Lessons from Sweden and Denmark on innovation

Denmark and Sweden both invest more in research than Austria, while at the same time also succeeding better than Austria in transforming the funds they invest into more innovation and greater economic dynamics, according to a new report.

In higher education, both Sweden and Denmark link funding of their higher education institutions to the number of student places, giving them a solid financial basis for top-level performance in research and teaching.

By contrast, compared with Sweden and Denmark, Austria is better integrated into the European Research Area and is regarded as a model concerning the instruments and structures supporting Austrian researchers in Horizon 2020 and other European initiatives by these two countries.

The findings of the report were presented at a Europa-Tagung or Europe Conference on 26 November, in Vienna, hosted by Austria’s Federal Ministry of Science, Research and Economy focusing on the theme “Reality Check on Austria’s Path towards Becoming an Innovation Leader”, with 350 participants.

The report, The Leverage Potential of the European Research Area for Austria’s Ambition to become One of the Innovation Leaders in Europe: A comparative study of Austria, Sweden and Denmark, was commissioned earlier this year by the European Research Area, or ERA, Council Forum Austria to address the apparent loss of dynamism in Austrian research and innovation systems since 2011.

Sweden and Denmark were chosen for comparison because both top the European Commission's Innovation Union Scoreboard.

Austrian Federal Minister of Science, Research and Economy, Reinhold Mitterlehner, presenting the study, said: "We consciously orient ourselves towards the innovation leaders in Europe and have the long-term objective of advancing again towards this top group of countries. For this, we require joint efforts and a clear commitment of all players involved in politics, science and business."

Based on the findings of the study the ERA Council called for an overhaul of the Austrian university landscape to achieve internationally competitive and visible research. This would include the creation of strategic alliances or mergers of universities, faculties or departments, and increased funding.

However, the Council warned against merely pumping more money into the Austrian innovation system, saying that Austria needs more money in exchange for more output, which also needs to be scrutinised.

The study was carried out by Joanneum Research. The mandate was to identify gaps and barriers for Austria to become an innovation leader and in particular to discuss the role of Austrian universities and university colleges in this task.

The key question asked was: “To the extent that universities in Sweden and Denmark function as backbones of their country’s overall excellent performance in research, development and innovation: What are the main drivers behind their success?”

The study provides a reach seam of information on structure and governance of research and development funding, the structure and performance of higher education institutions, the industrial structure and the role of venture capital funding, the nature of industry-science relations and respective support structures, the role of the European Research Area and innovation policy systems and science and technology policies, and trends towards implementation of large-scale mission-oriented funding programmes in Denmark and Sweden.

Sweden was for a long time a high-performer in terms of the number of researchers funded. While Austria has closed the gap on Sweden in recent years, Denmark has seen massive increases in its share of researchers in the active population since the mid-2000s. The study was undertaken before the massive budget cuts in Denmark – as reported in University World News – started to bite.

University World News asked one of the principal investigators, Wolfgang Polt of Joanneum Research: “If you were an advisor for Austrian universities receiving this report, where would you start on the work to gain more innovation support capacity for Austria?"

Polt said: “Personally, I would think that changes in the financing of higher education institutions in Austria would be most important: allocating a larger share of base finance according to performance criteria – including teaching, research output, external or competitive funding, third-mission [or community engagement] targets and the like. Especially the provision of studienplatzfinanzierung – funding related to student enrolment – would be something to learn from Denmark and Sweden.”

Denmark and Sweden invest more

Both Sweden and Denmark have tried to substantially improve their higher education systems, both through marked increases in funding and institutional reforms, which were very substantial in Denmark, involving the concentration of research in a comparatively smaller number of organisations, the report says.

In Denmark’s case the same amount of research and development, or R&D, funding that Austria pours into 22 universities is spent in eight Danish institutions.

Both Denmark and Sweden have succeeded in producing high numbers of students, graduates and high scientific output (especially Denmark), though the developments and dynamics differ somewhat between the two nations.

The Swedish National Innovation System is quite polarised into two main groups of actors: on the one hand a small number of large multinational groups – about 10 – and a similar number of dominating universities. These two groups are responsible for a large part of the R&D performed in Sweden.

The 10 universities that dominate the university sector and produce almost all R&D in the country are: the Karolinska Institute, Chalmers University of Technology, Uppsala University, Lund University, the University of Gothenburg, the Royal Institute of Technology or KTH, Stockholm University, Linköping University, Luleå University of Technology and Umeå University.

There is no quick-fix for Austria, looking into international policy learning in a simplistic way, the report warns, calling for a contextual analysis of what is depending on what in the path towards becoming a top innovative economy.

Among the factors identified in Denmark and Sweden that might advance the innovative capacity in the economy, the report mentions:

• • Structure and governance of R&D funding – higher shares of competitive funding, also based on private foundations (notably Denmark);
  
• • Performance-oriented funding of higher education institutions;
  
• • Extensive university reforms – merger of universities in Denmark;
  
• • High number of students, graduates and scientific output (notably Denmark);
  
• • Concentration of research in a smaller number of institutions;
  
• • Continuous and substantial increase in the number of graduates compensated by government funding;
  
• • Strong role of universities of applied sciences in providing education and in PhD training (Denmark);
  
• • Retaining foreign students upon graduation – notably Denmark;
  
• • No tuition fees for national students;
  
• • High level of institutional autonomy with a strong orientation towards performance especially in Denmark (individual targets of universities contracted with the ministry);
  
• • Total venture capital for Austria in 2014 was 1/8th of Denmark and 1/9th of Sweden. Denmark has seen remarkable increase in venture capital also in years of financial crisis;
  
• • Advanced information technology usage in both Denmark and Sweden.

Austria compared unfavourably

The report contains many useful observations on factors that might stimulate or halt innovation in Austria, among them the dispersed structure of its higher education landscape comprising 22 public universities, 21 university colleges of applied sciences, 11 private universities and 14 universities for teacher training. Some 81% of students are enrolled in public universities, compared to 67% enrolled in Denmark.

Notably, the university colleges in Austria have a more limited role, educating only half as many students as in Denmark, and they are not participating in research, whereas Denmark is planning to raise the proportion of staff at university colleges with PhDs tenfold, to 50%, as reported by University World News.

The efficient distribution of education tasks between different types of higher education institutions is therefore an important issue to increase tertiary education output in Austria.

On average non-EU students make up 24.2% of doctoral students in the EU, 17.7% in Denmark and 21.9% in Sweden but only 8.6% in Austria.

In total, Austria recruited 58,100 students from abroad in 2012, or 15.4% of its total student population, compared to Denmark with 8.1%. However, of these, 43% were from Germany and 65% come from EU countries.

In Sweden, where 40% of students or 29,000 were international, the highest share came from Asian countries.

There has been a massive increase in public financing for Danish universities since 2006, driven by the sharp rise in student intakes, fulfilling the targets of the Danish Globalisation Strategy 2006, and doubling the number of PhD students between 2006 and 2013.

Total funding for PhD programmes at Danish universities in 2011 was DKK4 billion (US$584 million) as part of the universities’ basic funding. Both Denmark and Sweden persistently outperform Austria in terms of funding per tertiary education student at US$21,253 and US$20,818 respectively, compared to Austria’s funding per student at US$14,894.

Public funding in Denmark and Sweden is accompanied by a large amount of funding from private philanthropic entities, which finance education, research, innovation, social and humanitarian activities. In both Denmark and Sweden this accounts for about 10% of universities’ research budgets.

R&D funding by the private non-profit sector accounted for 0.12% of gross domestic product, or GDP, in Denmark in 2013, compared to 0.01% in Austria. In total in Denmark there are around 1,000 small philanthropic private funding entities.

Austria’s financial support for students also compares unfavourably with Sweden and Denmark. In Austria 85% of university students do not receive any form of support in the form of scholarships, grants or public loans, while the majority of students in Sweden and Denmark do receive such support.

Denmark has the most favourable student financing support system in the world, with the country allocating as much funding to students as the total cost of running all higher education institutions in Denmark.

A chapter on female scientists in Sweden illustrates that 44% of staff in higher education in Sweden are women, while the corresponding figure in Austria is 38%. A high inclusion of the female workforce is seen as an important competitive advantage when looking for the best researchers in a global workplace.

The study also compares success in the European Framework Programmes for Research, clearly demonstrating the role of universities in Sweden and Denmark in securing funds from the Sixth and Seventh Framework Programmes and from Horizon 2020.

Recent analysis for Denmark shows, for example, that the University of Copenhagen, Aarhus University and Technical University of Denmark together secured about one-third of Denmark’s Sixth Framework Programme funds and almost half its Seventh Framework Programme funds.

Helga Nowotny, chair of the ERA Council and now also a member of the Austrian Council for Research and Technology Development, said: "Under the framework of its Research, Technology and Innovation Strategy, Austria has undertaken to advance towards the group of innovation leaders in Europe by 2020. This is still a correct target, but we have to ask ourselves what we can do even better, in order to become an innovation leader, also under difficult budgetary framework conditions.”

However, Göran Melin of Technopolis Group in Stockholm, Sweden, told University World News: “In fact neither Denmark nor Sweden are leaders when it comes to turning their high research performance into economic and societal growth. It is not certain how well the Innovation Union Scoreboard captures this, and if Austria is really lagging behind in that respect. But both Denmark and Sweden invest heavily in linking academia with the business sector.”

He said these investments have resulted in a relative openness at many higher education institutions towards research collaboration with companies, and it has also resulted in a relative appreciation of links with selected universities or colleges within the business sector.

“There is simply some mutual trust built up and some understanding of each part's respective and different motives and goals when collaborating,” he said. “For instance, there is a whole segment of higher education institutions in Sweden that has developed almost their entire research portfolio through cooperative research projects with the regional business sector. This can be worth exploring further for other countries.”