Innovation Canada: A Call to Action

Executive SummaryGuiding PrinciplesIn the course of our consultations and research,we developed a set of broad guiding principles— essentially a philosophy of program design topromote business innovation (see Chapter 4 inour main report). These principles, which arereflected in the foregoing framework for action,can be summarized as follows.Transformative ProgramsPrograms to support business innovation shouldfocus resources where market forces are unlikelyto operate effectively or efficiently and, in thatcontext, address the full range of businessinnovation activities, including research,development, commercialization andcollaboration with other key actors in theinnovation ecosystem. The design and deliveryof federal business innovation programs mustalways strive to result in R&D activity andcommercialization outcomes that meet thehighest global standards.Require Positive Net BenefitThe total benefit of any given program shouldbe greater than the cost of funding,administering and complying with the program.Support programs should reduce the subsidyamount provided — or move to a repayablebasis — the closer the activity being supportedis to market, and therefore the more likely it isthat the recipient firm will capture most of thebenefit for itself. There is also a need forcoordination across the full suite of innovationprograms to avoid excessive “stacking” ofincentives that may result in subsidies that arehigher than needed to achieve policy objectives.Excessive subsidization not only wastes financialresources, but also risks encouraging orsustaining activities that deliver little societalbenefit.Favour National Scope and BroadApplicationThe core of the federal suite of businessinnovation programs should be large nationalprograms of broad application — for example,the SR&ED program and IRAP — that supportbusiness innovation activity generally,empowering firms and entrepreneurs to makemarket-driven investment decisions according totheir own timelines and regardless of sector,technology or region.Build Sector Strategies CollaborativelyBeyond programs of broad application, there isa complementary role for programs tailored tothe needs of specific sectors that thegovernment identifies as being of strategicimportance. For industry sectors that areconcentrated in particular regions, initiativesshould be designed and delivered to workcollaboratively with the relevant provinces andother local interests.Require Commercial Success in RegionalInnovationRegionally oriented programs to supportbusiness innovation should focus on creatingthe capacity of firms in the target region tosucceed in the arena of global competition.That is why it is essential for regional innovationprograms to apply the same high standards ofcommercial potential as are required byprograms of nationwide application.E-5