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University of Ottawa Telfer School of Management

Submission — University of Ottawa Telfer School of Management

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Submitter(s): Brzustowski, Thomas

Summary: This submission deals with the delivery of R&D assistance programs, and specifically its timing. It argues that in certain cases prompt help at the time that costs are incurred can be much more effective than a subsidy after the fact. The example presented is federal support for R&D spending by companies that are among the most innovative in Canada and at the same time among the most vulnerable. These are the R&D-intensive companies that spend more on R&D than they earn in revenues. About two hundred of them are identified in public data, and they spend more than $1 billion annually on R&D. These companies are the breeding ground for major industrial innovations. They are financed to do R&D to develop their first products and secure their first customers. Along the way they are short of both time and money, they lack an established commercial base, and they encounter deep and rapid change driven by both technical developments and fluctuations in revenues. To be most effective for them, the federal assistance should be delivered through a program that is suited to their circumstances, imposes a minimum administrative time burden on them, makes decisions promptly, and provides the aid at the time when it is most needed. The key people in delivering such assistance would be public servants with significant business experience – call them "account executives" – who manage R&D support through multiple programs, visit the companies regularly and follow their situations closely, understand the match between the companies' activities and the criteria of the various programs, can choose the programs that fit best, and have the authority to make quick funding decisions. The phrase "demand-side program delivery" might be a useful way to label this approach. Its main features suggest that the IRAP model would be a good base from which to start its design. To help determine whether the R&D assistance is working, the submission closes with the suggestion of a simple indicator that shows whether an R&D-intensive company is on a trajectory to commercial success.

Full submission: PDF Version