Innovation Policy: The Role of Universities, Priority Sectors and Micro-enterprises

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Juliane Schwarz discusses the potential impacts of prioritising certain sectors over others and how universities can play a role in active industrial policy.

Juliane also looks at the role of small and micro businesses in our economy and how they can be better supported.

In her letter to the Financial Times, the Vice-Provost of Research and Enterprise at Imperial College London, Professor Mary Ryan, emphasised that UK universities need to be part of an active industrial policy. She continues to say:

“Boosting key industries like biopharmaceuticals and medtech, and quantum, artificial intelligence and telecommunications needs to be a priority.”

The statement raises questions regarding university involvement and the broader impact and implications of focusing primarily on high-tech and innovation-driven sectors and certain kinds of businesses:

  • How can universities be part of an active industrial policy?
  • What are the potential impacts of prioritising certain sectors over others?
  • What is the role of small and micro-businesses and how can they be better supported?
University engagement in industrial policy: Innovation Accelerators

The newly instigated Innovation Accelerator programme can be seen as a most recent example where universities are part of an active industry policy. Innovation Accelerators (IAs) were introduced in the Levelling Up White Paper in February 2022. In March 2023, £100m R&D levelling up funding was announced to support three regional IAs in the Glasgow City Region, the Greater Manchester Combined Authority and the West Midlands Combined Authority.

Across the three Pilot IAs, there are a total of 26 projects, 14 of which are university-led and, in nine, universities engage as partners of projects led by other universities and non-university organisations. Early lessons describe how IAs have successfully created strategic innovation partnerships in those three regions and universities playing a vital role in raising the levels of collaboration and investment.

The IA projects support a variety of sectors and key industries. The majority of projects are in digital technology, health tech, net zero and clean tech.

 Glasgow City Region
Glasgow City Region
University of Glasgow Lead institution
*Risk stratification tool for colorectal polyp surveillance, Sector: Health
*Museums in the metaverse, Sector: Creative
*Pilot Accelerator for National Institute for Quantum Integration, Sector: Electronics
Partner institution
*Modular chemical robot farms for chemical manufacturing, Sector: Manufacturing
*FinTech, Centre of Innovation in Financial Regulation, Sector: Digital
University of Strathclyde Lead institution
*Fusing a future from Glasgow’s proud heritage, Sector: Net Zero
*ReMake Glasgow, Sector: Energy
*Data-driven design and manufacturing colab (D3M_Colab), Sector: Digital
*Satellite space and photonics Glasgow Impact Accelerator, Sector: Space
Partner institution
*Innovation Accelerator in neutral atom quantum optimisation, Sector: Emerging Technology
*FinTech, Centre of Innovation in Financial Regulation, Sector: Digital
Greater Manchester Combined Authority
Manchester Metropolitan University Lead institution
*Greater Manchester Electro-chemical Hydrogen Cluster, Sector: Net Zero
*Centre for Digital Innovation (CDI), Sector: Digital
University of Manchester Lead institution
*Manchester Turing Innovation Hub (MTIH), Sector: Digital
*The Development and Validation of Technology for Time Critical Genomic Testing (DEVOTE) Programme, Sector: Health
Partner institution
*GM Advanced Diagnostics Accelerator, Sector: Health
University of Salford Lead institution
*Future Homes, Sector: Net Zero
West Midlands Combined Authority
Aston University Lead institution
*The Biochar Clean Tech Accelerator, Sector: Clean Tech
Partner institution
*Digital Innovation Transformative Change (DIATOMIC), Sector: Health & Clean Tech
Birmingham City University Partner institution
*Digital Innovation Transformative Change (DIATOMIC), Sector: Health & Clean Tech
Coventry University Partner institution
*Clean Futures, Sector: Clean Tech
University of Birmingham Lead institution
*West Midlands HealthTech/MedTech ‘6D’ Innovation Accelerator, Sector: Health Tech
Partner institution
*Digital Innovation Transformative Change (DIATOMIC), Sector: Health & Clean Tech

Level of university involvement in IA projects

This is a list of universities that are mentioned in project webpages as lead or partner organisations. More universities are further involved as delivery partners.

digital 5 creative 2 energy 1
health 5 electronics 2 manufacturing 1
net zero 5 advanced manufacturing 1 health/medtech 1
cleantech 3 emerging technologies 1 space 1
All IA projects: Sector breakdown
What are the potential impacts of prioritising certain sectors over others?

Strategic investment in high-tech sectors seems to be widely endorsed by researchers, especially those who are engaged in research about productivity and innovation. However, research into high growth also suggests that growth in turnover and productivity “cannot, and should not, be equated to ‘high tech’ firms” and that growth comes in a variety of sectors and contexts.  The Creative Industry before the pandemic (2011-2019), for example, was growing twice as fast as the UK economy as a whole contributing £116bn in GVA in 2019. Thus, the government prioritising biotech, fintech and life science at the expense of other sectors might be limiting growth and development.

Listen to our podcast on small business support with Professor Mart Hart. 

What is the role of small and micro-businesses and how can they be better supported?

The Government’s emphasis on large-scale, high-tech industries seems to also negatively affect UK SMEs who employed more than 13M people with an annual turnover of £1.4Tr in 2021. Micro-enterprises, SMEs with less than ten employees, the self-employed and freelancers, are an important element of urban economic growth. However, micro-enterprises are largely ignored by government policy and support. This has become highly visible during the pandemic where they have been hit hardest with slower post-pandemic recovery. This might be due to many micro-businesses being invisible, often home-based, and contributing ‘jobless growth’ that is expanding turnover but not taking on employees.

Micro-enterprises are, however:

  • together with small businesses the backbone of many economies, for example, home-based businesses account for over 50% of businesses in the USA and the United Kingdom (UK),
  • accounted for 4% of all employees in the UK (March 2021),
  • a growing segment of the small business sector and are essential for local economies and employment,
  • important contractors to large or small businesses.
Boosting high-tech industry and not losing sight of other sectors and industries

Boosting high-tech industries is important and it is reasonable for universities to contribute with their expertise in research, knowledge transfer and stakeholder engagement as demonstrated in the Innovation Accelerator programme. However, it is important not to lose sight of other sectors and their contribution to growth and productivity. In addition, certain industries like small and micro business might need to be placed into sharper focus, for both research and policy, to make them and the wider economy relying on their contribution more resilient.

This blog was written by Dr Juliane Schwarz, Research Fellow, City-REDI, University of Birmingham.

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.

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