Behavioural Additionality & Spillovers in the R&DTI

Background
This project aimed to understand the behavioural additionality effects of the R&DTI via a series of user interviews with companies currently engaged in R&D (including those participating and not participating in the R&DTI). Behavioural additionality goes beyond the traditional view of R&D additionality, which typically focuses on quantitative increases in inputs and outputs. Instead, behavioural additionality considers wider, qualitative changes that may not be as easy to measure quantitatively, but nonetheless have a positive impact on innovation. For example, these might include new collaborations, greater dissemination of knowledge, or projects being completed more rapidly. There may also be “spillovers” from these behavioural additionalities - additional benefits to the wider economy, beyond the original company. For example, a collaboration between a company and a university might then lead to that university partnering more often with other businesses and spreading the benefits of innovation. The Australian Department of Industry, Science, Energy & Resources partnered with the Behavioural Insights Team (Sydney office) to deliver this work.

Relevance
Understanding these elements of additionality is crucial to effectively evaluating an R&D incentive. Without considering behavioural additionality, it is likely that the benefits of any incentive will be understated. While quantitative metrics provide estimates of ‘what’ is occurring (the extent of the change), qualitative measures describe the ‘why’ (reasons behind these shifts). Ideally, future (more precise) measures of additionality will encompass input, output and behavioural components.

Findings
Most interviews revealed positive impacts and a range of additionalities, though these often varied substantially between companies. Most notably, whilst a majority of businesses would still conduct R&D without the R&DTI, the R&DTI led to increased intensity. This meant projects being completed faster, more projects being undertaken, or simply a larger R&D team.

Similarly, there were a range of spillovers as a result of the R&DTI. Within industries, the R&DTI encouraged collaboration and knowledge sharing in the short-term, whilst in the longer term staff who had been upskilled would often take their skills to other companies in the industry. More broadly, the R&DTI built wider capacity - businesses that developed a new product would often need suppliers to also develop new processes to manufacture components of the product. This helped to develop the local manufacturing sector and encouraged production to stay onshore.

In addition to supporting employment through keeping production and manufacturing onshore, the R&DTI also often directly supported employment by keeping R&D jobs in Australia. Indeed, some businesses also noted that the R&DTI allowed for more R&D projects, which was seen as a positive for staff retention and morale - R&D projects were often seen as more desirable and enjoyable to work on, particularly for highly-skilled staff.

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