Our report for NCUB – Growing the Value of University-Business Interactions in Wales – highlighted some of the peculiarities of the Welsh innovation landscape. Although it is considered a ‘strong innovator’ by the European Commission, Wales is not achieving sufficient added value from its innovation activities. This is a question of efficacy and impact, rather than scale and endeavour.

We undertook some qualitative interviews for the report, illuminating some of the pressing problems we face. Some respondents felt that knowledge transfer was attaining an increasingly negative status in the academy.

Businesses highlighted universities’ adherence to red-tape cultures and lack of strategic, long-term visions. There was also feedback that HEIs are not considered a significant source of innovation (a view supported by the data), with a growing number of firms willing to go beyond their local HEIs for academic strengths. If a Scottish institution is a world-leader, why stick to the local ecosystem.

As regards Welsh Government policy, we found a debilitating disconnect between economic and education plans: the former seeks greater university-business collaboration, while the latter abolishes bespoke funding for such collaboration.

The last point is particularly pertinent. Wales’ lack of Higher Education Innovation Funding (HEIF), or equivalent, is a significant disadvantage. The absence of a Welsh HEIF increases the difficulty of recruiting and retaining specialist business engagement teams, and creates barriers to the building of sustainable university-business partnerships. It also threatens to undo recent successes; English HEIs are already using HEIF to develop and refine REF impact case studies.

The effects are felt most sharply by SMEs however, who simply cannot absorb the loss of this funding. Exacerbating this situation are geography and demographics; Wales’ SMEs are in the poorer parts of the country, deepening economic disadvantages and prohibiting the knowledge exchange essential for regional regeneration.

Wales is faced with a series of challenges. Despite an increasing reliance on global supply chains, proximity to an organisation is still advantageous because it reduces search costs and allows for tacit knowledge exchange. The country’s size means there is potential to build on current clusters of expertise, in compound semiconductors for example, as well as emergent hotspots of activity, such as data analytics and cyber security.

To ensure these hotspots get the right backing, we recommend the development of bespoke business models and funding mechanisms, partners and operating relationships. The support for North Wales’ growing expertise in energy and the environment will not necessarily need the same support as West Wales’ skills in construction and advanced materials.

Flexibility is essential if we are to encourage deeper understanding between businesses and universities and develop a more coherent strategy for collaboration. Any flexibility needs to be backed by champions at senior level and fostered by responsive digital platforms and networking technology; Welsh Government’s ‘Be the Spark’ initiative provides a strong template.

The public sector also presents an opportunity to lead the way in process and service innovation. The most pressing public policy change, however, is to reinstate HEIF funding or a successor to support both the infrastructure and the skill sets within universities to enable them to engage more effectively with public, private and third sector partners.

The Welsh innovation landscape is as varied and idiosyncratic as the nation’s topography. The trick is not to flatten it out with a one-size-fits-all approach, but to create a flexible means of working within its comparative strengths. It requires genuinely smart specialisation.

by Professor Kevin Morgan
Professor of Governance and Planning – Cardiff University