facts & figures

TNO has a positive impact on the output of businesses

18 November 2019 • 4 min reading time

TNO’s mission is to connect people and knowledge to create innovations that sustainably boost the competitive strength of industry and the wellbeing of society. In other words, we strive for goal-oriented innovation. But what are the actual effects of TNO’s innovations? Analysis has confirmed that the impact on the output of companies is significant.

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Do you want to know more or do you have questions about the research? Please contact Marcel de Heide.

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Applied Research Organisations (known as TO2 institutes) such as TNO play an important role in the innovation system. There are five TO2 institutes in the Netherlands: Marin (Maritime Research Institute Netherlands), NLR (Netherlands Aerospace Centre), Deltares, Wageningen Research and TNO. These were established in order to strengthen the innovative power and competitive position of the Netherlands through research, to help solve societal issues and to support the tasks and policies of public authorities. If a company wants to innovate, for example, they get access to a research capacity that would be difficult for them to maintain themselves. The Dutch government makes funding (‘de Rijksbijdrage’) available to TO2s in order to stimulate innovation.

The impact of applied research

Because TO2 institutes are partly financed using public money, they are regularly evaluated externally. That’s only right, according to TNO’s CEO Paul de Krom. “We develop knowledge not for the sake of merely adding it to the stock of existing knowledge, but in order to arrive at practical applications and to help the Netherlands move forward. Making our impact transparent is therefore one of our own explicit goals. That’s why we’re evaluating our role in the innovation system ourselves. It’s important that we as TNO, and as the Netherlands in general (being a highly research-oriented country), show what we’re doing and what our impact is. However, impact and innovation are difficult to quantify. It’s great that an econometric analysis can now put its finger on this and show that we’re a result-oriented knowledge partner,” says De Krom.

“It’s important that we as TNO show what we’re doing, and what our impact is” (De Krom)

Growth of added value: 14 to 17 percent

Led by Marcel de Heide, TNO researchers Hettie Boonman, Jinxue Hu and Evgueni Poliakov have been investigating the impact of TO2s on companies. TNO was specifically included as a case. In order to quantify this impact, the research compared the annual growth of the added value of companies that carry out Research & Development (R&D) and whether or not they collaborate with TNO. “This is how we capture one aspect of the impact of TNO research: the economic impact,” says De Heide. “Added value is the value added to raw materials and semi-finished products via production factors during the production process. Examples of production factors include labour (people) and capital (production machines), but also ‘knowledge’ (as a result of research). The focus is on the added value that companies create, as this captures innovation best. In this context, added value is much better than (for example) turnover, which is influenced by many other factors," says De Heide.

“The focus is on the added value that companies create, as this captures innovation best” (De Heide)

The main conclusion of the research is that TNO has a significant impact on companies with which it collaborates on innovation. The additional growth in added value for companies that involve TNO in their R&D is estimated at 14 to 17 percent. This means that companies that collaborate with TNO have a growth in added value which is an average of 1.14 to 1.17 times the growth of companies that also engage in R&D, but not with TNO.

Unique data analysis

The data used in the research is unique and, for the first time, a Dutch TO2 has been studied using econometric methods. De Heide: “The dataset is particularly special. We combine our own TNO data with data on R&D investments from Statistics Netherlands. Similar evaluations carried out in Norway, Denmark and Germany have yielded comparable results.” The research is therefore neither isolated nor a lucky shot, adds De Krom. “It fits into a broader picture which confirms that TO2 institutes provide added value and therefore have the right to exist. Investing in innovation with TNO pays off.”

“Investing in innovation with TNO pays off” (De Krom)

Investments are crucial

“TNO’s impact on companies has been quantified objectively for the first time through this research, justifying the public financing of TNO and TO2 institutes. Perhaps it can also help to address the impact of research and innovation in macroeconomic models. When considering election programmes, the Bureau for Economic Policy Analysis (CPB) does not take sufficient account of the economic effects of investments in R&D and innovation,” explains De Heide. Nevertheless, The Hague is making progress with the CPB models, according to De Krom. “The Netherlands is doing well when it comes to innovation. If we want to maintain that position, we will have to invest more. At the moment, R&D investments in the Netherlands are equal to approximately 2 percent of GDP (gross domestic product). The aim is to increase this to 2.5 percent. By comparison, Germany is already at 3 percent and aims to increase this to 3.5 percent. The Netherlands should also aim for 3.5%, on par with Germany. Increased spending is essential as the Netherlands – but also Europe – is losing ground,” says De Krom.

Broad impact

As previously mentioned, this research captures only part of TNO’s impact. “TNO also has an impact on aspects that cannot be captured by added value, such as the solving of societal challenges. This is why we also test research projects on the contribution they make to the United Nations’ Sustainable Development Goals (SDGs),” De Krom concludes.

Want to read further?

Economic journal ESB has also written an article on the added value of TO2s (in Dutch).

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