrial R&D projects funded by TEKES which were scheduled to be completed during 1990 - 1993. The methodology developed for the evaluation of industrial and economic effects of the EUREKA initiative study of 1993 was largely applied in the design of the survey. The study was aimed at giving a thorough description of industrial R&D projects funded by TEKES and presenting the direct, indirect and broader effects as well as evaluating the significance of TEKES funding. Questionnaires were returned from 601 TEKES projects, reflecting a response rate of 59 %. The general conclusion based on the study was that, to a large extent, the survey results reinforced earlier assumptions about the role and significance of TEKES funding. According to the survey results, TEKES projects appeared to be very successful. The level of achievement of immediate results in terms of new products, immediate economic effects, indirect and broader effects of the projects were reported high. While reviewing the results, however, it has to be taken into account that the survey dealt with completed projects only. Projects where positive funding decision existed by TEKES but which had not been started or which had been interrupted were left out of the survey. Since two-thirds of the projects were either very important or moderately important to the business strategy and to the technology strategy of the firm, it seems that TEKES projects have been relatively central to the industry as a whole. Some 17% of the projects involved either the development of potential new core technologies or new core business areas. About every fifth project was reported to have been of marginal importance either for the technology or for the business strategy of the firm. Based on the survey, the additionality TEKES funding appeared to be high since one-fourth of the respondents estimated that they would not have done the project without TEKES funding. Two-thirds indicated that, in the absence of TEKES funding, they would have carried out the project differently, e.g. on a smaller scale, with less ambitious objectives, or that it would have taken longer to complete the project. For small firms, in particular, TEKES support has been vital by a variety of aspects in the development of new products and also for the firms activities as a whole. Over one-third of the respondents in small firms indicated also that TEKES funding has been critical to the existence of the firm. For large firms, TEKES funding has been significant by a variety of aspects, e.g. it has contributed to the broadening of their technological base beyond the core areas of activity to other operational and research segments. This, in turn, has contributed to the building and strengthening of the technological competence base and other structural prerequisites for R&D on the national level. The funding has been also important in enhancing the cooperation and promoting the networking among a number of participants in the national system of innovation and in promoting the use of outside resources during the project. Thus, it seems that TEKES funding has often enabled the firms to complement their own development work, e.g. with contract research done by public and private research institutes and universities and by outsourcing of R&D services. Thus, in general, an important effect of TEKES funding seems to be that it has promoted a more efficient use of the various sources of technological knowledge available in the innovation system. The firms have been able to better exploit the existing technological know how potential available which has led to the development of products with an improved quality and a higher technological ambition level.