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| Atallah: “Collaboration is desirable especially for a small party like Canada.” |
Laura Eggertson
In 1985, an innovative research partnership was born to boost European competitiveness in research and development. Called, appropriately enough, Eureka, the network was financed by European governments to help businesses, research centres and universities develop new technologies.
Two years later, the United States created a similar network, called SEMATECH, to accelerate the development of the American semiconductor industry, which lagged behind its competitors.
Today, a University of Ottawa economist is studying the impact of these initiatives on technological progress, consumers, and social welfare. It’s a trend that’s growing in Canada, particularly among universities, where networks such as Genome Canada and the Canadian Technology Network are pooling resources.
For assistant professor Gamal Atallah, these research and development consortiums are a critical means of fostering innovation – and innovation is the main driver of economic growth, for Canada and around the world.
“Competition on new products and processes is much more important than competition on how to undercut your competitors,” he says.
In general, according to Atallah, the complexity and the cost of developing new technology and processes is driving the decision for firms to pool their resources. Individually, they may not have the people or the expertise to move ahead. Collectively, they can create synergies that result in shorter development times, lower costs, reduced and shared risks, and better products.
Research and development networks or consortiums also have advantages for consumers. For example, partners may agree on standards to create compatible products.
This is a particular advantage in small markets like Canada’s, where overall, private-sector firms are under-investing in R & D relative to the government’s investments, Atallah says.
According to the 2006 report “Going for Growth” published by the Organisation of Economic Co-operation and Development, Canadian business ranks thirteenth in research and development intensity among industrialized nations. “We’re in the middle of the industrialized nations in terms of performance, and we want to go closer to the top.”
“I think collaboration is desirable especially for a small party like Canada,” says Atallah. “It allows it to team up with larger international firms, gain from their expertise and share knowledge. I think it’s socially beneficial.”
Atallah suggests that Canada may need to work harder to attract more foreign investment and further develop high-tech sectors with the scope for more R & D and productivity gains, and to ensure that we produce graduates in key areas like the sciences and engineering.
Although it is moving in the right direction in terms of spending at the academic level and in producing increasing numbers of scientists and engineers, in Canada, there is room for improvement in terms of producing new patents, products and processes.
However, there are drawbacks to research partnerships, Atallah points out. When firms collaborate technologically, they could “collude on the output market” and affect prices.
“You have to make sure that collaboration does not extend too far and become synonymous with collusion,” he cautions. That’s a warning governments need to heed, he says.
Firms may also be reluctant to pool resources if they are worried about who will ultimately own and benefit from the products and processes. Questions about intellectual property are sometimes solved by having companies work together at the pre-competitive stage.
