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Rethinking the role of big business in the UK's innovation ecosystem

Big business can and should play a vital role in the UK's innovation ecosystem – but we're getting that role all wrong at the moment.

Professor Mariana Mazzucato (of 'the Entrepreneurial State' fame) over the weekend used the controversial and complex Pfizer bid for AstraZeneca as a hook to call for the a re-think of the role of big business in innovation in the UK.

Highlighting pharmaceutical giant Pfizer's play as an example of a company looking to 'privatise profits and socialise losses', she notes that the takeover appears largely an exercise in international tax arbitrage, and to make room for schemes which suck investment out of broader innovation efforts, such as share buybacks.

But Professor Mazzucato also usefully points up the danger of an over-the-top response to these threats; responses driven by an assumption that, if big business can exploit our innovation system for gain that doesn't benefit the UK, then government's only recourse to prevent such corporate pillage is to shut them out of our carefully-nurtured innovation ecosystem.

While this would be an understandable response from government agencies to the threat of regulatory capture – under the current system governments such as the UK do indeed seem to be 'being played front and back' – it would also be entirely wrong; it would be throwing the baby out with the bathwater. Instead, through the national debate prompted by Pfizer's attempted takeover, we have an important opportunity to think about how to create an innovation ecosystem that genuinely has a 'symbiotic' rather than 'parasitic' role for big business.

I would like to build on Professor Mazzucato's argument on the role of big business in innovation through three related points:

Ultimately, as Professor Mazzocato urges, rather than shunning big business we need to involve them more closely in the innovation system – tying their fortunes more tightly to the broader success of the cluster, industry or indeed nation. To do so is imperative that we develop a much stronger understanding of the (full potential) positive role that big business can play in networks of startups and small businesses, and structure policy to encourage more large businesses to play that role. Otherwise we will continue to see Pfizer-style dysfunctional and damaging interventions. Instead we need to work with large businesses to understand how and where they engage effectively in different innovation ecosystems both in the UK and abroad, so that their involvement is harnessed for positive commercial and social outcomes.

Author

Benjamin Reid

Benjamin Reid

Benjamin Reid

Head of International Innovation - Development Programmes

Benjamin is head of the International Innovation team within Nesta's Policy and Research division, examining new global trends and practices in innovation, with an emphasis on emergi...

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