Impact Assessment of Innovation Policy

E. Building absorptive capacities for firms to use research

Tapping into knowledge created by public research is not straightforward. Even where knowledge is directly relevant to industries’ needs, businesses may lack the capacities to appropriate knowledge as part of their business processes. In other words, own internal know-how increases the gains from external knowledge-acquisition strategies due to “absorptive capacities” (Cohen and Levinthal, 1989). Strong internal R&D capacities increase the likelihood of firms to seek knowledge inputs from public research and raise impacts from public research on their innovation performance (Belderbos et al., 2004).

 “Absorptive capacities” and will likely differ across firms and be of differential importance across different industries. Absorptive capacities are not the same across larger and smaller firms, across start-ups and established businesses, and other firm characteristics also influence capacities. There is little evidence to date providing insights on differential impacts across industries. The extent to which industry is “prepared” to make use of public research outputs is another critical policy area when it comes to maximising the impacts of public research.