Climbing the Collaborative Research and Innovation Policy Support Ladder

Small and Medium-Sized Enterprises (SMEs) are a crucial engine of Research and Innovation (R&I), but often face financial, knowledge and capability constraints that limit their ability to engage in R&I. Collaboration with Higher Education Institutions (HEIs) can help SMEs overcome these constraints, yet taking the first step into academic-industry collaboration can be difficult for firms with limited R&I experience. This highlights the need for a tailored policy support environment that enables SMEs to build R&I capabilities progressively. The report proposes a ‘collaborative R&I policy support ladder’, which combines different forms of R&I policy support over time. The first rung involves accessible, low-cost supports that help SMEs build relationships with academic partners. In many economies, Innovation Vouchers represent the first rung on the ladder for most SMEs.

Innovation Vouchers provide €5,000 for SMEs to collaborate with an academic in an HEI. The second rung provides larger-scale support for more complex and ambitious R&I collaborations between SMEs and HEIs. The ladder therefore provides a framework for helping SMEs progress from early-stage collaboration towards more substantial R&I activity. Using a novel panel dataset tracking 4,477 Irish SMEs between 2006 and 2022, the report examines how SMEs progress through this ladder and the effects on R&I and business performance. The findings show that Innovation Vouchers significantly increase the likelihood of SMEs securing subsequent larger-scale collaborative R&I funding. SMEs that progress from Innovation Vouchers to larger-scale support also substantially increase R&D spending and R&D employment over the following five years. Improvements in sales, employment and Gross Value Added are also observed, although these effects are less consistent. The findings provide empirical support for a ladder-based approach to R&I policy. They suggest that funding agencies should create deliberate pathways that help SMEs progress from accessible, small-scale supports into larger collaborative R&I programmes, with Innovation Vouchers viewed as a first step rather than an end in themselves.

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