Research: The invisible drag on UK R&D
This research, from innovation foundation Nesta, considers how corporate incentives within the FTSE 350 are inhibiting innovation. It argues that remuneration packages are dominated by measures that stifle innovation.
- Just 16% of total FTSE 350 annual bonus conditions encourage spending on innovation compared with 39% that discourage it.
- Long-term incentive plans are strongly skewed towards discouraging executives from innovating at a ratio of 6:1.
- These ‘incentives’ are in place despite agreement from companies, investors and regulators that innovation needs to be promoted.
The research argues that businesses and shareholders should re-evaluate whether incentives are promoting or discouraging innovation.
The report sets out a number of recommendations, including: the need for investors to use their power to demand better incentives for investment in innovation; the Financial Reporting Council should include innovation as a measure of effective stewardship; and the government should consider whether the value-for-money of R&D tax credits is reduced by improper executive incentives.