2024:  As 77% of businesses plan to increase R&D funding over next 3 years, there remains a €2.2 Billion+ gap in R&D funding across the economy.

Innovation Index 2024 reveals lack of budget and the high cost of innovation as the biggest factors impacting companies’ ability to innovate

Strengthening and deepening Research, Development, and Innovation (RD&I) capacity is essential to ensure the continued prosperity of Ireland’s innovation economy.

As the global economy becomes increasingly competitive, marked by rapid technological advancements, talent shortages, and evolving consumer preferences, the pathways to growth have become more challenging than ever before.

IRDG and KPMG carried out a survey on attitudes to Research and Innovation in Ireland, how Ireland compares to other countries, and what improvements can be made to maintain and enhance our performance.

Key Findings

1. Over the past three years, 74% of businesses conducting RDI in Ireland increased their overall Research and Innovation spend, and 77% expect to increase their RDI investment over the next three years.

2. Lack of budget / perceived high cost of innovation activities, and time to plan and administer (identified by 60% and 48% of respondents respectively) are the biggest factors impacting companies’ ability to innovate. The number of respondents who selected recruitment of key talent as one of the biggest factors impacting the ability to innovate has fallen by 15% indicating the increasing depth and confidence in the talent pool available to companies operating in Ireland.

3. Admin time related to grant drawdowns or R&D tax credit claims (41% of respondents) and

the grant application process (40%) remain the biggest barriers stopping companies from applying for RDI supports.

4. 54% of companies have between 1 and 10 people directly involved in RDI in Ireland, 26% have 11-50, 13% have 51-250, 5% have 251- 1000 and 2% have over a thousand employees directly involved in RDI.

5. 65% of respondents indicated that state funding supports allowed them to conduct more R&D and 52% noted that the funding supported more employment.

6. 51% of respondents feel that Ireland’s RDI grants and R&D tax credit supports compare equally or favourably to other countries. 13% feel that the Irish system compares negatively to other jurisdictions. 36% responded that they weren’t sure.

 

7 . Of multinational corporations (MNCs) half responded that 10% or less of their R&D would take place in Ireland without the R&D Tax Credit. 83% indicated that 50% or less of their R&D.

8. According to survey respondents, the main factors Ireland needs to look at to remain competitive in the evolving international landscape are; simplifying the claims process/ reducing admin work (40% up from 29% in 2023), increasing funding amounts/expanding eligibility criteria (32%), and improving access for Small and Medium Enterprises (SMEs) (9%).

9. In relation to improving supports for SMEs conducting RDI, 35% of SMEs feel that increasing the level of funding / increasing

the scope of qualifying expenditure, 24%

feel that increasing education/training and 21% indicated that making the application/ claims process easier will significantly improve supports for them.

10. 34% of companies are engaged in incremental innovation (Extension of products/services with existing customers) to a great extent,

27% engage in breakthrough innovation (Breakthrough product market changing products/services) to a great extent and 21% engage in disruptive innovation (Technology or new business model that disrupts the existing market) to a great extent.

11. 73% responded that new product, process or service development is one of their key innovation priorities. 45% of companies conducting RDI in Ireland are prioritising disruptive technologies / leveraging Artificial Intelligence (AI).

12. 78% of respondents stated that they think a R&D Tax Credit of 50% would incentivise increased R&D of Green and Sustainable Technologies.

2023 Report and Webinar