A company with greater flexibility when it comes to recruiting can be more innovative, but only up to a certain point, according to an Applied Economics study by the University of the Basque Country

The formula for success in innovation is about finding the middle ground. Although some studies assert that the more flexibility a company enjoys when it comes to recruiting or firing workers, the less capacity it has for innovation, there are in fact subtle differences. This is the conclusion of a study carried out by researchers from Applied Economics Department V of the University of the Basque Country (UPV/EHU) and published in the Industrial and Labor Relations Review. “We have noticed that in the case of Spanish manufacturing, flexibility contributes positively towards innovative activity up to a certain threshold. In other words, the company has to have a certain degree of flexibility to handle the shocks taking place in demand, and technical change, although beyond this threshold the contribution of flexibility towards innovation is negative,” explains Amaia Altuzarra.

Altuzarra is a member of the team of economists of the UPV/EHU that analyses the connections between the labour market, competitiveness and job creation. In this team she and her colleague Felipe Serrano focus on the microeconomic aspect: “On this occasion we tried to study which framework of labour relations is most suited to generating innovation and employment.” These relations are determined by functional flexibility, which consists of the possibility of moving workers from one post to another, and by numerical flexibility, which refers to the capacity of companies to modify their numbers of workers or hours. Numerical flexibility is one of the cornerstones in this line of study.

They have established that the flexibility-innovation relationship is not in fact completely linear. Now the research is looking at whether this relationship varies depending on the team of workers the flexibility measures are associated with. Specifically, they are studying engineers/scientists on the one hand, and technical support staff, on the other; these are the two labour groups most closely linked to innovative activity.

The technicians, more than anyone

They used the Labour Market Census of the BAC (Basque Autonomous Community) and its results for 2000, 2004 and 2008. “This means we can study the various occupations, which enables us to open up a channel which is unusual in the literature,” says Altuzarra. She points out that for practical reasons the study is limited to the manufacturing sector. Specifically, focus has been placed on the relationship between two aspects: the recruiting arrangements used by companies for the different types of workers, and the outputs obtained in the form of innovations (in the product as well as in the process).

The results so far have shown that the connection between innovation and numerical flexibility does in fact vary according to professional category, with the technicians being the most faithful to it. “For example, engineers and scientists on permanent contracts contribute positively towards the obtaining of innovations in the company. By contrast, technicians contribute more towards innovation when they are bonded to the company through temporary contracts. The company may use these workers to capture the external knowledge it needs to resolve specific, one-off problems, whereas the accumulation of more generic internal knowledge is done through the engineers and scientists,” says Altuzarra.

Innovation is diverse

When talking about innovation within the company, there are many characteristics to take into consideration: contract type, training, structural elements (size), the sector and market structure (whether sales are made in the local, national or international ambit), etc. For example, “companies that gear their products towards the international ambit are more innovative, because the international markets are much more demanding.”

Nevertheless, Altuzarra stresses that innovation can have different forms and that there is no one company type nor single model to be followed: “What we want to get over is that innovation is highly diverse and that different types of company co-exist within a single industrial base. What prospers on the markets is an innovative company irrespective of its size and the sector in which it is located, and a company in a traditional sector can be highly innovative.” She admits that large companies usually have a greater capacity for innovation owing to the simple fact of having more resources available for investment, in R+D, for example. Nevertheless, the data in the BAC show that they are not the only ones: “There are small enterprises that have great dynamism and the capacity to adapt to the markets. We came across a group of companies (of between 50 and 100 workers) that are very dynamic, innovative and engaged in exporting.”

With the research in the BAC well advanced, the challenge facing these UPV/EHU economists now is to test the same hypotheses in Spain using a Survey on Business Strategies. This is a database that gathers annual samples (that of the BAC, by contrast, is only updated every four years), and it spans the period between the 1990s and today. “We have a broad range of years to be able to conduct econometric analyses that are more robust,” concludes Altuzarra.

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For a bigger harvest and faster results: The University of Hohenheim, the MPI for Molecular Plant Physiology and the Leibniz Institute of Plant Genetics and Crop Plant Research in Gatersleben start a new chapter in plant breeding

In order to breed new varieties of corn with a higher yield faster than ever before, researchers at the University of Hohenheim in Stuttgart, Germany, and other institutions are relying on a trick: early selection of the most promising parent plants based on their chemical and genetic makeup, as well as on new statistical analysis procedures. The work has now been published in the authoritative journal Nature Genetics on Sunday evening, Jan. 15.

The problem is the sheer number: In the family tree of modern-day corn, there are two main groups with 10,000 pure-breed lines each. Each of these lines could potentially be used for producing a new variety by means of cross-breeding. In mathematical terms, that equates to 100 billion possibilities. In terms of corn, however, a parent’s performance is no indicator of what potential lies hidden in their offspring. Even the feeblest of parents can produce mighty offspring when cross-bred.

But time is of essence: Currently it takes approximately 10 years for breeders to develop a new variety. Issues such as climate change, food shortages and the increasing demand for more energy, however, are making it essential to find solutions even faster.

Prof. Dr. Albrecht Melchinger, PhD student Christian Riedelsheimer and their research partners are experimenting with a new technique to solve both problems. The best parent plants are selected in two steps, beginning when they are not even planted yet or when they are just small plantlets. This saves time and guarantees the highest rate of success right from the very start.

Trick Nr. 1: Use mathematics and experience when selecting

Riedelsheimer takes a tiny sample from a kernel of corn. Not enough to harm the kernel, but enough to get a full picture of its DNA structure. This analysis is conducted jointly by the University of Hohenheim and the IPK Gatersleben.

The rest is mathematics and experience. “We know today that there is no single gene which determines whether a stalk of corn will grow up strong or produce lots of kernels on the cob. Instead there are numerous sequences in its DNA which all contribute to the plant’s development. We can now examine up to 56,000 of these sequences using the latest techniques in genome analysis”, Riedelsheimer explains.

The analysis does not involve modifying the DNA, but rather creating a unique profile of each parent, a so-called “genome profile” or “genetic fingerprint”.

To analyse the fingerprint, scientists have spent the past three years and more planting, cross-breeding, analysing chromosomes and recording yields. The observations in the field have been used to develop a mathematical-statistical model which can be used to predict a parent’s genetic potency.

Trick Nr. 2: Early selection

The composition of the leaves is a second indicator of which plants make for especially good parents. More specifically, it is about the amounts of starch, sugar, amino acids, chlorophyll and other substances. As with the genetic information, this data allows for a statistical prognosis of a plant’s breeding capabilities.

Tests can be conducted to find out the levels shortly after the seeds have been sown, when the plantlets are roughly three weeks old and 20 cm tall. Compared with analysing the plant’s genetic structure, taking samples in the field is rather an athletic activity. “The plant’s metabolism varies constantly throughout the course of a day and that makes it necessary to collect the leaves quickly and shock freeze the samples immediately”, says Riedelsheimer. “All in all we collected 6,000 samples- in just 69 minutes!”

For the technically-challenging task of analysing the substances, plant breeders work in collaboration with experts from the Max Planck Institute for Molecular Plant Physiology in Golm. The rest involves cutting-edge statistics. “Similar to the DNA profile, it is not the individual substances which are important for making predictions, but rather how these substances stand in relation to one another”, Riedelsheimer explains.

New technology saves time, money and expensive acreage

“This new technique allows us to select the most promising parents with high accuracy and to focus all of our resources on these”, says Prof. Dr. Melchinger.

This method also saves cultivatable land, which, in turn, saves money. “In order to test all possible crosses, we would have to plant corn on half of the earth’s surface”, a utopian, if not an expensive undertaking. “A single field plot costs us 50 euros. We test on two plots per genotype at ten different locations, making a total of 1,000 euros”, Prof. Dr. Melchinger explains. An analysis of the genome using a chip and a robot costs approximately 150 euros.

Impressive as well is the amount of time saved. DNA analysis of the kernels can be conducted during the winter months. Meanwhile, the plantlets to be analysed for their substance composition grow in the greenhouse. As a result, the best parent plants can be chosen and cultivated that same year.

Paradigm shift opens door to new research approaches

Nonetheless, it will take another few years until the new breed is ready. Breeders worldwide also know another trick, especially when it comes to corn. One that has been around for decades.

Prof. Dr. Melchinger describes a paradoxical phenomenon: “With corn, the offspring tend to be especially large when the parents stem from generations of in-breeding.” Experts speak of “heterosis”, hobby gardeners of “hybrids”.

The most promising parent plants are sorted out and self-pollinated over many generations. Only then does cross-pollination take place in preparation for the sowing of the new hybrid variety.

Heterosis as a biological phenomenon has yet to be fully researched in detail, according to Prof. Dr. Melchinger. “We were able to determine in earlier research projects that the reasons for the phenomenon lie in the extremely complex interaction of many different genes.”

For researchers, this has led to a paradigm shift. “We’ve moved away from the search for individual super genes.” Instead we focus on the interplay among the diverse elements in the genetic code. “This new perspective on plants will help the hybrid breeding programme immensely”, Prof. Dr. Melchinger believes. “There is so much genetic diversity in corn. One must simply know how to combine it in the right way.”

Brussels, 18 October 2011 – The European Commission’s 2011 “EU Industrial R&D Investment Scoreboard” shows that R&D investment by top EU companies recovered strongly in 2010, with a 6.1% rise following a 2.6% decrease in 2009. However, data for the world’s top 1400 companies show EU companies as a whole lagging behind major competitors from the US and some Asian economies on R&D growth. There was a general positive trend in 2010, as global R&D investment increased by 4%, a robust up-turn after the 1.9% drop observed in 2009. The global top 50 in terms of total R&D investment includes 15 EU companies, 18 US firms and 13 from Japan. Two pharmaceutical companies occupied the top spots: Roche from Switzerland (€7.2bn) followed by Pfizer from the US (€7bn). Volkswagen (€6.3bn), in sixth place, is the biggest EU investor in R&D, followed by Nokia (11th with €4.9bn), Daimler (13th with €4.8bn) and Sanofi-Aventis (14th with €4.4bn).

Máire Geoghegan-Quinn, Commissioner for Research, Innovation and Science said: “The upturn in R&D investment by EU companies is a positive signal as we seek to boost growth and jobs through innovation in Europe. However, the fact that we are still lagging behind some global competitors shows we have to improve conditions for business further, in line with our Innovation Union goals. We need quick adoption and implementation of recent and up-coming European Commission proposals on the unitary patent, on standards, public procurement and risk capital.”

US companies did even better than the EU in 2010, with R&D investment increasing by 10% (after a 5.1% decrease in 2009). Companies from some Asian countries continued to show very strong growth in R&D investment levels, including 29.5% for Chinese companies and 20.5% for those from South Korea. The 1400 companies in the Scoreboard employed more than 40 million people in 2010, a 3% increase over 2009. An analysis of the past eight years’ trends shows that employment growth in R&D-intensive sectors is generally higher than in other sectors and less affected by the economic downturn.

More than two thirds of R&D investment of EU Scoreboard companies is from those located in the three biggest Member States, with German companies showing the highest one-year growth (8.1%). This is mostly due to a few automotive companies (Daimler, Volkswagen and BMW). UK companies’ R&D investment growth was 5.8%, close to the EU average, compared to 3.8% for French companies.

In other Member States, a few large players account for high shares of R&D investment growth. These include Novo Nordisk (27.3%) and Vestas (49.8%) in Denmark and Banco Santander (56.3%), Telefonica (16%) and Amadeus (33.2%) in Spain. Fast growing companies such as TomTom (Netherlands) in the electronic equipment sector, Autonomy (UK) and Gameloft (France) in software and Morphosys (Germany) in biotech, are highlighted as success stories showing very good performance in 2010.

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