INTRODUCTION TO CORE ISSUES

The field of public funding has three players which are the Company, Society and the Agency. All have their own objectives which must coincide before funding becomes valid. The Company has two main objectives, to improve its profitability (typically growth, but not necessarily) and to sustain and improve its competitiveness. In order to do this a company can take up a number of measures, but the interesting ones in this context are R&D activities aiming at industrial innovations in production, products or services.

The society has to benefit from its investment in industrial R&D for it to be justified. These benefits can be realised through the two mechanisms described in the Chapter II, namely the market and the social needs mechanisms. These two can be separated for the purpose of this document although in a number of cases they can actually be both identified in single Projects. The market mechanism relates to economic growth and the social needs mechanism relates to dealing more directly with specific social questions. Sustainable economic growth of a nation/region depends on a versatile, competitive and dynamic structure of companies which can react to market changes and seize new market opportunities effectively. Solving social questions usually requires longer term investments which can sometimes also be turned into marketable products and knowledge.

The Agency is faced with questions of its justification to exist. Why should the public incentives be channelled through the Agency instead of through other mechanisms? This vital question requires the Agency to be able to prove that the additionality of its measures contributed to the mere funding. There is also the question of the productivity or rather the efficiency of the Agency as well as the quality of its activities.

These three objectives must all be present in some degree for funding to be justified. Calling these objectives the Company agenda, Society agenda and Agency agenda, the main core questions can be defined.

The Agency is mainly concerned with these considerations :
What is the additionality, quality and efficiency of public funding?

The Company's main considerations related to R&D investments are:
Are R&D activities profitable?
Do R&D activities improve competitiveness?

Related to public R&D investment, the society is concerned with the questions:
Do R&D activities improve the national/regional economy?
Do R&D activities have benefits for the society?

Each of these core issues is elaborated in the following Chapters in order to facilitate deeper analysis and
the definition of performance indicators.