How to analyse socio-economic impact of research and innovation

With research and innovation depending on ever scarcer (public) financial resources, professional reports to clarify the impact of your projects offer you a distinct edge in the competition for financial resources. To this extent, mATTch offers professional reporting on the socio-economic impact of your projects for research and innovation. We recommend the BETA method as developed by Laurent Bach.

Economic impact

The BETA method

The BETA method was developed in 1985 and has seen use in amongst others both the economic evaluation of multiple European collaborative research projects, and the economic evaluation of the European Space Agency (ESA). The BETA method can be used to analyse the impact of projects or programmes where companies and potentially a university or other institution collaborate to accomplish specific goals related to research and innovation. Typically, the projects analysed are partially or wholly funded with public money, and limited in time. For the participants in such projects, the results, outcomes and other impacts is gathered ex post.

Expected outcomes of the analysis

The BETA method results in both an assesment of the economic impact, and an understanding on how this economic impact came to be. The understanding can be used to develop policy to adjust this impact.

The economic impact of research projects

The direct effects

The direct effects are those effects directly related to the objectives of the projects. Examples of economic impact may be a new space satellite or new transport infrastructure procured, the benefits society receives by use of a new technology, or public funding received by a single company or university for research and innovation.

The indirect effects

The indirect effects are those that go beyond the scope of the objectives of the projects. Four are commonly identified.

Technological effects
Technological effects concern the use of knowledge and technology gained for other activities by the participant. These may include new or enhanced products or services, or patents.
Commercial effects
Commercial effects cover both new business links that result from the project and reputation gained by working e.g. with ESA. This can be used as a marketing tool.
Organization and Method effects
Organization and Method effects happen when a participant in the project modifies its’ organisation. For example, projects can be managed in new ways, or relationships between departments can be changed.
Competence & Training effects
Competence and Training effects concern the impact the project has on human capital. This includes both a competence effect on staff already employed and training of new employees. The latter means that a company decides to employ an employee they met at the project.

Method and data collection

The BETA method collects data on a sample of projects that are expected to be representative for the whole programme. Data is collected in two steps. First, participants in the project are interviewed to identify any economic effects. In a second round these effects are quantified. Quantified effects are expressed as increased sales or cost reductions. Human capital is expressed in the monetary equivalent of man-hours. The measuring of the impacts starts with the project, and ends at a pre-determined time.

Reporting a minimal estimation helps build trust, because all economic effects reported can be confirmed.

The economic impact is a minimal estimation. Some effects are expected to remain unidentified, and for some effects identified it may not be possible to deduct the economic impact. However, this does build trust in the validity of the economic effects found.

Previous projects by mATTch

For the IDECAT Network of Excellence (Sixth Framework Programme, FP6) I had the opportunity to work with Dr. Laurent Bach to analyse the impact of European research on photo catalysts. Photo catalysts influence chemical reactions in the presence of light. At the time, they were receiving increasing amounts of attention amongst researchers for their potential to open up new fields of application, and thereby new markets. An analysis of the economic impact of this research was felt to raise public awareness on the potential of photocatalysis. This analysis supports constructive discussions in favour of shifting public budgets towards the new innovative opportunities offered.

References

Bach, L. & Matt, M. (2005). 20 years of evaluation with the BETA method: Some insights on current collaborative ST&I policy issues. In Matt, M. & Llerena, P. (Eds.), Innovation policy in a knowledge based economy: theory and practise (pp 251-281). Berlin Heidelberg: Springer Verlag.

Bach, L.; Cohendet, P.; Lambert, G. & Ledoux, M. J. (1992). Measuring and Managing Spinoffs: The Case of the Spinoffs Generated by ESA programs. In Greenberg, J. S. & Hertzfeld, H. R. (Eds.), Progress in Astronautics and Aeronautics. Vol. 144. Space Economics (pp 171).

Bach, L., Conde-Molist, N., Ledoux, M., Matt, M., & Schaeffer, V. (1995). Evaluation of the economic effects of Brite-Euram programmes on the European industry. Scientometrics, 34(3), 325-349.

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