Economic Benefits of International RDI Collaboration: Evidence on Product and Process Innovation (phase 2)

Does collaborating with international partners actually make UK businesses more innovative, or would domestic partnerships deliver just as much? This report provides the first robust UK evidence on the question. Drawing on seven waves of the UK Innovation Survey covering around 22,000 businesses between 2009 and 2021, the analysis combines propensity score matching with a staggered difference-in-differences design to isolate the causal effect of business-to-business (B2B) and business-to-university (B2U) collaboration on innovation outcomes. UK businesses that collaborate with other businesses are 21 percentage points more likely to introduce process innovations and 9 percentage points more likely to bring new-to-market products forward than non-collaborators, and those reaching beyond the UK to international business partners gain a further, measurable advantage over firms collaborating only domestically.

The picture for university collaboration is more nuanced. Collaboration with universities, whether domestic or international, significantly raises the likelihood of process innovation, but international university partnerships add little over domestic ones for product innovation. For policymakers and funders weighing how to support cross-border research, development and innovation (RDI) partnerships, the findings offer timely evidence on where international collaboration adds genuine value, and where the UK’s own knowledge base is already delivering.