Academics warn policy-makers must learn from their mistakes

New research examining the controversial Scottish Government funded innovation initiative – the Intermediate Technology Institutes (ITIs) – was published this week by a team of entrepreneurship researchers from the Universities of St Andrews, Glasgow and Edinburgh. Led by Dr Ross Brown from the School of Management, University of St Andrews, the work examines the spectacular failure of the programme.

The ITIs were an extremely ambitious policy intervention launched in 2003 by Scottish Enterprise with a budget of £450m. Designed to have a major transformational impact on the Scottish economy, its main aim was to produce new high-technology start-ups and to dramatically increase the levels of business expenditure on research and development (R&D). The researchers conclude that the ITI badly malfunctioned; chronically failing to deliver the economic objectives envisaged by Scottish Enterprise and the Scottish Government. The ten year programme produced very little of the expected commercial outputs, such as new tech start-ups and licensing revenues, and was prematurely terminated by Scottish Enterprise in 2010.

In the first independent and objective assessment of the initiative, the research examined the reasons for this policy failure.

Commenting on the publication of the findings, Dr Brown stated:

“The ITI programme was based on an outdated linear view of innovation. The critical stumbling block behind the policy’s failure was the inability of policy makers to properly diagnose the nature of structural problems within the Scottish entrepreneurial ecosystem.”

Co-author Dr Geoff Gregson from the University of Edinburgh stated:

“We identified a number of factors contributing to ITI underperformance: the research undertaken was too ‘far from market’, fitted poorly with the innovation needs of Scottish SMEs, had too many restrictions in terms of the usage of the intellectual property (IP) and the licensing conditions were prohibitively expensive.”

The authors are concerned that Scottish policy-makers may not have fully absorbed the lessons from the failure of the initiative.

Professor Colin Mason from the University of Glasgow who also worked on the project states:

“Lessons need to be learnt to prevent similar and costly policy failures being repeated. This entails being open with external researchers and stakeholders with information and data to further our understanding of the performance of policies and, crucially, the causes of failure.”

Dr Brown added:

“While policy failures in the sphere of innovation policy are numerous and costly, such failures are rarely acknowledged by policy makers, as was the case of the ITIs. Arguably, this prevents the ability to learn from past mistakes.”

In terms of future policy, Dr Gregson added: “Innovation policy makers need to become less focused on generating the supply of new IP and more focused on increasing the ability of Scottish SMEs to undertake innovative activities and to absorb external sources of knowledge. A critical mass of innovative SMEs will provide more of a seed-bed for new tech start-ups than policies to stimulate and protect new IP.”

Notes to news editors

The paper is called “A Post-Mortem of Regional Innovation Policy Failure: Scotland’s Intermediate Technology Initiative (ITI)” and is published in the journal Regional Studies. Further details about the paper can be obtained online.

A copy of the paper is available on request from the authors. Contact:

Dr Ross Brown at: [email protected] or call 07947 190175

Professor Colin Mason: [email protected] or call 0141 330 2728

Or Professor Geoff Gregson, JR Shaw School of Business, Northern Alberta Institute of Technology (NAIT), email: [email protected]

Issued by the University of St Andrews

Contact Emma Shea, Deputy Director of Communications, on 01334 462 167 or email [email protected]