Innovation comes from many actors, both big and small. We need to properly fund all of them.

Canadian physicist Willard Boyle’s 2009 Nobel Prize has cast fresh light on a long-standing question: What is the best way to support scientific research in Canada? This issue is not only of interest to the science community. Our collective economic future depends on creative ideas and the means to transform them into value-added products and services. But what is the best way to stimulate the creative ideas that prime the pump of innovation? All agree that a focus on research excellence will ensure a steady stream of ideas. But what is the best way to fund that excellence? Some suggest excellence requires placing the lion’s share of public financial resources in the hands of a limited number of research institutions. Personally, I don’t see it that way.

The idea of centralizing resources was widely publicized this past summer when the presidents of Canada’s five most research-intensive universities proposed that their institutions “be given the means and mandates to set themselves still further apart from the rest of Canada’s universities to pursue world-class scientific research and train the most capable graduate students, while other schools concentrate on undergraduate education,” as reported in the July 28 issue of Maclean’s.

Similar views in support of centralization were expressed at the Canadian Science Policy Conference held recently in Toronto.

These "Big Five" universities argue that Canada can only compete with the best in the world if we have focused research powerhouses. But that argument isn’t logical in the Canadian context. Canadian researchers punch well above their weight in the creation of new knowledge. In its 2008 international review of its Discovery Grants program, the Natural Sciences and Engineering Research Council of Canada, or NSERC, reported that Canada ranked first among G7 countries in publications per capita. Research quality indicators rated Canada fourth among the G7. By contrast, the Canadian business sector suffers from an innovation gap compared to other nations.

The sources of this gap are many, but according to a report presented to the May 2009 meeting of the Canadian Economic Association, one factor is Canadian business’ lower demand for innovation inputs such as R&D. Further, the “State of the Nation 2008” report from the Science Technology and Innovation Council ranked Canada 24th out of 26 OECD countries in business collaboration with public and/or private partners in innovative activities, and 23rd of 26 in firm collaboration with higher education institutions. Canadian business is just not seeking collaborations with Canadian researchers, the sources of creative ideas for new technologies. It is not clear how this would be improved by centralizing research resources in fewer hands.

Another argument against centralization is the need to train highly qualified personnel. Canada needs citizens with the specialized skills to drive knowledge creation and innovation; these citizens are a key part of Canada’s technology capacity. The ability of firms to take advantage of new knowledge requires that they employ skilled workers who possess both codified (text-based) and tacit knowledge (“know-how”) knowledge. A very effective way to convey such knowledge is by university training of PhDs. According to Statistics Canada, Canada already underperforms in the production of these most highly qualified personnel. Funnelling more research money to a handful of publicly funded research universities will not necessarily lead to the training of more knowledge experts for the new economy. Removing research funds from smaller institutions to feed the “Big Five” might just as well have the opposite effect and further lower Canada’s output of PhD graduates, undermining its capacity to develop and implement technology.

A concrete example of a non-centralized funding model that works is the NSERC Discovery Grants program mentioned above. The international review of the program was carried out to address concerns that high success rates for NSERC applicants (70 per cent in 2007, and 64 per cent in 2009) meant “excellence” was being sacrificed to a “love-all-serve-all” mentality. The review soundly rejected this view. It concluded that the relatively high success rate encourages research excellence across a broad range of fields, that the best researchers use the NSERC grants to leverage internationally competitive levels of support from other sources, and, tellingly, that the broad base of NSERC grants sustains national research capacity and student training. Further, even small-size grants supported high quality research. This decentralized funding mode contributes significantly to meeting the nation’s need for research capacity, creative ideas, and highly qualified people.

Canada currently has a diverse university sector, with institutions ranging from the very small to those which are already star performers on the world’s research stage. This decentralized model certainly needs adjustment, but in a broad way it works. Placing more resources in fewer hands will not make Canada a stronger science nation.