Impact of Government Organizational Reform to Scientific Research Legal System and Response Thereto (1) – For Example, The Finnish Innovation Fund (“SITRA”) I. Foreword We hereby aim to analyze and research the role played by The Finnish Innovation Fund (“Sitra”) in boosting the national innovation ability and propose the characteristics of its organization and operation which may afford to facilitate the deliberation on Taiwan’s legal system. Sitra is an independent organization which is used to reporting to the Finnish Parliament directly, dedicated to funding activities to boost sustainable development as its ultimate goal and oriented toward the needs for social change. As of 2004, it promoted the fixed-term program. Until 2012, it, in turn, primarily engaged in 3-year program for ecological sustainable development and enhancement of society in 2012. The former aimed at the sustainable use of natural resources to develop new structures and business models and to boost the development of a bioeconomy and low-carbon society, while the latter aimed to create a more well-being-oriented public administrative environment to upgrade various public sectors’ leadership and decision-making ability to introduce nationals’ opinion to policies and the potential of building new business models and venture capital businesses[1]. II. Standing and Operating Instrument of Sitra 1. Sitra Standing in Boosting of Finnish Innovation Policies (1) Positive Impact from Support of Innovation R&D Activities by Public Sector Utilization of public sector’s resources to facilitate and boost industrial innovation R&D ability is commonly applied in various countries in the world. Notwithstanding, the impact of the public sector’s investment of resources produced to the technical R&D and the entire society remains explorable[2]. Most studies still indicate positive impact, primarily as a result of the market failure. Some studies indicate that the impact of the public sector’s investment of resources may be observable at least from several points of view, including: 1. The direct output of the investment per se and the corresponding R&D investment potentially derived from investees; 2. R&D of outputs derived from the R&D investment, e.g., products, services and production methods, etc.; 3. direct impact derived from the R&D scope, e.g., development of a new business, or new business and service models, etc.; 4. impact to national and social economies, e.g., change of industrial structures and improvement of employment environment, etc. Most studies indicate that from the various points of view, the investment by public sector all produced positive impacts and, therefore, such investment is needed definitely[3]. The public sector may invest in R&D in diversified manners. Sitra invests in the “market” as an investor of corporate venture investment market, which plays a role different from the Finnish Funding Agency for Technology and Innovation (“Tekes”), which is more like a governmental subsidizer. Nevertheless, Finland’s characteristics reside in the combination of multiple funding and promotion models. Above all, due to the different behavior model, the role played by the former is also held different from those played by the general public sectors. This is why we choose the former as the subject to be studied herein. Data source: Jari Hyvärinen & Anna-Maija Rautiainen, Measuring additionality and systemic impacts of public research and development funding – the case of TEKES, FINLAND, RESEARCH EVALUATION, 16(3), 205, 206 (2007). Fig. 1 Phased Efforts of Resources Invested in R&D by Public Sector (2) Two Sided f Role Played by Sitra in Boosting of Finnish Innovation Policies Sitra has a very special position in Finland’s national innovation policies, as it not only helps successful implementation of the innovation policies but also acts an intermediary among the relevant entities. Sitra was founded in 1967 under supervision of the Bank of Finland before 1991, but was transformed into an independent foundation under the direction of the Finnish Parliament[4]. Though Sitra is a public foundation, its operation will not be intervened or restricted by the government. Sitra may initiate any innovation activities for its new organization or system, playing a role dedicated to funding technical R&D or promoting venture capital business. Meanwhile, Sitra also assumes some special function dedicated to decision-makers’ training and organizing decision-maker network to boost structural change. Therefore, Sitra may be identified as a special organization which may act flexibly and possess resources at the same time and, therefore, may initiate various innovation activities rapidly[5]. Sitra is authorized to boost the development of innovation activities in said flexible and characteristic manner in accordance with the Finland Innovation Fund Act (Laki Suomen itsenäisyyden juhlarahastosta). According to the Act, Finland established Sitra in 1967 and Sitra was under supervision of Bank of Finland (Article 1). Sitra was established in order to boost the stable growth of Finland’s economy via the national instrument’s support of R&D and education or other development instruments (Article 2). The policies which Sitra may adopt include loaning or funding, guarantee, marketable securities, participation in cooperative programs, partnership or equity investment (Article 3). If necessary, Sitra may collect the title of real estate or corporate shares (Article 7). Data source: Finnish innovation system, Research.fi, http://www.research.fi/en/innovationsystem.html (last visited Mar. 15, 2013). Fig. 2 Finnish Scientific Research Organization Chart Sitra's innovation role has been evolved through two changes. Specifically, Sitra was primarily dedicated to funding technical R&D among the public sectors in Finland, and the funding model applied by Sitra prior to the changes initiated the technical R&D promotion by Tekes, which was established in 1983. The first change of Sitra took place in 1987. After that, Sitra turned to focus on the business development and venture capital invested in technology business and led the venture capital investment. Meanwhile, it became a partner of private investment funds and thereby boosted the growth of venture capital investments in Finland in 1990. In 2000, the second change of Sitra took place and Sitra’s organization orientation was changed again. It achieved the new goal for structural change step by step by boosting the experimental social innovation activities. Sitra believed that it should play the role contributing to procedural change and reducing systematic obstacles, e.g., various organizational or institutional deadlocks[6]. Among the innovation policies boosted by the Finnish Government, the support of Start-Ups via governmental power has always been the most important one. Therefore, the Finnish Government is used to playing a positive role in the process of developing the venture capital investment market. In 1967, the Government established a venture capital company named Sponsor Oy with the support from Bank of Finland, and Sponsor Oy was privatized after 1983. Finland Government also established Kera Innovation Fund (now known as Finnvera[7]) in 1971, which was dedicated to boosting the booming of Start-Ups in Finland jointly with Finnish Industry Investment Ltd. (“FII”) established by the Government in 1994, and Sitra, so as to make the “innovation” become the main development force of the country[8] . Sitra plays a very important role in the foundation and development of venture capital market in Finland and is critical to the Finnish Venture Capital Association established in 1990. After Bank of Finland was under supervision of Finnish Parliament in 1991, Sitra became on the most important venture capital investors. Now, a large portion of private venture capital funds are provided by Sitra[9]. Since Sitra launched the new strategic program in 2004, it has turned to apply smaller sized strategic programs when investing young innovation companies, some of which involved venture capital investment. The mapping of young innovation entrepreneurs and angel investors started as of 1996[10]. In addition to being an important innovation R&D promoter in Finland, Sitra is also an excellent organization which is financially self-sufficient and tends to gain profit no less than that to be generated by a private enterprise. As an organization subordinated to the Finnish Parliament immediately, all of Sitra’s decisions are directly reported to the Parliament (public opinion). Chairman of Board, Board of Directors and supervisors of Sitra are all appointed by the Parliament directly[11]. Its working funds are generated from interest accruing from the Fund and investment income from the Fund, not tax revenue or budget prepared by the Government any longer. The total fund initially founded by Bank of Finland amounted to DEM100,000,000 (approximately EUR17,000,000), and was accumulated to DEM500,000,000 (approximately EUR84,000,000) from 1972 to 1992. After that, following the increase in market value, its nominal capital amounted to DEM1,400,000,000 (approximately EUR235,000,000) from 1993 to 2001. Obviously, Sitra generated high investment income. Until 2010, it has generated the investment income amounting to EUR697,000,000 . In fact, Sitra’s concern about venture capital investment is identified as one of the important changes in Finland's national technical R&D polices after 1990[13]. Sitra is used to funding businesses in three manners, i.e., direct investment in domestic stock, investment in Finnish venture capital funds, and investment in international venture capital funds, primarily in four industries, technology, life science, regional cooperation and small-sized & medium-sized starts-up. Meanwhile, it also invests in venture capital funds for high-tech industries actively. In addition to innovation technology companies, technical service providers are also its invested subjects[14]. 2. “Investment” Instrument Applied by Sitra to Boost Innovation Business The Starts-Up funding activity conducted by Sitra is named PreSeed Program, including INTRO investors’ mapping platform dedicated to mapping 450 angel investment funds and entrepreneurs, LIKSA engaged in working with Tekes to funding new companies no more than EUR40,000 for purchase of consultation services (a half thereof funded by Tekes, and the other half funded by Sitra in the form of loan convertible to shares), DIILI service[15] dedicated to providing entrepreneurs with professional sale consultation resources to integrate the innovation activity (product thereof) and the market to remedy the deficit in the new company’s ability to sell[16]. The investment subjects are stated as following. Sitra has three investment subjects, namely, corporate investments, fund investments and project funding. (1) Corporate investment Sitra will not “fund” enterprises directly or provide the enterprises with services without consideration (small-sized and medium-sized enterprises are aided by other competent authorities), but invest in the businesses which are held able to develop positive effects to the society, e.g., health promotion, social problem solutions, utilization of energy and effective utilization of natural resources. Notwithstanding, in order to seek fair rate of return, Sitra is dedicated to making the investment (in various enterprises) by its professional management and technology, products or competitiveness of services, and ranging from EUR300,000 to EUR1,000,000 to acquire 10-30% of the ownership of the enterprises, namely equity investment or convertible funding. Sitra requires its investees to value corporate social responsibility and actively participate in social activities. It usually holds the shares from 4 years to 10 years, during which period it will participate the corporate operation actively (e.g., appointment of directors)[17]. (2) Fund investments For fund investments[18], Sitra invests in more than 50 venture capital funds[19]. It invests in domestic venture capital fund market to promote the development of the market and help starts-up seek funding and create new business models, such as public-private partnerships. It invests in international venture capital funds to enhance the networking and solicit international funding, which may help Finnish enterprises access international trend information and adapt to the international market. (3) Project funding For project funding, Sitra provides the on-site information survey (supply of information and view critical to the program), analysis of business activities (analysis of future challenges and opportunities) and research & drafting of strategies (collection and integration of professional information and talents to help decision making), and commissioning of the program (to test new operating model by commissioning to deal with the challenge from social changes). Notwithstanding, please note that Sitra does not invest in academic study programs, research papers or business R&D programs[20]. (4) DIILI Investment Model Integrated With Investment Absorption A Start-Up usually will not lack technologies (usually, it starts business by virtue of some advanced technology) or foresighted philosophy when it is founded initially, while it often lacks the key to success, the marketing ability. Sitra DIILI is dedicated to providing the professional international marketing service to help starts-up gain profit successfully. Owing to the fact that starts-up are usually founded by R&D personnel or research-oriented technicians, who are not specialized in marketing and usually retains no sufficient fund to employ marketing professionals, DILLI is engaged in providing dedicated marketing talents. Now, it employs about 85 marketing professionals and seeks to become a start-up partner by investing technical services. Notwithstanding, in light of the characteristics of Sitra’s operation and profitability, some people indicate that it is more similar to a developer of an innovation system, rather than a neutral operator. Therefore, it is not unlikely to hinder some work development which might be less profitable (e.g., establishment of platform). Further, Sitra is used to developing some new investment projects or areas and then founding spin-off companies after developing the projects successfully. The way in which it operates seems to be non-compatible with the development of some industries which require permanent support from the public sector. The other issues, such as INTRO lacking transparency and Sitra's control over investment objectives likely to result in adverse choice, all arise from Sitra’s consideration to its own investment opportunities and profit at the same time of mapping. Therefore, some people consider that it should be necessary to move forward toward a more transparent structure or a non-income-oriented funding structure[21] . Given this, the influence of Sitra’s own income over upgrading of the national innovation ability when Sitra boosts starts-up to engage in innovation activities is always a concern remaining disputable in the Finnish innovation system. 3. Boosting of Balance in Regional Development and R&D Activities In order to fulfill the objectives under Lisbon Treaty and to enable EU to become the most competitive region in the world, European Commission claims technical R&D as one of its main policies. Among other things, under the circumstance that the entire R&D competitiveness upgrading policy is always progressing sluggishly, Finland, a country with a population of 5,300,000, accounting for 1.1% of the population of 27 EU member states, was identified as the country with the No. 1 innovation R&D ability in the world by World Economic Forum in 2005. Therefore, the way in which it promotes innovation R&D policies catches the public eyes. Some studies also found that the close relationship between R&D and regional development policies of Finland resulted in the integration of regional policies and innovation policies, which were separated from each other initially, after 1990[22]. Finland has clearly defined the plan to exploit the domestic natural resources and human resources in a balanced and effective manner after World War II. At the very beginning, it expanded the balance of human resources to low-developed regions, in consideration of the geographical politics, but in turn, it achieved national balanced development by meeting the needs for a welfare society and mitigation of the rural-urban divide as time went by. The Finnish innovation policies which may resort to technical policies retroactively initially drove the R&D in the manners including upgrading of education degree, founding of Science and Technology Policy Council and Sitra, establishment of Academy of Finland (1970) and establishment of the technical policy scheme, et al.. Among other things, people saw the role played by Sitra in Finland’s knowledge-intensive society policy again. From 1991 to 1995, the Finnish Government officially included the regional competitiveness into the important policies. The National Industrial Policy for Finland in 1993 adopted the strategy focusing on the development based on competitive strength in the regional industrial communities[23]. Also, some studies indicated that in consideration of Finland’s poor financial and natural resources, its national innovation system should concentrate the resources on the R&D objectives which meet the requirements about scale and essence. Therefore, the “Social Innovation, Social and Economic Energy Re-building Learning Society” program boosted by Sitra as the primary promoter in 2002 defined the social innovation as “the reform and action plan to enhance the regulations of social functions (law and administration), politics and organizational structure”, namely reform of the mentality and cultural ability via social structural changes that results in social economic changes ultimately. Notwithstanding, the productivity innovation activity still relies on the interaction between the enterprises and society. Irrelevant with the Finnish Government’s powerful direction in technical R&D activities, in fact, more than two-thirds (69.1%) of the R&D investment was launched by private enterprises and even one-thirds launched by a single enterprise (i.e., Nokia) in Finland. At the very beginning of 2000, due to the impact of globalization to Finland’s innovation and regional policies, a lot of R&D activities were emigrated to the territories outside Finland[24]. Multiple disadvantageous factors initiated the launch of national resources to R&D again. The most successful example about the integration of regional and innovation policies in Finland is the Centres of Expertise Programme (CEP) boosted by it as of 1990. Until 1994, there have been 22 centres of expertise distributed throughout Finland. The centres were dedicated to integrating local universities, research institutions and enterprise for co-growth. The program to be implemented from 2007 to 2013 planned 21 centres of expertise (13 groups), aiming to promote the corporate sectors’ cooperation and innovation activities. CEP integrated local, regional and national resources and then focused on the businesses designated to be developed[25]. [1] Sitra, http://www.sitra.fi/en (last visited Mar. 10, 2013). [2] Jari Hyvärinen & Anna-Maija Rautiainen, Measuring additionality and systemic impacts of public research and development funding – the case of TEKES, FINLAND, RESEARCH EVALUATION, 16(3), 205, 208 (2007). [3] id. at 206-214. [4] Charles Edquist, Tterttu Luukkonen & Markku Sotarauta, Broad-Based Innovation Policy, in EVALUATION OF THE FINNISH NATIONAL INNOVATION SYSTEM – FULL REPORT 11, 25 (Reinhilde Veugelers st al. eds., 2009). [5] id. [6] id. [7] Finnvera is a company specialized in funding Start-Ups, and its business lines include loaning, guarantee, venture capital investment and export credit guarantee, etc. It is a state-run enterprise and Export Credit Agency (ECA) in Finland. Finnvera, http://annualreport2012.finnvera.fi/en/about-finnvera/finnvera-in-brief/ (last visited Mar. 10, 2013). [8] Markku Maula, Gordon Murray & Mikko Jääskeläinen, MINISTRY OF TRADE AND INDUSTRY, Public Financing of Young Innovation Companies in Finland 32 (2006). [9] id. at 33. [10] id. at 41. [11] Sitra, http://www.sitra.fi/en (last visited Mar. 10, 2013). [12] Sitra, http://www.sitra.fi/en (last visited Mar. 10, 2013). [13] The other two were engaged in boosting the regional R&D center and industrial-academy cooperative center programs. Please see Gabriela von Blankenfeld-Enkvist, Malin Brännback, Riitta Söderlund & Marin Petrov, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT [OECD],OECD Case Study on Innovation: The Finnish Biotechnology Innovation System 15 (2004). [14] id. at20. [15] DIILI service provides sales expertise for SMEs, Sitra, http://www.sitra.fi/en/articles/2005/diili-service-provides-sales-expertise-smes-0 (last visited Mar. 10, 2013). [16] Maula, Murray & Jääskeläinen, supra note 8 at 41-42. [17] Corporate investments, Sitra, http://www.sitra.fi/en/corporate-investments (last visited Mar. 10, 2013). [18] Fund investments, Sitra, http://www.sitra.fi/en/fund-investments (last visited Mar. 10, 2013). [19] The venture capital funds referred to herein mean the pooled investment made by the owners of venture capital, while whether it exists in the form of fund or others is not discussed herein. [20] Project funding, Sitra, http://www.sitra.fi/en/project-funding (last visited Mar. 10, 2013). [21] Maula, Murray & Jääskeläinen, supra note 8 at 42. [22] Jussi S. Jauhiainen, Regional and Innovation Policies in Finland – Towards Convergence and/or Mismatch? REGIONAL STUDIES, 42(7), 1031, 1032-1033 (2008). [23] id. at 1036. [24] id. at 1038. [25] id. at 1038-1039.
Impact of Government Organizational Reform to Research Legal System and Response Thereto (2) – Observation of the Swiss Research Innovation System I. Foreword Switzerland is a landlocked country situated in Central Europe, spanning an area of 41,000 km2, where the Alps occupy 60% of the territory, while it owns little cultivated land and poor natural resources. In 2011, its population was about 7,950,000 persons[1]. Since the Swiss Federal was founded, it has been adhering to a diplomatic policy claiming neutrality and peace, and therefore, it is one of the safest and most stable countries in the world. Switzerland is famous for its high-quality education and high-level technological development and is very competitive in biomedicine, chemical engineering, electronics and metal industries in the international market. As a small country with poor resources, the Swiss have learnt to drive their economic and social development through education, R&D and innovation a very long time ago. Some renowned enterprises, including Nestle, Novartis and Roche, are all based in Switzerland. Meanwhile, a lot of creative small-sized and medium-sized enterprises based in Switzerland are dedicated to supporting the export-orientation economy in Switzerland. Switzerland has the strongest economic strength and plentiful innovation energy. Its patent applications, publication of essay, frequencies of quotation and private enterprises’ innovation performance are remarkable all over the world. According to the Global Competitiveness Report released by the World Economic Forum (WEF), Switzerland has ranked first among the most competitive countries in the world for four years consecutively since 2009[2]. Meanwhile, according to the Global Innovation Index (GII) released by INSEAD and the World Intellectual Property Organization (WIPO) jointly, Switzerland has also ranked first in 2011 and 2012 consecutively[3]. Obviously, Switzerland has led the other countries in the world in innovation development and economic strength. Therefore, when studying the R&D incentives and boosting the industrial innovation, we might benefit from the experience of Switzerland to help boost the relevant mechanism in Taiwan. Taiwan’s government organization reform has been launched officially and boosted step by step since 2012. In the future, the National Science Council will be reformed into the “Ministry of Science and Technology”, and the Ministry of Economic Affairs into the “Ministry of Economy and Energy”, and the Department of Industrial Development into the “Department of Industry and Technology”. Therefore, Taiwan’s technology administrative system will be changed materially. Under the new government organizational framework, how Taiwan’s technology R&D and industrial innovation system divide work and coordinate operations to boost the continuous economic growth in Taiwan will be the first priority without doubt. Support of innovation policies is critical to promotion of continuous economic growth. The Swiss Government supports technological research and innovation via various organizations and institutions effectively. In recent years, it has achieved outstanding performance in economy, education and innovation. Therefore, we herein study the functions and orientation of the competent authorities dedicated to boosting research and innovation in Switzerland, and observe its policies and legal system applied to boost the national R&D in order to provide the reference for the functions and orientation of the competent authorities dedicated to boosting R&D and industrial innovation in Taiwan. II. Overview of Swiss Federal Technology Laws and Technology Administrative System Swiss national administrative organization is subject to the council system. The Swiss Federal Council is the national supreme administrative authority, consisting of 7 members elected from the Federal Assembly and dedicated to governing a Federal Government department respectively. Switzerland is a federal country consisting of various cantons that have their own constitutions, councils and governments, respectively, entitled to a high degree of independence. Article 64 of the Swiss Federal Constitution[4] requires that the federal government support research and innovation. The “Research and Innovation Promotion Act” (RIPA)[5] is dedicated to fulfilling the requirements provided in Article 64 of the Constitution. Article 1 of the RIPA[6] expressly states that the Act is enacted for the following three purposes: 1. Promoting the scientific research and science-based innovation and supporting evaluation, promotion and utilization of research results; 2. Overseeing the cooperation between research institutions, and intervening when necessary; 3. Ensuring that the government funding in research and innovation is utilized effectively. Article 4 of the RIPA provides that the Act shall apply to the research institutions dedicated to innovation R&D and higher education institutions which accept the government funding, and may serve to be the merit for establishment of various institutions dedicated to boosting scientific research, e.g., the National Science Foundation and Commission of Technology & Innovation (CTI). Meanwhile, the Act also provides detailed requirements about the method, mode and restriction of the government funding. According to the RIPA amended in 2011, the Swiss Federal Government’s responsibility for promoting innovation policies has been extended from “promotion of technology R&D” to “unification of education, research and innovation management”, making the Swiss national industrial innovation framework more well-founded and consistent[8] . Therefore, upon the government organization reform of Switzerland in 2013, most of the competent authorities dedicated to technology in Swiss have been consolidated into the Federal Department of Economic Affairs, Education and Research. Under the framework, the Swiss Federal Government assigned higher education, job training, basic scientific research and innovation to the State Secretariat for Education, Research and Innovation (SERI), while the Commission of Technology & Innovation (CTI) was responsible for boosting the R&D of application scientific technology and industrial technology and cooperation between the industries and academy. The two authorities are directly subordinate to the Federal Department of Economic Affairs, Education and Research (EAER). The Swiss Science and Technology Council (SSTC), subordinate to the SERI is an advisory entity dedicated to Swiss technology policies and responsible for providing the Swiss Federal Government and canton governments with the advice and suggestion on scientific, education and technology innovation policies. The Swiss National Science Foundation (SNSF) is an entity dedicated to boosting the basic scientific R&D, known as the two major funding entities together with CTI for Swiss technology R&D. The organizations, duties, functions and operations of certain important entities in the Swiss innovation system are introduced as following. Date source: Swiss Federal Department of Economic Affairs, Education and Research official website Fig. 1 Swiss Innovation Framework Dedicated to Boosting Industries－Swiss Federal Economic, Education and Research Organizational Chart 1. State Secretariat of Education, Research and Innovation (SERI) SERI is subordinate to the Department of Economic Affairs, Education and Research, and is a department of the Swiss Federal Government dedicated to managing research and innovation. Upon enforcement of the new governmental organization act as of January 1, 2013, SERI was established after the merger of the State Secretariat for Education and Research, initially subordinate to Ministry of Interior, and the Federal Office for Professional Education and Technology (OEPT), initially subordinated to Ministry of Economic Affairs. For the time being, it governs the education, research and innovation (ERI). The transformation not only integrated the management of Swiss innovation system but also unified the orientations toward which the research and innovation policy should be boosted. SERI’s core missions include “enactment of national technology policies”, “coordination of research activities conducted by higher education institutions, ETH, and other entities of the Federal Government in charge of various areas as energy, environment, traffic and health, and integration of research activities conducted by various government entities and allocation of education, research and innovation resources. Its functions also extend to funding the Swiss National Science Foundation (SNSF) to enable SNSF to subsidize the basic scientific research. Meanwhile, the international cooperation projects for promotion of or participation in research & innovation activities are also handled by SERI to ensure that Switzerland maintains its innovation strength in Europe and the world. The Swiss Science and Technology Council (SSTC) is subordinate to SERI, and also the advisory unit dedicated to Swiss technology policies, according to Article 5a of RIPA[9]. The SSTC is responsible for providing the Swiss Federal Government and canton governments with advice and suggestion about science, education and innovation policies. It consists of the members elected from the Swiss Federal Council, and a chairman is elected among the members. 2. Swiss National Science Foundation (SNSF) The Swiss National Science Foundation (SNSF) is one of the most important institutions dedicated to funding research, responsible for promoting the academic research related to basic science. It supports about 8,500 scientists each year. Its core missions cover funding as incentives for basic scientific research. It grants more than CHF70 million each year. Nevertheless, the application science R&D, in principle, does not fall in the scope of funding by the SNSF. The Foundation allocates the public research fund under the competitive funding system and thereby maintains its irreplaceable identity, contributing to continuous output of high quality in Switzerland. With the support from the Swiss Federal Government, the SNSF was established in 1952. In order to ensure independence of research, it was planned as a private institution when it was established[10]. Though the funding is provided by SERI, the SNSF still has a high degree of independence when performing its functions. The R&D funding granted by the SNSF may be categorized into the funding to free basic research, specific theme-oriented research, and international cooperative technology R&D, and the free basic research is granted the largest funding. The SNSF consists of Foundation Council, National Research Council and Research Commission[11]. Data source: prepared by the Study Fig. 2 Swiss National Science Foundation Organizational Chart (1) Foundation Council The Foundation Council is the supreme body of the SNSF[12], which is primarily responsible for making important decisions, deciding the role to be played by the SNSF in the Swiss research system, and ensuring SNSF’s compliance with the purpose for which it was founded. The Foundation Council consists of the members elected from the representatives from important research institutions, universities and industries in Swiss, as well as the government representatives nominated by the Swiss Federal Council. According to the articles of association of the SNSF[13], each member’s term of office should be 4 years, and the members shall be no more than 50 persons. The Foundation Council also governs the Executive Committee of the Foundation Council consisting of 15 Foundation members. The Committee carries out the mission including selection of National Research Council members and review of the Foundation budget. (2) National Research Council The National Research Council is responsible for reviewing the applications for funding and deciding whether the funding should be granted. It consists of no more than 100 members, mostly researchers in universities and categorized, in four groups by major[14], namely, 1. Humanities and Social Sciences; 2. Math, Natural Science and Engineering; 3. Biology and Medical Science; and 4. National Research Programs (NRPs）and National Centers of Competence in Research (NCCRs). The NRPs and NCCRs are both limited to specific theme-oriented research plans. The funding will continue for 4~5years, amounting to CHF5 million~CHF20 million[15]. The specific theme-oriented research is applicable to non-academic entities, aiming at knowledge and technology transfer, and promotion and application of research results. The four groups evaluate and review the applications and authorize the funding amount. Meanwhile, the representative members from each group form the Presiding Board dedicated to supervising and coordinating the operations of the National Research Council, and advising the Foundation Council about scientific policies, reviewing defined funding policies, funding model and funding plan, and allocating funding by major. (3) Research Commissions Research Commissions are established in various higher education research institutions. They serve as the contact bridge between higher education academic institutions and the SNSF. The research commission of a university is responsible for evaluating the application submitted by any researcher in the university in terms of the school conditions, e.g., the school’s basic research facilities and human resource policies, and providing advice in the process of application. Meanwhile, in order to encourage young scholars to attend research activities, the research committee may grant scholarships to PhD students and post-doctor research[16]. ~to be continued~ [1] SWISS FEDERAL STATISTICS OFFICE, Switzerland's population 2011 (2012), http://www.bfs.admin.ch/bfs/portal/en/index/news/publikationen.Document.163772.pdf (last visited Jun. 1, 2013). [2] WORLD ECONOMIC FORUM [WEF], The Global Competiveness Report 2012-2013 (2012), http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf (last visited Jun. 1, 2013); WEF, The Global Competiveness Report 2011-2012 (2011), http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf (last visited Jun. 1, 2013); WEF, The Global Competiveness Report 2010-2011 (2010), http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf (last visited Jun. 1, 2013); WEF, The Global Competiveness Report 2009-2010 (2009),. http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2009-10.pdf (last visited Jun. 1, 2013). [3] INSEAD, The Global Innovation Index 2012 Report (2012), http://www.globalinnovationindex.org/gii/GII%202012%20Report.pdf (last visited Jun. 1, 2013); INSEAD, The Global Innovation Index 2011 Report (2011), http://www.wipo.int/freepublications/en/economics/gii/gii_2011.pdf (last visited Jun. 1, 2013). [4] SR 101 Art. 64: “Der Bund fördert die wissenschaftliche Forschung und die Innovation.” [5] Forschungs- und Innovationsförderungsgesetz, vom 7. Oktober 1983 (Stand am 1. Januar 2013). For the full text, please see www.admin.ch/ch/d/sr/4/420.1.de.pdf (last visited Jun. 3, 2013). [6] Id. [7] Id. [8] CTI, CTI Multi-year Program 2013-2016 7(2012), available at http://www.kti.admin.ch/?lang=en&download=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1ad1IZn4Z2qZpnO2Yuq2Z6gpJCDeYR,hGym162epYbg2c_JjKbNoKSn6A-- (last visited Jun. 3, 2013). [9] Supra note 5. [10] Swiss National Science Foundation, http://www.snf.ch/E/about-us/organisation/Pages/default.aspx (last visited Jun. 3, 2013). [11] Id. [12] Foundation Council, Swiss National Science Foundation, http://www.snf.ch/E/about-us/organisation/Pages/foundationcouncil.aspx (last visited Jun. 3, 2013). [13] See Statutes of Swiss National Science Foundation Art.8 & Art. 9, available at http://www.snf.ch/SiteCollectionDocuments/statuten_08_e.pdf (last visited Jun. 3, 2013). [14] National Research Council, Swiss National Science Foundation, http://www.snf.ch/E/about-us/organisation/researchcouncil/Pages/default.aspx (last visted Jun.3, 2013). [15] Theres Paulsen, VISION RD4SD Country Case Study Switzerland (2011), http://www.visionrd4sd.eu/documents/doc_download/109-case-study-switzerland (last visited Jun.6, 2013). [16] Research Commissions, Swiss National Science Foundation, http://www.snf.ch/E/about-us/organisation/Pages/researchcommissions.aspx (last visted Jun. 6, 2013).
3.Commission of Technology and Innovation (CTI) The CTI is also an institution dedicated to boosting innovation in Switzerland. Established in 1943, it was known as the Commission for the Promotion of Scientific Research[1]. It was initially established for the purpose of boosting economy and raising the employment rate, and renamed after 1996. The CTI and SNSF are two major entities dedicated to funding scientific research in Switzerland, and the difference between both resides in that the CTI is dedicated to funding R&D of the application technology and industrial technology helpful to Switzerland’s economic development. Upon enforcement of the amended RIPA 2011, the CTI was officially independent from the Federal Office for Professional Education and Technology (OEPT) and became an independent entity entitled to making decisions and subordinated to the Federal Department of Economic Affairs (FDEA) directly[2]. The CTI is subject to the council system, consisting of 65 professional members delegated from industrial, academic and research sectors. The members assume the office as a part time job. CTI members are entitled to making decisions on funding, utilization of resources and granting of CTI Start-up Label independently[3]. The CTI primarily carries out the mission including promotion of R&D of industrial technology, enhancement of the market-orientation innovation process and delivery of R&D energy into the market to boost industrial innovation. For innovation, the CTI's core mission is categorized into[4]: (1)Funding technology R&D activities with market potential The CTI invests considerable funds and resources in boosting the R&D of application technology and industrial technology. The CTI R&D Project is intended to fund private enterprises (particularly small-sized and medium-sized enterprises) to engage in R&D of innovation technology or product. The enterprises may propose their innovative ideas freely, and the CTI will decide whether the funds should be granted after assessing whether the ideas are innovative and potentially marketable[5]. CTI’s funding is conditioned on the industrial and academic cooperation. Therefore, the enterprises must work with at least one research institution (including a university, university of science and technology, or ETH) in the R&D. Considering that small-sized and medium-sized enterprises usually do not own enough working funds, technology and human resources to commercialize creative ideas, the CTI R&D Project is intended to resolve the problem about insufficient R&D energy and funds of small- and medium-sized enterprises by delivering the research institutions’ plentiful research energy and granting the private enterprises which work with research institutions (including university, university of science and technology, or ETH) the fund. Notably, CTI’s funding is applicable to R&D expenses only, e.g., research personnel’s salary and expenditure in equipment & materials, and allocated to the research institutions directly. Meanwhile, in order to enhance private enterprises' launch into R&D projects and make them liable for the R&D success or failure, CTI’s funding will be no more than 50% of the total R&D budget and, therefore, the enterprises are entitled to a high degree of control right in the process of R&D. The industrial types which the CTI R&D Project may apply to are not limited. Any innovative ideas with commercial potential may be proposed. For the time being, the key areas funded by CTI include the life science, engineering science, Nano technology and enabling sciences, etc.[6] It intends to keep Switzerland in the lead in these areas. As of 2011, in order to mitigate the impact of drastic CHF revaluation to the industries, the CTI launched its new R&D project, the CTI Voucher[7]. Given this, the CTI is not only an entity dedicated to funding but also plays an intermediary role in the industrial and academic sectors. Enterprises may submit proposals before finding any academic research institution partner. Upon preliminary examination of the proposals, the CTI will introduce competent academic research institutions to work with the enterprises in R&D, subject to the enterprises' R&D needs. After the cooperative partner is confirmed, CTI will grant the fund amounting to no more than CHF3,500,000 per application[8], provided that the funding shall be no more than 50% of the R&D project expenditure. The CTI R&D Project not only boosts innovation but also raises private enterprises’ willingness to participate in the academic and industrial cooperation, thereby narrowing the gap between the supply & demand of innovation R&D in the industrial and academic sectors. Notably, the Project has achieved remarkable effect in driving private enterprises’ investment in technology R&D. According to statistical data, in 2011, the CTI solicited additional investment of CHF1.3 from a private enterprise by investing each CHF1[9]. This is also one of the important reasons why the Swiss innovation system always acts vigorously. Table 1 2005-2011 Passing rate of application for R&D funding Year 2011 2010 2009 2008 2007 2006 2005 Quantity of applications 590 780 637 444 493 407 522 Quantity of funded applications 293 343 319 250 277 227 251 Pass rate 56% 44% 50% 56% 56% 56% 48% Data source: Prepared by the Study (2)Guiding high-tech start-up Switzerland has learnt that high-tech start-ups are critical to the creation of high-quality employment and boosting of economic growth, and start-ups were able to commercialize the R&D results. Therefore, as of 2001, Switzerland successively launched the CTI Entrepreneurship and CTI Startup to promote entrepreneurship and cultivate high-tech start-ups. 1.CTI Entrepreneurship The CTI Entrepreneurship was primarily implemented by the Venture Lab founded by CTI investment. The Venture Lab launched a series of entrepreneurship promotion and training courses, covering day workshops, five-day entrepreneurship intensive courses, and entrepreneurship courses available in universities. Each training course was reviewed by experts, and the experts would provide positive advice to attendants about innovative ideas and business models. Data source: Venture Lab Site Fig. 3 Venture Lab Startup Program 2.CTI Startup The CTI is dedicated to driving the economy by virtue of innovation as its priority mission. In order to cultivate the domestic start-ups with high growth potential in Switzerland, the CTI Startup project was launched in 1996[10] in order to provide entrepreneurs with the relevant guidance services. The project selected young entrepreneurs who provided innovative ideas, and guided them in the process of business start to work their innovative ideas and incorporate competitive start-ups. In order to enable the funding and resources to be utilized effectively, the CTI Startup project enrolled entrepreneurs under very strict procedure, which may be categorized into four stages[11]: Data source: CTI Startup Site Fig. 4 Startup Plan Flow Chart In the first stage, the CTI would preliminarily examine whether the applicant’s idea was innovative and whether it was technologically feasible, and help the applicant register with the CTI Startup project. Upon registration, a more concrete professional examination would be conducted at the second stage. The scope of examination included the technology, market, feasibility and management team’s competence. After that, at the stage of professional guidance, each team would be assigned a professional “entrepreneurship mentor”, who would help the team develop further and optimize the enterprise’s strategy, flow and business model in the process of business start, and provide guidance and advice on the concrete business issues encountered by the start-up. The stage of professional guidance was intended to guide start-ups to acquire the CTI Startup Label, as the CTI Startup Label was granted subject to very strict examination procedure. For example, in 2012, the CTI Startup project accepted 78 applications for entrepreneurship guidance, but finally the CTI Startup Label was granted to 27 applications only[12]. Since 1996, a total of 296 start-ups have acquired the CTI Startup Label, and more than 86% thereof are still operating now[13]. Apparently, the CTI Startup Label represents the certification for innovation and on-going development competence; therefore, it is more favored by investors at the stage of fund raising. Table 2 Execution of start-up plans for the latest three years Quantity of application Quantity of accepted application Quantity of CTI Label granted 2012 177 78 27 2011 160 80 26 2010 141 61 24 Data source: CTI Annual Report, prepared by the Study Meanwhile, the “CTI Invest” platform was established to help start-up raise funds at the very beginning to help commercialize R&D results and cross the valley in the process of R&D innovation. The platform is a private non-business-making organization, a high-tech start-up fund raising platform co-established by CTI and Swiss investors[14]. It is engaged in increasing exposure of the start-ups and contact with investors by organizing activities, in order to help the start-ups acquire investment funds. (3)Facilitating transfer of knowledge and technology between the academic sector and industrial sector KTT Support (Knowledge & Technology Transfer (KTT Support) is identified as another policy instrument dedicated to boosting innovation by the CTI. It is intended to facilitate the exchange of knowledge and technology between academic research institutions and private enterprises, in order to transfer and expand the innovation energy. As of 2013, the CTI has launched a brand new KTT Support project targeting at small-sized and medium-sized enterprises. The new KTT Support project consisted of three factors, including National Thematic Networks (NTNs), Innovation Mentors, and Physical and web-based platforms. Upon the CTI’s strict evaluation and consideration, a total of 8 cooperative innovation subjects were identified in 2012, namely, carbon fiber composite materials, design idea innovation, surface innovation, food study, Swiss biotechnology, wood innovation, photonics and logistics network, etc.[15] One NTN would be established per subject. The CTI would fund these NTNs to support the establishment of liaison channels and cooperative relations between academic research institutions and industries and provide small- and medium-sized enterprises in Switzerland with more rapid and easy channel to access technologies to promote the exchange of knowledge and technology between both parties. Innovation Mentors were professionals retained by the CTI, primarily responsible for evaluating the small-sized and medium-sized enterprises’ need and chance for innovation R&D and helping the enterprises solicit competent academic research partners to engage in the transfer of technology. The third factor of KTT Support, Physical and web-based platforms, is intended to help academic research institutions and private enterprises establish physical liaison channels through organization of activities and installation of network communication platforms, to enable the information about knowledge and technology transfer to be more transparent and communicable widely. In conclusion, the CTI has been dedicated to enhancing the link between scientific research and the industries and urging the industrial sector to involve and boost the R&D projects with market potential. The CTI’s business lines are all equipped with corresponding policy instruments to achieve the industrial-academic cooperation target and mitigate the gap between the industry and academic sectors in the innovation chain. The various CTI policy instruments may be applied in the following manner as identified in the following figure. Data source: CTI Annual Report 2011 Fig. 5 Application of CTI Policy Instrument to Innovation Chain III. Swiss Technology R&D Budget Management and Allocation The Swiss Federal Government has invested considerable expenditures in technology R&D. According to statistic data provided by Swiss Federal Statistical Office (FSO) and OECD, the Swiss research expenditures accounted for 2.37% of the Federal Government’s total expenditures, following the U.S.A. and South Korea (see Fig. 6). Meanwhile, the research expenditures of the Swiss Government grew from CHF2.777 billion in 2000 to CHF4.639 billion in 2010, an average yearly growth rate of 5.9% (see Fig. 7). It is clear that Switzerland highly values its technology R&D. Data source: FSO and OECD Fig. 6 Percentage of Research Expenditures in Various Country Governments’ Total Expenditures (2008) Data source: FSO and OECD Fig. 7 Swiss Government Research Expenditures 2000-2010 1.Management of Swiss Technology R&D Budget Swiss research expenditures are primarily allocated to the education, R&D and innovation areas, and play an important role in the Swiss innovation system. Therefore, a large part of the Swiss research expenditures are allocated to institutions of higher education, including ETH, universities, and UASs. The Swiss research expenditures are utilized by three hierarchies[16] (see Fig. 8): Government R&D funding agencies: The Swiss research budget is primarily executed by three agencies, including SERI, Federal Department of Economic Affairs, Education and Research, and Swiss Agency for Development and Cooperation (SDC). Intermediary R&D funding agencies: Including SNSC and CTI. Funding of R&D performing institutions: Including private enterprises, institutions of higher education and private non-profit-making business, et al. Therefore, the Swiss Government research expenditures may be utilized by the Federal Government directly, or assigned to intermediary agencies, which will allocate the same to the R&D performing institutions. SERI will allocate the research expenditures to institutions of higher education and also hand a lot of the expenditures over to SNSF for consolidated funding to the basic science of R&D. Data source: FSO Fig. 8 Swiss Research Fund Utilization Mechanism ~to be continued~ [1] ORGANIZATION FOR ECONNOMIC CO-OPERATION AND DEVELOPMENT [OECD], OECD Reviews of Innovation Policy: Switzerland 27 (2006). [2] As of January 1, 2013, the Federal Ministry of Economic Affairs was reorganized, and renamed into Federal Department of Economic Affairs, Education and Research (EAER). [3] The Commission for Technology and Innovation CTI, THE COMMISSION FOR TECHOLOGY AND INNOVATION CTI, http://www.kti.admin.ch/org/00079/index.html?lang=en (last visited Jun. 3, 2013). [4] Id. [5] CTI INVEST, Swiss Venture Guide 2012 (2012), at 44, http://www.cti-invest.ch/getattachment/7f901c03-0fe6-43b5-be47-6d05b6b84133/Full-Version.aspx (last visited Jun. 4, 2013). [6] CTI, CTI Activity Report 2012 14 (2013), available at http://www.kti.admin.ch/dokumentation/00077/index.html?lang=en&download=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1ad1IZn4Z2qZpnO2Yuq2Z6gpJCDen16fmym162epYbg2c_JjKbNoKSn6A-- (last visited Jun. 3, 2013). [7] CTI Voucher, THE COMMISSION FOR TECHOLOGY AND INNOVATION CTI, http://www.kti.admin.ch/projektfoerderung/00025/00135/index.html?lang=en (last visited Jun. 3, 2013). [8] Id. [9] CTI, CTI Activity Report 2011 20 (2012), available at http://www.kti.admin.ch/dokumentation/00077/index.html?lang=en&download=NHzLpZeg7t,lnp6I0NTU042l2Z6ln1ad1IZn4Z2qZpnO2Yuq2Z6gpJCDeYR,gWym162epYbg2c_JjKbNoKSn6A--(last visited Jun. 3, 2013). [10] CTI Start-up Brings Science to Market, THE COMMISSION FOR TECHOLOGY AND INNOVATION CTI, http://www.ctistartup.ch/en/about/cti-start-/cti-start-up/ (last visited Jun. 5, 2013). [11] Id. [12] Supra note 8, at 45. [13] Id. [14] CTI Invest, http://www.cti-invest.ch/About/CTI-Invest.aspx (last visited Jun. 5, 2013). [15] KTT Support, CTI, http://www.kti.admin.ch/netzwerke/index.html?lang=en (last visited Jun.5, 2013). [16] Swiss Federal Statistics Office (SFO), Public Funding of Research in Switzerland 2000–2010 (2012), available at http://www.bfs.admin.ch/bfs/portal/en/index/themen/04/22/publ.Document.163273.pdf (last visited Jun. 20, 2013).