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PolicyPaper

MARKET RESEARCH AND PRIVATE SECTOR

The Regional Research Promotion Programe is coordinated and operated by the Interfaculty Institute for Central and Eastern Europe (IICEE) at the University of Fribourg (Switzerland). The programme is fully funded by the Swiss Agency for Development and Cooperation (SDC), Federal Department of Foreign A�airs.Institute for Democracy and Mediation is the Program’s Local Coordination Unit.


Authors:

Dr. Selami XHEPADr. Arsena Gjipali

This policy paper is prepared within the National Policy Dialogue in Albania supported by the Regional Research Promotion Programme (RRPP). The content of this policy paper does not represent the official opinion of the Regional Research Promotion Program nor of the Institute for Democracy and mediation. The responsibility for the information and viewpoints expressed in this paper belongs entirely to the authors.

Contents

1. Introduction 5

2. Significance of Universities-Industry-Government Cooperation – a Review of Theory and Best Practices

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2.1 Best Practices 9

2.2 Determinant Factors of Research on Innovation 11

3. Methodology of Study 14

4. Stylized Facts 16

4.1 Economic Aspects of the Need for Research and Development

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4.2 Legacy and Reforms Conducted in the Area of Scientific Research

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5. Empirical Evidence from Individual Data on Business Demand for Research and Innovation

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6. Conclusions and Recommendations. Triple Helix: Universities-Industry-Government

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References 32

Shtojca 35

5MARKET RESEARCH AND PRIVATE SECTOR

1. Introduction

Cooperation between universities and research units with the business is not an innovation of modern times, but a century-long history. Yet what makes this topic of special importance is the birth and spread of economy of knowledge at global scale, a development that has wiped out the division between universities seen as producers of knowledge and industry as a place of its experimentation. The new concept of relationship between these two major agents of change calls for strengthened strategic partnership between universities and research centers on one hand and the business on the other. The Silicon Valley1-like experiences are significant in the powerful impact that a strong link between scientific research and private sector can have in the future of industry and economy in general. The role of scientific research has become critical in the context of today’s development of globalization and is increasingly focusing in challenges to address social problems and economic growth.

The interaction between industry and universities, coupled with the government’s supportive role with policies and funding to empower this interaction, gave rise to a new concept, Triple Helix (university-industry-government), developed by Etzkowitz (1994) and Etzkowitz and Leydesdorff (1995). The Triple Helix thesis is that the potential for innovation and economic development in a Knowledge Society lies in a more prominent role for the university and in the hybridization of elements from university, industry and government to generate new institutional and social formats for the production, transfer and application of knowledge. This vision encompasses not only the creative destruction that appears as a natural innovation dynamics (Schumpeter, 1942), but also the

1 Silicon Valley is a nickname for the southern portion of the San Francisco Bay Area, which is located in the part of the U.S. state of California. It is home to many of the world’s largest high-tech corporations, as well as thousands of tech startup companies.

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creative renewal that arises within each of the three institutional spheres of university, industry and government, as well as at their intersections.

While developed countries have long ago undertaken initiatives to concretize such partnership, countries like Albania are still suffering from large separation of these two crucial stakeholders that lead the economic and social growth and development of a country. Therefore, in the framework of the Regional Research Promotion Programme, the Government of Swiss Confederation, the Swiss Agency for Development and Cooperation and the University of Fribourg are supporting this initiative through the Institute for Democracy and Mediation to identify appropriate mechanisms for the establishment of a sustainable and profitable partnership between scientific research and private sector so that the research agenda is guided to challenges confronting this sector, so that it contributes more to the growth of productivity of the economy.

This study seeks to identifythe needs of businesses for research and studies, manner of cooperation among businesses and universities and research units as well as to assess research capacities available in the domestic market and how the research and academic domain perceive interaction with the private sector. By adopting this approach in addressing the problem from the demand side (industry) and offer side (universities/research units), the study will identify deficiencies inherent in their communication and interaction. To this end, structured and semi-structured interviews have been conducted with stakeholders representing each domain.

At first, this study elaborates on the importance of the university-industry-government cooperation by highlighting some of the world’s best practices. It, then, continues with a theoretical analysis of determinant factors of research studies and innovations with the aim of identifying spaces and potentials that can adequately strengthen the business-research relationship by economic sectors. The next section explains the methodology employed in this study and continues with the presentation of real instances of cooperation of businesses with the research as well as with the


results of modest efforts to quantify the extent of this relationship in Albania.

The study concludes with policy recommendations drawing on world’s best practices for the establishment of healthy and reliable partnerships with the aim of improving this cooperation and embodying the Triple Helix concept as a neoinstitutionalist philosophy in policymaking practice. While this report is part of an ongoing work, it is expected that these conclusions and recommendations will be updated in pursuance of results obtained from direct or indirect communication with stakeholders.

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2. Significance of Universities-Industry-Government Cooperation – a Review of Theory and Best Practices

As already mentioned in the introduction of this study, the cooperation between industry and universities is not a novelty of our time, but, rather, a practice initiated in the Industrial Revolution. Traditionally, universities and research and science centers had offered innovatory ideas and development of technologies with a revolutionary transformational power of production methods. The industry had served as the lab where technology and organizational innovations had been experimented and where the new methods had encouraged the boost of economic productivity at levels unseen before in the history of economy. Economy historians consider innovation, along with scientific research, to be the only source for economic growth and development, and the factors that stand behind the material wellbeing of human society of the modern times. The next section presents cases of best experiences recognized in the world economy and highlights some theoretical aspects of determinant factors of research work and innovations.


2.1 Best Practices

What differentiates the need to reconsider the cooperation between universities and business in our era is the context of time, globalization and quick dissemination of knowledge and technology. Silicon Valley experience proved that close interaction between scientific research and entrepreneurship may trigger revolutionary changes in economy and society. Development of computer technology and, subsequently, information technology produced the today’s revolution in technology by giving rise to unprecedented growth of productivity of labor force and economy as a whole. On the other hand, today’s methods of production and level of technology in use require highly qualified labor force. This is the very place where a close interaction between these two agents of change becomes very keen. The labs of science and research institutions are simultaneously centers of innovatory production and technology just like industry has become not only an experimenter of ideas coming from university departments but also an important engine of research and development in itself.

Increase of synergies of cooperation between them comes, therefore, naturally, on one hand to better economize on financial resources of research and development that leads to innovation, and, on the other hand, as a very efficient channel of dissemination of knowledge to universities and facilities of qualification and vocational education, so that the future labor force will be well-qualified in utilizing the existing technologies.

The synergy of close cooperation in the form of partnerships between industry and academia has proven to be a win-win situation for both stakeholders and for the progress of mankind in general. To this end, since the Lisbon Treaty, the European Union has made strengthening of links between universities and industry one of its main pillars of enhancing competitiveness of European economies by promoting research and development and innovation. This triangular partnership among the state, business, and university has proven to be an efficient tool for progress and successful experiences have shown that companies have also supported such initiatives, have become pioneers in their markets, and have boosted competitiveness in ratio to their business competitors.

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It should be pointed out that the enhancement of cooperation between business and universities is a problematic issue even for European Union countries. According to AISBL report (2010), most European academics arenot engaged at all in collaborations with industry and only few cooperate with business to a high degree, and when European universities form partnerships with industry, too often the potential for synergy is thwarted by failures of communication. Furthermore, scientific research in the area of social sciences has taken on priority only in the last decade. The Targeted Socio-Economic Research (TSER)Programunder the Fourth Framework Programme marks the point of return to importance paid to scientific research in these areas. The new digital and communication technologies are producing an effect of unimaginable transformational social and political power in today’s democratic societies. An examination of their role even in the viewpoint of employment is a priority for our society. Exact and social sciences are much more integrated in the current world.

Creation of a climate of trust between industry and research institutions has a great impact on both parties and is a game of mutual benefits. While for the industry the gains are measurable from their economic and financial indicators, in the case of research institutions the gains go beyond their financial resources and empowerment of their research capacities, extending to indirect benefits, such as:

• Creation of a good climate of understanding leading to the establishment of strategic partnerships between them rather than sporadic or case-by-case contracts;

• Expansion of field of research activities, putting researchers in contact with market needs and problems of industry and providing them access to modern laboratories of private industry, etc.;

• Enhancement of teaching skills and building capabilities of universities by exposing them to industry as part of the curricula;

• Creation of better opportunities of professional career to young and motivated researchers;


• Production of positive demonstrative effect on social gains of research, thus improving access to financing from public funds.

2.2 Determinant Factors of Research on Innovation

In defining innovation activities undertaken by companies nowadays most of the empirical evidence follows Joseph Schumpeter(1942, pp. 66), who defined innovation in a broad sense as: “carrying out of new combinations” that include “the introduction of new goods, new methods of production, the opening of new markets, the conquest of new sourcesof supply and the carrying out of a new organization of any industry”. On the other hand, OECD (2010) guiding the collection of data on innovation reflectsthis perspective by defining innovation as: “... the implementation of a new or significantlyimproved product (good or service), or process, a new marketing method, or a neworganizational method in business practices, workplace organization or external relations(p. 46).

Existing literature elaborating on the importance of these innovative processes over economic development highlights factors that affect these very processes. This literature has been enriched recently with studies on factors that determine the scale of innovation in developing countries and in those countries that have shifted from centralized economic system to market economy. Thus, in their empirical analysis on firms in European countries2, including those of Western Balkans, Ramadani et al (2014) and Abazi-Alili (2014) point out that firms’ size, foreign ownership, competition, skilled workers and export activity have positive and significantimpact on their incentive to undertake innovation activities. In addition, these firms perform better when compared with the competition. In their study on 10 countries

2 Business Environment Enterprise Performance Surveys (BEEPS), data collected on firms through polls conducted by the World Bank and European Bank for Reconstruction and Development in 2002, 2005,and 2009.

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in transition, Boermans and Roelfsema (2012) emphasize the importance of opening-up to foreign markets in term of exports, foreign investments, and outsourcing to firms, and their skills to carry out and invest on innovations. In this line of microeconomic analysis of firms from six Latin American countries, Crespi and Zuñiga (2010) find that cooperation, foreign ownership, and exporting increase the propensity to invest in innovation activities.

The reason why most findings of literature spotlight the role of capital and foreign markets on innovative developments is closely related with the opportunities of finding and expanding markets that would increase the business demand for innovation. According to elder (2013), uncertainty of demand for innovation is seen by firms as the major impediment for innovation activity. Many surveys on firms reveal that the factors linked with the demand are deemed important to the innovative processes and their success when compared with the factors of offer (Allman et al., 2011).

As Bianchi (2001) notes, creation of innovations is possible when new products or ideas result from combined communication among partners of industry, on one hand, and when knowledge on existing technologies is present, on the other. In this aspect, there is a general idea that countries with adequate human capital may have advantages from modern technologies and can carry out innovations. Thus, Crespi and Zuñiga (2010) highlight that for developing countries it is essential that emphasis is placed on accumulation of social and human capital that can generate innovative activities with the aim of achieving economic development just like industrialized countries. With regard to determinants of performance of innovations, according to Szirmai et al. (2011),some of the explanations are found in characteristicsof the firm or of the entrepreneur such as education and experience ofthe entrepreneur, firm size and age, or organizational culture, particularly relative to small and medium-sized firms, just like those prevailing in most developing countries, including Albania. On the other hand, market conditions, policies, and the institutional environment canpromote or hinder innovative behavior.


Overall, the above factors that promote or hinder innovative research process may be included in key features of the economy of a country and that, according to Lazonick (2000), have to do with industrial conditions, organizational conditions, andinstitutional conditions. Each of these conditions relates to:(1) technology, market, and competition, (industrial conditions); (2)cognitive internal skills, behavior, and strategy of enterprises (organizational conditions); and, (3) employment, financing, and regulation (institutional conditions).

In the following section of this study, we identify the extent to which these factors delineate Albania’s possibilities to undertake and conduct innovative process in order to lay bare the reasons related with the relatively low level of innovative processes undertaken in the country. In addition, we will examine the business behavior and attitude linked with their demands for investing in research project with the aim of boosting economic efficiency.

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3. Methodology of Study

In an effort to analyze the cooperation of business with the research in Albania, the study presents evidence of real and potential demand of the country’s production units as well as the potentials offered by the research domain so as to advance this cooperation. To this end, the study sheds light on the potentials of competiveness in Albania drawing on the existing data. As already pointed out in paragraph 2.2 on the role of market and demand, guiding comparative advantages of a country may also lead to guiding and extent of research-development activities of interest to the Albanian economy. Findings of various reports reveal limitations and challenges to the country’s economy in general and research and development (R&D) process in particular. Later, a descriptive analysis of actions undertaken by Albanian and foreign public institutions focusing on functional relationship between the business and R&D is provided.

The need for intervention by means of policies of interest to improve the above relationship is coupled with the necessity to quantify the information on this synergic process. Similar to research processes in Albania, this need is a challenge in itself and could, consequently, generate at best a better understanding of problems and details inherent to them rather than a true assessment of the extent of the problem and the scale of factors affecting them. Thus, the data at microeconomic level that would help to overcome these difficulties are almost inexistent. Irrespective of this, the report draws on secondary data that reveal, at the minimum, the potential for research and development within businesses.

Furthermore, we have placed efforts to ensure primary data through structured and semi-structured interviews with the major goal to identify and measure the scale of cooperation between the business and research institutions. (Structured and semi-


structured interviews are given in Annex 1 of this study.) The survey seeks to identify the demand of the business community operating in various sectors of the economy for research projects and to conduct a diagnostic analysis of the relationship between the business community and academic domain and scientific research conducted in universities and different scientific and academic research facilities.

Some of the questions made by the study and sought to provide an answer to are based on the diagnosis of the current situation include: To what extent does scientific research contribute to the solution of problems confronting the private entrepreneurship? How is research agenda built and to what extent does it reflect the needs of economy to promote innovation as the main sources to boost productivity of the economy? Why has it been impossible to establish successful partnership to date? Is there any successful experience that can serve as a “model” to replicate to other industries/businesses?

The survey was conducted to private businesses as well as to independent research institutions or units operating at Albanian universities. For this purpose, the Agency for the Support of Civil Society and the Parliament of Albania provided a list of all research centers. While there are a significant number of registered centers, it is probable that not all of them are currently active and that only some of them focus in research and development activities for which we are interested. To this end, we filtered only those organizations whose scope of work includes R&D activities.

In terms of identification of business entities, we randomly selected one of the business grouping (association) with a considerable number of businesses irrespective of their origin. A preliminary observation reveals that one company may be a member of several business associations. For this reason, we referred to only one of them. The survey results are presented in Chapter 5.

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4. Stylized Facts

As already stated above, this section will run a descriptive analysis of the current situation of Albanian economy’s competitiveness level as an indicator of challenges to guide and develop R&D processes, followed by a description of potentials of institutions expected to realize R&D products.

4.1 Economic Aspects of the Need for Research and Development

Many studies have shown that increase of spending in R&D activity results in a corresponding increase of productivity of economy in general. At the firm level, R&D expenditures of enterprises are often correlated to higher sales and productivity growth. Firm-level data for the Western Balkans show that innovative firms grow 15 percent faster in sales and 8 percent faster in labor productivity than non-innovative firms. Business R&D expenditures significantly contribute to growth in sales by 14 percent and labor productivity by 7 percent.Furthermore, when firm R&D, training, and infrastructure services are compared, R&D is shown to have the highest correlation to sales growth (World Bank, 2013).3

While the methodology of this study foresees the use of questionnaires to better illuminate the aspects of this cooperation, some indirect indicators are a strong testimony that the role of research and innovation in our economy remains very modest even when compared with the economies of the Western Balkan region. Below are some significant indicators that shed light on the level of

3 Western Balkans Regional R&D Strategy for Innovation -- World Bank Technical Assistance Project funded by the European Commission (DG ENLARG – TF011064), as part of the Country Paper Series – 2013 (http://www.worldbank.org/content/dam/Worldbank/document/eca/Western-Balkans-R&D-Albania.pdf)


competitiveness of the domestic business and its potential to gain from the relation with the R&D process.

Global Competitiveness Report, a publication of the World Economic Forum, is a very influential report for business and policymaking at global level and provides some interesting indicators Economic Forum, 2014).The report ranks various countries of the world based on major indicators that measure their competitiveness, including the main macroeconomic indicator and economic freedom, innovation and level of business sophistication. In general, the level of competitiveness of our economy continues to be problematic. In the ranking of the report for year 2014-2015, Albania got 3.8 points out of a maximum of 7 points, ranking 97th most competitive economy (out of a total of 114 economies). (See Annex 2 for a detailed profile of indicators by pillars of the report.) Even worse, this ranking has aggravated considering that during 2011-2012 the country occupied the 78th place.

Among indicators of innovation and business sophistication, one indicator that measures the quality of internal suppliers, development of industry clusters and depth of value added to economy, sophistication of production and distribution processes, capacities of firms for innovation, quality of scientific research, spending of firms in R&D activities, domestic offer of scientists and engineers, etc., ranks Albania in the 114th place, assigning only 3.2 points out of seven (World Bank, 2013). Likewise, lack of a qualified labor force and poor work ethics are considered one of the five most problematic factors of doing business.

Indicator of export of intensive technology products. Another form to measure level of technological development and innovation of an economy is the nature of goods it exports. More specifically, according to theories of international trade, it is expected that the weight of export goods that have a high technological content will increase with technical and technological advancements. In the case of Albanian economy, the weight of these commodities for 2007-2013 was averagely 15% of the total exports (See the table in Annex 3) thus indicating an economy that exports raw materials and basic products, in which the added value is very low.

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4.2 Legacy and Reforms Conducted in the Area of Scientific Research

The scientific research in Albania and its link with the development of economy has a generally modest tradition. In several sectors of economy –agriculture and exploitation of natural resources, in particular– the legacy is richer and has had significant effect in the productivity of certain sectors regardless of limitations that dictated the manner of organization of production in accordance with the centralized economy. As witnessed by various studies, innovation has produced revolutionary impacts in the free market economy system, while the communist economic systems are short of practices of commercialization of knowledge.

During the transition years, promotion of scientific research and innovation has been almost out of any true and serious agenda, either in public policy or private sector. The heritage of research institutions from the former political system continued to exist in a very limited form and ran almost no activity that could affect economy and society.

A first-time serious reform on organization of public entities of scientific research was undertaken in year 2007 transferring the research units from the authority of line ministries to research entities attached to universities (with the exception of Center of Albanology Studies). The reform sought to better harmonize scientific activity, pedagogical work, and teaching programs with the real needs of the economy in order to provide well-studied solutions to problems confronting the industry and economy. A government strategy on scientific research and innovation for a period until 2019 is adopted and being implemented. A document on “Albanian Position on the Green Paper - From Challenges to Opportunities: Towards a Common Strategic Framework for EU Research and Innovation Funding (approved by the European Commission me COM (2011)48was adopted in May 2011, whereby Albania engages to adapt structures and mechanisms that strengthen scientific research and innovation in economy, in accordance with the priorities defined in the Lisbon Treaty, focusing in boosting competitiveness of economy through innovation. This document follows the ratification of a Memorandum of


Understanding between Albania and European Community signed in 2008 on association of Albania in the Seventh Framework Program of the European Commission for the research and technological development for 2007-2013 and was updated again by the Government of Albania in year 2014.

To achieve these objectives, the Government created the Agency for Scientific Research and Innovation (ASRI) in 2009. Starting its operation in March 2010, this public entity is run by a steering structure that includes all stakeholders – the state, community of scientific research, and industry. The Government allocated a modest fund for 2010-2012 for the seven programs announced by the Agency to be carried out during a longer period, 2010-2014. These programs are:

• Agriculture, food, and biotechnology;

• Information systems and technologies;

• Water and energy;

• Health;

• Biodiversity and environment;

• Social sciences

• Materials (technologies of material production)

From which 25 projects have been selected for implementation. Considering that these projects are still in the initial phase and project funding is modest, it is impossible to assess their real impact.

Two major objectives of the Government’s Crosscutting Strategy of Science, Technology and Innovation until 2015 included:4 (1) Increase public spending on research to 0.6% of GDP by 2015;

4 Crosscutting Strategy of Science, Technology and Innovation 2009–2015

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and, (2) Increase innovation activity in 100 companiesthrough investment in R&D or via consortia with the academic research institutions or in partnership with foreign partners. These objectives are far from being accomplished. It suffices to mention that the budget projection for year 2015 stated 31 million Euros, whereas the budget real figures for this item can barely reach 1 million Euros. Yet, since the reform on scientific research in Albania is in its first steps, it is too early to draw conclusions on the effects it will produce. One we, however, come up with some positive generalizations and deficiencies that need to be addressed. In this aspect, we can refer to some comparative statistics that show the level of development of research and innovation projects in Albania compared with other countries of the Wester Balkans.

One indicator that shows the weakness of scientific research in our country is the low rate of success of application submitted for funding in the framework of Horizon 2020 (FP7).5 Reports indicate that Albania has submitted the lowest number of applications (20), compared with Montenegro (21), Macedonia (46), and Serbia (116). Our country’s benefits from EU funds for scientific research for the entire period since 2007 amount to 1.1 million Euros, while Montenegro was able to receive twice as much. Albania and Bosnia are reported to have the lowest success rates in EU funds.

SCImago Journal & Country Rank6, a platform that includes countries’ scientific indicators,ranked Albania in 121stplace (in 2013), below Bosnia (98th), Macedonia (94th), and Serbia (54th). However, considering the dynamics of integration of Albanian researchers’ research work, the indicators tend to be optimistic. Thus, in 2006 the country published 74 documents and in 2013 the number of published documents reached 493.

On the offer side of the research work, important structures include capacities provided by academic university institutions that offer doctoral (and master’s degree) studies and that are supposed to further enhance the potential for R&D work in the

5 http://www.herdata.org/in-focus/horizon-2020-can-the-countries-of-the-western-balkans-catch-up/8

6 http://www.scimagojr.com/countryrank.php


country. However, in general, the institutions lack designation of areas and topics where doctoral and master studies need to focus and produce new findings. A random observation of this study reveals several cases where scientific research of doctoral level treat issues that are somewhatdistant to market or business needs, relatively secluding the research process from the dynamic reality of economic situations. This lack of vision on the part of the university education institutions incurs inefficient spending of available (mostly intellectual) resources and limits the opportunities to generate additional funding for quality improvement of research work. Thereon, reformation of academic institutions should include, inter alia,guidance of scientific research, as part of accomplishing academic duties, to the interests of business and society as a whole. On the other hand, it seems that the Agency for Research, Technology and Innovation has not played its role in serving as a coordination platform between the industry and research community to build an agenda of research work in order to satisfy the needs of economy and business.

The following evidence drawn from secondary and primary data at individual level help to measure the readiness of business community operating in Albania to collaborate with research institutions and universities to increase innovation.

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5. Empirical Evidence from Individual Data on Business Demand for Research and Innovation

As already mentioned earlier in this study, it is hard to generate data at microeconomic level to enable a detailed analysis of causes and consequences of the almost inexistent relationship between the business and R&D. Yet, an approach to overcome this difficulty comes from results obtained from various surveys conducted by national and international organizations that help to understand the level of interest of the business community to invest in social-economic research projects.

We should, initially, make mention of the Business Environment and Enterprise Performance Survey (BEEPS)periodically carried out by the European Bankfor Reconstruction and Development (EBRD) in cooperation with the World Bank (WB) for European countries at firm level. Albania has been part of this survey in years 2005 and 2008. Among others, an analysis of the data reveals that the skills and education of employees are a problem for about 40% of the firms in 2005 and for about 60% of the firms in 2008. This is a problem confronting other regional countries (even though at a more moderate level than Albania) at a more disturbing level in 2008 than in 2005 (World Bank, 2010).

The same source reports that the percentage of firms that have developed new products during 2005-2008 is 40% in Albania, compared with over 50% in other regional countries (for year 2008). In addition, the percentage of firms that have spent funds on R&D


during these three years has increased from 9% in 2005 to 30% in 2008, ranking below the level of other Southeastern European countries, even though higher than Euro-Central Asia countries. It seems that those factors that affect innovation include, as stated by about 75% of the firms, domestic competition and consumer demands that exercise powerful influence in the development of new products. This attitude is similar to those of firms in the Southeastern Europecountries. On the other hand, a smaller percentage of Albanian firms than the regional firms feel the impact of foreign competition in the development of new products by the firms themselves. As already expected from the analysis of competiveness of the Albanian economy in subchapter 4.1, it seems that Albania does not benefit sufficiently from all industrial conditions that, according to Lazonick (2000) would promote innovative processes.

In terms of encouraging businesses to increase the demand for and investments in research area for innovation, an EU initiative in Southeastern European countries, started in 2010 and ended in August 2014, produced no impact whatsoever amid efforts to empower innovation. The project’s website7 does not give any indication of the impact of this project in promoting innovation, particularly in the case of Albania.8 Other countries of the region and beyond that have participated in this project have been supported with innovative business initiatives in various sectors of economy (Finno, 2015). A survey that received response from only 30 firms confirms that firms have demanded more funding, more government support – who would not want these? – and only a modest number (25.8%) of firms requested technical expertise to realize the entire cycle of innovation.

Further on, the Institute of Statistics of Albania (INSTAT) in cooperation with UNESCO has made efforts to ensure direct data on R&D processes and business involvement in them by means of a Survey on R&D and Innovation conducted during August-September 2013. The results of this survey have not been published

7 www.finnoeurope.eu

8 Checkhttp://finno.agid.gov.it/innovation-in-see/

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yet. Regardless, INSTAT specialists consulted on this matter provide conclusions drawing on preliminary analysis stating that domestic firms are mostly involved in innovative processes rather than R&D processes. These firms rely on their existing internal staff for this and have little or no cooperation at all with R&D structures. Detailed data come from INSTAT’s Annual Structural Survey of Economic Enterprises(ASSEE) concerning the level of intangible investments made by firms. The following table shows that the total of investments has increasedinconstantly from 2008 to 2012. Irrespective of this, the firms’ investments in R&D is very low, at about 0.74& of the total investments made by firms operating in Albania.

Table1. Intangible investments from ASSEE during 2008-2012

Year 2008 2009 2010 2011 2012

Total 0.8 4.7 4.96 3.48 1.40Mineral research N/A N/A 0.01 0.01 0.02

Computer programs anddatabases

N/A N/A 0.01 0.25 0.41

Patents, marks and related

N/A N/A 0.01 0.30 0.02

Investments in R&D N/A N/A N/A N/A 0.74

Other (reputation, etc.) N/A N/A 4.93 2.93 0.21

Source: INSTAT (2015)

Note: N/A implies lack of data on related indicator, because questions on these data were not included in the survey.

As already stated in Chapter 3 and for the purpose of this study, the working group has prepared a structured questionnaire with 10 questions. A sample of this questionnaire is presented in Annex 1. While the questionnaire was disseminated electronically to over 200 firms, the response rate was very low (11). This poor response may be considered an indicator of the little interest of the domestic


business community in R&D processes. On the other hand, this may be related to the deficient promotion for this community to be involved in and become an active part of discussion on issues of this nature. This was also confirmed by the lack of readiness to take part in roundtable discussions that the working group had planned to hold in cooperation with the business community. A roundtable was held under the auspices of the Ambassador of the Swiss Confederation with the participation of Swiss firms and Albanian firms with trade and economic interests with Switzerland. Likewise, one might consider the option that this kind of “indifference” could be a consequence of the lack and/or knowledge of infrastructures that would mediate or increase cooperation between business community and research (academic) community.

The following generalizations can be made from the results of structured questionnaires and in-depth interviews with business representatives:

In general, the businesses operating in Albania are hesitant to directly fund research projects with research organizations running in the country. Based on opinions expressed by them, this can also be explained with the fact that they work with foreign technology and business applications already tested from the countries of origin.

Big companies with business interests beyond domestic market make investments in research studies in the social, environmental, and technical areas and support requalification of their labor force. It should be pointed out, however, that big companies take up a very small percentage in the total number of businesses in Albania (where firms with over 50 employees constitute 1.3% and those with 5-49 employees take up 4.7 of the total). For this reason, the focus is placed in the opportunities of small and medium-sized (SMEs) firms and their interest and will for research work that may be available in the domestic market of research in the socio-economic area. On the other hand, big companies with foreign capital carry out R&D and innovation activity or economic and social studies by using resources of their mother companies in the country of origin or by outsourcing the services internationally

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and see little or no need to collaborate with the local research community. (An example to this is the Trans-Adriatic Pipeline project.)

An interest most articulated by almost all respondents relates to the need for market and technical research, even though it results that few of them have invested in this direction. It seems that the potential market in this aspect is large. In consideration of solicited responses, the business’s interest for research is linked with the size of product and service markets. On the other hand, lack of organizations by sector of operation seems to limit their willingness and affordability to fund research project to the interest of the business themselves.

A survey intended for researchers serves to better understand the demand of the business community to the researchers’ community. The structured questionnaire was sent electronically and contained 10 questions with sufficient space for respondents’ comments as necessary. Irrespective of the small number of responses (only 9 in total), we can understand that research institutions perform very little research work to the benefit of the business community in Albania (5 cases out of 9, albeit quite limited), even though it is their objective to attract private sector of production and services as “consumers” of their products of studies and researches. Cases if research work related with market research and feasibility studies or other works of technical nature. Only one organization has received financial donation from private sector for its role in the research and scholar activity.

The longevity of research institutions of this analysis varies from 3 to 20 years in this market in the areas of mainly social-economic research and agrarian research (in three cases). Similar distribution applies to those entities that have collaborated with the private sector in their research projects. It seems that entities established a long time ago and some institution of only four years of experience in the area have had success. As one can expect from the state of the country’s economic development, the research work conducted by research institutions are basic and applicative and almost not experimental at all.


Surveyed entities comment on the lack or low level of cooperation with the business community and the impediments in establishing ties with this community. They express the need for line ministries covering businesses or business associations to establish links with researchers and scholars suggesting the possibility of applying various amenities to businesses.

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6. Conclusions and Recommendations.Triple Helix: Universities-Industry-Government

The survey conducted for this study reveals that the business representatives in Albania show interest in and potential demand for research work, even though this need is basically oriented to technical and market research. In-depth interviews with business community indicate the need for structured organization of groups by sector of industry, which would help to guide their need and demand as well as shared funding of research projects to the business interest. On the other hand, the business community in general senses the government’s hesitation to facilitate or encourage investments in research projects.

In this aspect, the role of public policies to increase private investments in innovations to an optimal level for the society is crucial. In addition to direct support that should be effective, another option would be promotion by means of fiscal policies that would favor firms spending in innovation. As Andrews and Criscuolo (2013) point out, these policies should be prepared with caution in order to minimize their unwarranted fiscal costs and consequences. To this end, it is proposed to reformulate Article 20 (Deductible Expenses) of the Law No. 8438, “On Income Tax”, using the following language: “Expenses made for research and development, technological improvement and innovation, social and economic studies conducted to build the company’s internal policies, technical and managerial consultancies, and requalification of company’s labor force and staff shall be tax-free


provided that these expenses are proven with financial documents.”

Company’s possibility for abusing with this right would be reduced due to their obligation to justify their expenses with financial documents and because service provider are subject of taxation and tax control. On the other hand, the rights to intellectual property as an important part of encouraging firms to undertake innovations should be reconsidered.

The intervention of state policies with the aim of increasing business financing for research projects should also include aspects of the new draft law on university education and scientific research. This law foresees that the Agency for Research, Technology, and Innovation will be transformed to the National Agency for Scientific Research and Innovation (NASRI), a public institution that, in addition to managing public funds on scientific research, will be responsible to evaluate scientific research and work. The draft law vests NASRI with the authority to manage funds obtained from international grants.The law does not, however, encouragethe private sector or national or international donors to sponsor scientific research activity, considering that such donations, gifts, and financing are recognized as deductible expenses in case the donor is subject to profit tax. On the other hand, NASRI should have the appropriate flexibility to manage its own funds. This agency should have a separate bank account independent of its line Ministry and should have the legal authority to use the budget and the funds it generates. Budgeting of public funds should use a midterm (three-year) approach. In most cases, the nature of research projects encompasses a timespan of more than one calendar/financial year. Thus, successful realization of these projects requires similarly long budget lifetime. The Board of Administration, foreseen to be regulated upon a Decision of the Council of Ministers, should include representatives from the private sector and business organizations, in addition to community of academics. Board members should be selected on open competition among personalities of the academic domain.

In order to make scientific research serve the real needs of the economy and business, it would be useful for research project proposals to have a letter of reference issued by the business

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organizations. The project itself should have a clear rationale of the benefits to the business and economy. In addition, public funds should become available to support research and studies that would benefit a concrete investor. In such cases, funds made available from NASRI for the research project should have counterpart fund contributed to by the beneficiary organization of the private sector or the beneficiary business (association, firm/enterprise, professionals’ organization, etc.).

Research projects and studies of universities and research unit should include aspects of applications for the business or industry. Experts from private sector/civil society should be involved in NASRI’s evaluation of research projects. Establishing a long-term partnership between business and academic world is a time-consuming process of building mutual trust. NASRI may start to implement a pilot project and promote its success, demonstration effect, among stakeholders. The strategic document should include realistic objectives, so that by means of a limited number of private firms the links between the business and academia are established and sustained advantages of cooperation are promoted to the business community.

NASRI should really serve as a platform to facilitate communication between the two stakeholders and should satisfy the demand for matching funds before it allocates budget to concrete projects. Furthermore, NASRI should provide expertise on capacity building in preparing projects that would have an acceptable success rate in EU (FP7) programs.

Public research institutions should be autonomous and independent of universities in managing their own funds. This would increase the interest of researches in engaging in projects on institutional rather than individual basis, as is currently happening. In addition, university professors or various personalities that can be involved in important research projects may, upon a request from the head of research facility, be entitled by university management to reduced teaching workload.

In today’s highly complex world where the private sector is more focused in profit rather than knowledge, the role of the state


to disseminate knowledge becomes even more important. It is necessary to understand our complex reality, particularly in the economic field, price behavior, operation of financial markets, risk management, how money is won or lost, etc., so that we can better manage our future and cycles of economy. This definitely calls for basic financing from public funds. This becomes even more necessary if it is understood that the private sector has oftentimes more short-termed goals and orientations (at least in the Albanian business climate) compared with long-term and socially comprehensive goals that public policies should have.

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COMMUNICATION STRATEGY BETWEEN SOCIAL SCIENCE RESEARCH AND PRIVATE SECTOR IN ALBANIA


Role of Public Policies

The role of public policies to encourage private investments in innovations efficiently for the society is crucial. In addition to direct support that should be effective, another option would be promotion by means of fiscal policies that would favor firms spending in innovation. To this end, it is proposed to reformulate Article 20 (Deductible Expenses) of the Law No. 8438, “On Income Tax”, using the following wording: “Expenses made for research and development, technological improvement and innovation, social and economic studies conducted to build the company’s internal policies, technical and managerial consultancies, and requalification of company’s labor force and staff shall be tax-free provided that these expenses are proven with financial documents.”

The state policies aimed at promoting the possibilities of increasing business financing research projects should take into consideration the new law on university education and scientific research elements inclining regulation of the research sector. This law foresees that the Agency for Research, Technology, and Innovation will be transformed to the National Agency for Scientific Research and Innovation (NASRI), a public institution that, in addition to managing public funds on scientific research, will be responsible for identifying priority research areas, the evaluation of scientific research work of the high education institutions and provide their ranking, as well as funding PhD research projects. The law vests NASRI with the authority to manage funds obtained from international grants. The law does not, however, encourage the agency to involve in generating funds from alternative sources such as private sector, national or international donors to sponsor scientific research activity, considering that such donations, gifts, and funding are recognized as deductible expenses in case the donor is subject to profit tax.

Public research institutions should be autonomous and independent of universities in terms of financial management. More specifically the recommendation goes to NASRI, which should have the appropriate flexibility to manage its own funds. This agency should have a separate bank account independent and should have the legal authority to use the budget and the funds it

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generates. Budgeting of public funds should use a midterm (three-year) approach. In most cases, the nature of research projects encompasses a time span of more than one calendar/financial year. Thus, successful realization of such projects requires a similar budget lifetime.

There is a lack of trust in the research evidence produced by local researchers, which comes along with the tendency to trust more the international research community. This is best illustrated in cases when public institutions rely upon the international research community to build the capacities of Albanian institutions and human resources (public and private) to address challenges and opportunities they are facing. An open procurement of similar services to both national and international research “market” would make domestic research community more competitive and challenging, as well bring it closer to the public notice. The public institutions should use the existing national research capacities to address political, economic and development challenges. A special focus on engaging local researchers in initiatives related to the private sector development in Albania could constitute the added value and could bring the two sectors closer. This would be the case when government agencies/executive announce some well-know international institution to provide certain study analysis/projects instead of promoting domestic research capacities who are expected to have a better knowledge of the local characteristics, especially regarding social aspects to which economic activities are associated with.

Promote regulatory policies to incite the cooperation between the two sectors. Currently, Albania applies the Law no Nr. 10 448, datë 14.7.2011 ”On Environmental Permission”, which requires all private companies to receive the environmental permission from the National Environmental Agency prior to initiating a business activity. Replicate this model with regard to social effects a business initiative might have in the society, i.e.: incorporate social responsibility.


Setting the Research Agenda

It is crucial to include the private sector as one of the actors when the national social science research agenda is defined. As part of the research agenda, vital questions to the development of the private sector but also questions with regard to the challenges the private sector faces in the everyday life should be addressed. Substantial participation (in numbers and quality) of private sector representatives in the processes of Research Agenda Setting (at national level MoES and NASRI) and/ or University / Research Institution level is assumed to be efficient. Thus, acknowledgement and interest of business on research would increase. The Chambers of Commerce should act as forums to bring together needs and challenges the private sector is facing and also act as liaisons between the private sector and research institutions (universities) in ensuring these “issues” are addressed from the scientific point of view.

Universities and research centers have a very rigid structure which does not enable researchers to orient their research towards the needs of the private sector. Study topics are often subject of data availability and business sector is less accessible and usually perceived as a black box by the researchers who would otherwise provide feedback for the business as a result of their research work. Orient the Doctoral programs towards business needs. Offer bonuses (of academic, financial or professional nature) to PhD studies that are applicable to the needs of the private sector. This could be possible by providing direct links between business and academia that produces corresponding research projects.

When big international private companies come to invest in Albania, they need to find research in social science, which will inform them on topics such as the social profile of the society, the evolution of the concept of the property, legal and institutional framework with regard to property; employment tendencies, evolution of the concept of environment etc. In the situation when no such research analyses are to be found at the national level, produced by national researchers, these companies commission international research companies. Universities have to adopt market oriented management practices in order to make them

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internationally noticed. Appropriate public policy should take into account the impact of competitive global economy and the social responsibility of the universities, a role assumed to be satisfied by the new law on university education and scientific research.

It is widely accepted now that Corporate Social Responsibility9 and Environment and Social Management Systems10 are two main concepts (closely related to private sector development) which could serve as a strong baseline for promoting the cooperation between the two sectors. Research institutions and universities should increasingly include these concepts into the research agenda. They could provide scholarship to the PhD projects focused on the area. Moreover, direct links to the Corporate Social Responsibility departments/sectors of large corporate businesses that operate in Albania could produce a synergy benefiting both private sector and academia.

Promote the culture of partnership between social science researchers and private sector

Scientific work and economy / business development should go hand in hand. There should be concrete initiatives designed to foster movement of related knowledge between these domains by providing opportunities to grow together. CONCRETELY: When research proposals focusing on any of the economic development and innovation challenges are put forward to be funded, they should be accompanied by a letter of reference issued by an economic operator. The research proposal should have a clear rationale on the benefits of the economy or business. projects

Public funds should become available to support research and studies that would support a concrete investor. In such cases,

9 Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or responsible business) is a form of corporate self-regulation integrated into a business model.

10 An environmental and social management system (ESMS) relates to managing the impact the business has on the environment, host neighborhoods, and other external stakeholders.


funds made available from NASRI for the research projects should include also a separate budget supporting research for the purposes of the beneficiary organization of the private sector or the beneficiary business (association, firm/enterprise, professionals’ organization, etc.).

Experts from private sector and civil society should be involved in NASRI’s evaluation of research projects. Moreover, researchers should become part of governing boards of private companies. In this context, they could serve as advisors to those entities and be subsidized for research products that are related with their activity. Establishing a long-term partnership between business and academic world is a long lasting process of building mutual trust and overcoming the prejudices that both sectors have towards each other. NASRI could be involved in a pilot project to promote the success case between groups of interest through a “demonstration efect”. By meeting certain realistic objectives, a limited number of firms can be brought close to research and academia and the approach and achievements of the collaboration than should be promoted to the business.

Increase the availability of students internships in the private companies.

Open Research Data

There is a need to know and understand the work and evidence produced by researchers. University faculties or research centers should organize Open Days to introduce the findings and recommendations resulting from research conducted on topics of relevance and importance to the private sector. Economic operators, Chambers of commerce, private companies etc. should be invited to be part of these days.

Research work produced in the academic institutions need to be public. These have a larger research capacity as compared to other research organizations, which are already more advertised. A database listing the PhD thesis as well as those at the Master level

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should be made public, as there is a recent movement in a few universities but only with thesis at PhD level.

As part of their legal obligations, big companies in Albania have embraced Corporate Social Responsibility (CSR) mission. Fulfilling their commitment in favor of their workers, environment and society at large they have generally created structures that are responsible for bringing into attention CSR issues. However, to better fulfill the mission, more in depth studies would be needed in analyzing social effects and/or impacts of business activities. For the companies that already have a responsible unit to deal with the CSR, creating a synergy with the research institutions that conduct social research could improve business perceptions and understanding of externalities they produce for the society. Examples of good practice indicate that certain corporate contract national experts on the field (on issues related to socio-economic impacts of large investments). However, such attempts remain sporadic.

Recommendations: Although CSR related reports are randomly produced by the big companies in Albania from about a decade, we recommend that these are oriented to more society related issues. In order to raise business capabilities approach this aim, collaboration with specific institutions that are specialized into social research is crucial. The following steps could be undertaken:

1. As a few large companies have already organized in the corporate Social Responsibility Network (SRN) launched in 2013, Academia and research institutions focused on social related issues could become part of the network.

2. Social research specialized institutions (academia and NGOs) could organize open days with the presence of the CSR offices within companies to deliver research conducted CSR related issues. The SRN could be a linking bridge in this context.

3. Companies that invest into CSR, could as well finance related topics produced from the academia (in the form of a PhD project) and become a joint holder and user of the study project.


The challenge / the bottleneck

Goal / Objective

Steps / Actions to be undertaken

Responsible Stakeholder

Generate links between Academia and SMEs.

Identify research areas of interest for SMEs to be conducted by academia researchers

Conduct questionnaires with SMEs.

Academia, SMEs, Chambers of Commerce

Raise awareness of SMEs to the role of research, particularly social related issues.

Create the synergy between private business and academia that produces research focused on social responsi-bilities.

Introduce private business with research products that research institutions produce through periodic organized meetings (open days). Specific research studies could be presented with potential interest for private business.

Academia, research organizations, Chambers of Commerce.

Acknowledge potentials of academia research in the area of Corporate Social Responsibility (CSR) and create premises for collaboration with the CSR departments of large companies operating in Albania.

Get involved into CSR of large companies in the country as partner of their CSR departments.

Academic institutions to get membership of the Albanian CSR network launched in April 2013 with the participation of about 15 large companies that operate in the country and promote their role in providing services regarding CSR research.

Academia, Corporate companies that operate in Albania, Chambers of Commerce, companies member of Albanian CSR network

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Evaluate capacities of private sector to use and (collaborate to) produce CSR studies.

Create national database on training events (incidence and intensity) of human capital as well as qualification level of the workforce and business investments on innovation.

Workshops. Executive orders.

Academia, Albanian School of Public Administration, Medium and Large companies, Chambers of Commerce, Ministry of Education, Ministry of Social Welfare.


References

Abazi-Alili, H. (2014), Innovation Activities and Firm Performance: Empirical Evidence from Transition Economies, JECBI, 1(2): 5-18

AISBL (2012), Making Industry-University Partnerships Work, Lessons from Successful Collaborations;The Science | Business Innovation Board, Belgium

Allman K., Edler, J., Georghiou, L., Jones, B., Miles, I., Omidvar, O., Ramlogan, R. dhe Rigby, J. (2011), Measuring Wider Framework Conditions for Successful Innovation. A System’s Review of UK and International Innovation Data, NESTA Report, London (UK)

Andrews, D dhe Criscuolo, C. (2013), Knowledge Based Capital, Innovation and Resource Allocation, OECD Economics Department Working Papers, No. 1046

Baily, Martin Neil and Alok K. Chakrabarti, 1985, “Innovation and Productivity in US Industry”, Brookings Papers on Economic Activity, 16(2), pp. 609-639

Bianchi, Tito, 2001, “With and Without Co-operation: Two Alternative Strategies in the Food Processing Industry in the Italian South”, Entrepreneurship & Regional Development, 2(2), pp. 117-145

Boermans, M. dhe Roelfsema, H. (2012), The Effects of Internationalization on Innovation: Firm-Level Evidence for Transition Economies

Crespi, G. dhe Zunga, P. (2010), Innovation and productivity: Evidence from six Latin American countries, Interamerican Development Bank Working Paper Series, No. 218

Diaconu, L. (viti), The Role of Innovation for the Economic Growth and Development of the States. The Case of the Emerging Countries

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Elder, J. (2013), Review of Policy Measures to Stimulate Private Demand for Innovation. Concepts and Effects, NESTA Working Paper, No. 13

Etzkowitz, H. (1994). Academic-Industry Relations: A Sociological Paradigm for Economic Development. In L. Leydesdorff & P. van den Besselaar (Eds.), Evolutionary Economics and Chaos Theory: New Directions in Technology Studies (pp. 139-151). London, etc.: Pinter

Etzkowitz, H., and Leydesdorff, L. (1995). The Triple Helix---University-Industry-Government Relations: A Laboratory for Knowledge-Based Economic Development. EASST Review 14, 14-19

European Commission (2015), Horizon 2020, The EU Framework Programme for Research and Innovation, http://ec.europa.eu/programmes/horizon2020/en/newsroom, date accessed 14.01.2015

FINNO (2015), http://finno.agid.gov.it/innovation-in-see/, date accessed: 20 November 2014

Georghiou, Luke et al., 1986, Post-Innovation Performance, London: Macmillan.

INSTAT (2015), Data from ASN on request by [email protected], on 27 January 2015

Lazonick, W. (2000), TheTheory of Innovative Enterprise: Organization of Innovation in the “Learning Economy”, DRUID Annual Conference, Rebild, Denmark

OECD (2010), SMEs, Entrepreneurship and Innovation, Centre for Entrepreneurship, SMEs and Local Development, Paris: OECD Publishing

Ramadani, V., Abazi-Alili, H. dhe Gërguri-Rashiti, S. (2014), Determinants of Innovation Activities and Their Impact on the Entrepreneurial Businesses Performance: Empirical Evidence from Central and South Europe, 3rd International Scientific Conference, University of Banja Luka, Bosnia-Hercegovina

Schumpeter, J. (1942), Capitalism, Socialism and Democracy, New edition, Routlege, London and New York


Szirmai, A., Naudé, W. and Goedhuys. M. (2011), Entrepreneurship, Innovation, and Economic Development: An Overview. Entrepreneurship, Innovation, and Economic Development: 3-32

The World Bank, (2013), Western Balkan Regional R&D Strategy for Innovation, Country Paper Series, Albania, World Bank Technical Assistance Project, October

The World Bank, (2015), School Enrollment, Tertiary, (gross, %), http://data.worldbank.org/indicator/SE.TER.ENRR/countries, date accessed: 5 January 2015

The World Economic Forum, (2014), The Global Competitiveness Report 2014-2015, http://www.weforum.org/reports/global-competitiveness-report-2014-2015, date accessed:5 January 2015

World Bank, (2010), BEEPS at AGlance 2008 – Albania, the World Bank Group

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Annex 1A

Semi-Structured Interviews:

(Meeting with Prof. Dr. Marenglen Spiro, Former Director of the Institute of Geoscience)

Date: 30 October 2014 Time 11:30-13:30

Brief Profile

The Institute of Geoscience was created as part of the reform on the university education and scientific research institutions carried out during 2007 by which time the scientific research system inherited from the previous system changed and where research institutions attached to the Academy of Sciences operated to solve problems of the line ministries.

The reform transferred these institutes to universities so that the latter could have the necessary conditions to carry out scientific research on one hand and through this complementary activity they can be able to generate funding by conducting studies, research and application for the private sector.

The Institute of Geoscience was created by transferring to the Polytechnic University of Tirana the former institutes that later changed to university departments, including:

1. Department of Climate and Environment

2. Departmentof Regional and Engineering Geophysics.

3. Department Geo-Resources and Geo-Environment

4. Department of Seismology

5. Departmentof Water Economy


Findings of this meeting:

• There is an increasing need to use services provided by the research centers of the institute. The private sector (builders of apartment buildings, hydropower stations, etc.) has an interest in cooperating with the institute, which has generated considerable funds from such projects. Private businesses find it easier to communicate directly with the respective departments of the institute rather than with the university, because the level of bureaucracy is getting increasingly discouraging.

• Indeed, the potentials for better links of the research with the business are great and almost unexplored. The reasons to this modest cooperation are closely linked with the adopted model and lack of incentives for individual researchers to undertake applicative research work. Researchers employed in public entities have no problems of survival. Their job is considered secured, because “the state never goes bankrupt and it is not easy to shut down institutions like this.” This is a form of moral hazard in the field of science. Scholars/researchers/academics contract any research/scholar activity to the benefit of private sector on individual basis. This contract form is of mutual benefits: individual contract has lower costs (does not have administrative costs); is more flexible and avoids bureaucracies. In most cases, groups of university teachers create private firms/companies through which they provide their research/scholar services.

• Public entities are not allowed to participate in public tenders, because this is considered a conflict of interest. Bearing in mind that public entities are by large buyers of researches/studies and services, these institutions are deprived of this opportunity.

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Annex 1B

Questionnaire Intended for Private Enterprises

Q1: What is the main economic activity you are running?

Q2: How long has your business been operating in Albania?

Q3: What if the origin and type of ownership of your company?

Q4: What is the origin of markets with which your company has business relations for its product?

European Union member or candidate countries?

Other countries (Please specify)

Q5: How big is your company?(In terms of number of employees.)

Q6: Does your company hire researchers/scholars in Albania?

Q7: Has your company ever contracted another company or institute to carry out a research activity on the account of your company?

Q8: Has your company ever cooperated in a research project with other research institutes (as partners) in Albania?

Q9: Has your company ever invested in research projects with the aim of improving innovations?

Q10: What type of research would your company be interested in?


Questionnaire Intended for Entities Engaged in Research

(Independent or University-Attached NGOs)

Q1:Please specify the field (from the scientific viewpoint) of R&D activity conducted by your center.

Q2:Can you indicate which sectors benefit (directly) from the scientific research of your center?

• Agriculture, forestry, fishing

• Mining industry

• Processing industry (manufactures)

• Construction

• Trade

• Transport and storage

• Accommodation and food service

• Information and communication

• Financial and security activities

• Real estate activities

• Administrative and logistics activities

• Vocational, scientific, and technical activities

• Public administration and protection, mandatory social insurance

• Education

• Healthcare and social work activities

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• Arts and entertainment

• Activities of international organizations and organisms

Q3:What type of scientific research do you conduct?

• Basic scientific research

• Applied scientific research

• Experimental scientific research

Q4:How long have you been operating with this (these) type(s) of scientific research?

Q5:Have you had any request from private companies (businesses, business/trade forums) from Albania and/or other countries to undertake research/investigations on their account?

Q6:How many studies/researches have you conducted on their account since the beginning of the activity of your organization and what percentage of your research activity do they count for?

Q7:How many studies/researches have you conducted last year and what of type were they?

Q8:Does your organization have any objective at all to attract private sector of production and services as “consumer” (buyer) of your products (studies and researches)? If yes, what would you suggest to accomplish this objective? Do you need structures to establish the links and from whom?

Q9:Type of financing: Please rank the following sources by importance for generating funding for the research-scientific work of your organization:


• Self-financing

• State funds

• Albanian private companies/businesses

• Foreign companies/businesses

• Albanian public companies

• Other international sources (organizations, foundations etc.)

Q10:Have you ever been a beneficiary of a financial donation from private sector (businesses, business/trade forums) for your role in the research activity?

Note on terminology:

Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view.

Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific practical aim or objective.

Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, that is directed to producing new materials, products or devices; to installing new processes, systems and services; or to improving substantially those already produced or installed.

PolicyPaper


The Regional Research Promotion Programe is coordinated and operated by the Interfaculty Institute for Central and Eastern Europe (IICEE) at the University of Fribourg (Switzerland). The programme is fully funded by the Swiss Agency for Development and Cooperation (SDC), Federal Department of Foreign A�airs.Institute for Democracy and Mediation is the Program’s Local Coordination Unit.

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