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Is governmental investment in industrial R&D paying off?

June 30, 2011 Jerusalem, Israel The Israeli Chairmanship of EUREKA, the largest pan-European network for market-oriented, industrial R&D and innovation, has released new data from a report conducted by Kalman Gayer and the economic and strategic consulting firm Applied Economics Ltd., to mark the completion of Israel's Chairmanship year and EUREKA's 25th anniversary. The study presents the proven impact of EUREKA on companies participating in EUREKA programs.

Israel Shamay, Director of the Israeli Chairmanship of EUREKA, explained that the surveys previously conducted by various European R&D programs, including EUREKA, were based largely on interviews with managers and/or technical summary reports of the project, which naturally focused on the tools of R&D and less on financial results. "Since the Israeli Chairmanship does not consider industrial R&D an end in it of itself, but rather as a means to advance industry and economic growth through innovation and international cooperation, we decided to measure the financial effect of participation in the program for the firm."

Geyer's study measured the impact of participation in EUREKA projects for companies in Europe. The study is based on a sample of 350 companies which participated in EUREKA projects between 1996 and 2005. The study compares pairs of companies nearly identical in their parameters: size, country, field of technology, sales revenue, number of employees, etc. - with the key difference between them being that one company having participated in at least one EUREKA project, and the other company having not participated. The difference in outcomes (after the EUREKA project is completed) between the participating company and the non-participating company is attributed to the effect of participation in EUREKA. The research examined individual cooperation projects that were performed mostly by two partners from 2 countries, and that focused on industrial R&D - products close to market. This is the main support vessel, characteristic of most of the activities taking place in the program.

Dr. Shaul Freireich, Deputy Chief Scientist of Technology, oversaw the execution of the survey on behalf of the Israeli Chairmanship.

The study focused on changes in sales volume and number of employees at the company, showing significant results on the impact of EUREKA participation in both of these parameters. On average, companies participating in EUREKA recorded sales that rose by 28% annually during the three years from the completion of the project, compared to similar companies which did not participate during this period as part of EUREKA project. Additionally, there was an annual increase in employment in these companies by 20% or more, compared to similar companies not involved in EUREKA at the time. Overall, approximately two-thirds of companies that participated in EUREKA projects outperformed similar but non-participating companies, in terms of both sales and employment.

The positive impact of EUREKA was shown to be significant upon both large companies and SMEs, with the statistics for sales and employment growth being greater fir medium and large companies.

According to Luuk Borg, Director of the EUREKA Secretariat based in Brussels, the survey shows that the total annual increase in sales among companies participating in EUREKA projects is approximately 2.8 billion euros, in addition to 25,000 jobs created each year - while the annual governmental aggregate investment (from the 40 EUREKA member countries) in these projects stands at about 140 million euros only.

The Israeli angle in the study: The sample included 30 Israeli companies. The comparison was made between firms that received regular grants from the Office of the Chief Scientist, and the 'twin' companies that were supported by the OCS as part of participation in the EUREKA project, in order to measure the added economic value of EUREKA participation beyond that of normal government support for R&D. The results of the survey initiated by the Israeli Chairmanship of EUREKA are supported by other studies conducted during the Israeli Chairmanship year by other countries including Spain, France and Denmark.


Contact: Piotr Pogorzelski

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