Assessment of the DOST funded research and development collaboration between the small and medium enterprises (SMEs) and government institutions / Bernadine L. De Veyra

Year : 2010

Number of Pages : 31 leaves

Adviser : Dr. Roger D. Posadas

Executive Summary

An important source of social and regional stability in terms of job creation and employment opportunities, Small and Medium Enterprises (SMEs) remain to be the economic backbone of developing countries in the future hence, the promotion of their efficiency and dynamism deserve a serious attention especially on the part of government. In the Philippines they account for 99.7 percent of companies and play a major role in economic development. Sadly, the state of R&D innovation in this country leaves much to be desired, with the SME largely disconnected from the National Science and Technology (S&T) agenda. SMEs face problems getting involved in the government's R & D activities primarily due to lack of information and awareness of government programs providing assistance. (Patalinhog, 1999) Among these are inadequate skills in evaluating alternative technologies, limited technical know-how in shifting to advanced technologies, lack of mechanism for technological transfer, and inertia among entrepreneurs. Based on this dire situation, this research investigation was conducted. The study sought to assess the status of Research and Development (R&D) collaboration between the government sector and the Small and Medium Enterprises (SMEs), particularly, the Department of Science and Technology (DOST)-funded R & D programs and projects. Specifically, the objectives of the investigation were as follows : 1. To evaluate/assess the current collaborated DOST-funded R&D programs and projects in terms of beneficiaries, funding and number of programs/projects. 2. To identify problems related to SME participation in R&R activities. 3. To suggest policy-based actions to encourage/attract SME participation in R&D activities. Findings of the study would stand to benefit lawmakers and policy-making bodies, specifically, the DOST, in terms of policy formulated and government-supported schemes to address identified gaps and improved R&D collaboration between the government and the private sector (SMEs). Literature reviewed indicate that R&D collaboration is increasingly becoming a crucial mode of knowledge development and competitiveness in research and business. In the Philippines, this is concentrated in the government research and development institutes and in the universities, with the private sector remaining largely uninvolved if not, disconnected. The study was based on the following premises and analytical framework : There is a perceived lack of coordination among various stakeholders on R & D concerns and activities that would explain the emerging theme of market failure, re : the lack of SME-specific R&D programs and projects in spite of the existing R&D grants a problem of unavoidable knowledge leaks in terms of public goods and externalities due to weak and imperfect patenting systems lack of information on potential returns and risk-aversion which has led to the inhibition of innovative behavior, placing the Philippines among the lowest ranking ASEAN countries in terms of R&D innovation a need for this country to adopt a Systems Approach or an encompassing model which would clearly spell out sectoral involvement a need to boost/expand R&D investment through tax credit and incremental incentives.

The study was limited to the assessment of identified collaborated programs and projects of the DOST, its five (5) sectoral councils and seven (7) R&D Institutes (RDIs), particularly, the status of collaboration in terms of beneficiaries, number of projects and funding provided. Program/project evaluation was based on data gathered from the DOST using the issues and concerns stipulated in the analytical framework. Finally, focus was on the micro, small and micro level categories of SMEs supported by DOST funds. The study utilized the descriptive-analytical method of research with data primarily collected through interviews with key informants supplemented by hard data accessed through office files of agencies concerned. Contingency tables, charts and figures were likewise used in the data analysis and discussed in narrative form. The following were the findings of the study : The collaborated government projects through the DOST and the Sectoral Councils' Grants-in-Aid programs focus on and concentrate the R&D funds in various government agencies and the academe/universities, while grants for SMEs are limited. In support of the SMEs DOST has two major programs, namely : Technology Innovation for Commercialization (TECHNICOM) and Small Enterprise Upgrading Program (SETUP). Observed was the fact that the DOST RDIs conduct their own R&D activities. Their collaboration with the SMEs was through the conduct of contract researches that entail confidentiality between the parties involved. Unmitigated problems concerning the lack of strong linkages between the government and the private sector/SMEs, the lack of public awareness/information on available technologies, financial and technical assistance, policy-related issues including project implementation requirements and delays in processing and release of funds would seem to explain the limited participation of SMEs in government funded R & D activities/projects. To address foregoing issues, the country, through the DOST, should undertake a nurturing of SMEs to encourage growth and proliferation through a state policy articulating a macroeconomic financial and technical assistance to SMEs. Specifically, the government could assist potential SMEs to upgrade their technical and professional skills, subsidize technologies and assist in the purchase of equipment, provide industrial sites and special parks at competitive prices, provide assistance/facilitate registration and patenting of intellectual property (IP), reduce, if not, eliminate red tape for faster project processing, and rationalize incentives. Specific strategies such as the following should be adopted to further motivate and encourage private sector participation : aggressive information campaign on available technologies, dialogues to ensure development of demand-driven technologies, private sector representation in project development and research results utilization, an improved inter-agency policy-related interfacing, easy-term credit facilities with financial institutions, and policy-based incentives for investment in R&D.