Businesses often receive a mix of different innovation policy instruments, a
policy mix, to support their innovation activities. For example, they may
receive a mix of R&D grants and R&D tax credits. What does the evidence
suggest about policy mix’s role in driving business innovation? SOTA studies
on the impact of different policy mixes present a complex picture.
Internationally, findings range from an increase of 34 percent in business
innovation associated with some policy mixes to a decrease in business
innovation of 26 percent associated with other mixes.
This wide range of findings is due in part to the lack of an established
empirical methodology or set of ‘guiding principles’ to inform best practices in
evaluating the impact of policy mix on business innovation. It is also due in
part to the lack of widely available business-level datasets capturing detailed
information on a) the type and source of innovation policy instruments
businesses receive each year and b) a range of business innovation measures,
beyond R&D expenditure. This form of data is necessary to conduct, in the UK
and internationally, robust evaluations with the potential to offer clear
guidance on the most effective policy mix for driving business innovation.
To date, there has been an over-reliance on single policy instrument
evaluations. Such evaluations risk attributing the impact of a policy mix on
business innovation to one individual instrument in the mix.