What makes the UK industrial innovation system different?

To better understand these dynamics, the Department for Science, Innovation and Technology (DSIT) commissioned Cambridge Industrial Innovation Policy (CIIP) to examine the performance of the UK’s industrial innovation system, from basic and applied research to product commercialisation.

Our findings are summarised in the report: ‘What makes the UK industrial innovation system different?’, with further analysis in two supporting technical reports.

The report is intended to highlight policy-relevant facts and characteristics of the UK’s industrial innovation system. Its purpose is to provide a clear, accessible overview of the system’s strengths and where key opportunities or gaps may exist, particularly in relation to R&D expenditure, technology scale-up, and value capture.

The findings are designed to inform policy thinking and strategic decision-making without prescribing specific interventions. Instead, the report serves as a foundation for further exploration, discussion, and policy development.

Key messages

Several themes emerge that explain how the UK’s strengths and structural challenges shape its innovation outcomes:

1. The UK excels in curiosity-driven science, placing more emphasis on basic research than its OECD peers.
2. International peers have broader networks of research, development, and innovation (RDI) institutions than the UK, particularly public organisations.
3. The UK offers a high level of support to industry, principally through tax incentives – this support is uneven, with high uptake in information and communication services.
4. Public UK investment in research and development is high in a small number of sectors.
5. A few sectors dominate technology scale-up and innovation metrics across UK business and academia.
6. Strong industry networks, mature value chains, and the presence of primes enable the UK to capture value from research.
7. The high mobility of spinouts, startups, and industrial R&D risks eroding UK value capture.

“In this timely report, CIIP has examined themes related to the journey from science, via applied research, to product – the point at which technology research becomes useful to citizens and to the economy.

While more data will yield further insights, we cannot analyse forever: there is more than enough here to point at the actions we need to take to grow the UK economy.”

Dr Dave Smith, National Technology Adviser

A key takeaway from the report is that the UK research and innovation ecosystem differs more from leading comparator economies than is often assumed – and these differences matter. Ecosystem and R&D portfolio configurations can provide either advantage or disadvantage, particularly in critical technologies or during industrial scale-up.

This underscores the need for better data and analysis to reveal national capabilities and sources of comparative advantage, and cautions against complacency – both the assumption that all leading innovation economies are alike, and the belief that early scientific leadership will inevitably translate into sustained industrial success.

Download: What makes the UK industrial innovation system different?

Download: UK value capture from innovation

Download: UK performance in technology scale-up