Insight

Innovation is sometimes treated as a race towards maximising the bottom line: one where only commercial outcomes matter and impact is measured in exports, market share, or investor returns. But that lens misses something critical. Many of the most important benefits of research and development are felt locally. In this article, we review the importance of place-based R&D support mechanisms. The overarching principle is clear: think globally – act locally.

Capturing Innovation Value Chain

Scotland, and indeed much of the UK, is often not the final destination for commercialisation of cutting-edge innovations. Whether it is scaling of quantum computing or drug discovery in novel modalities, the commercial opportunity of the final product or service may lie outside our borders. That geographic mismatch between technical capability and end market is not a threat, but rather a reality of a globally networked economy. In this environment, it is important to find mechanisms that can maximise the local value of globally oriented innovation.

The innovation value chain starts long before the global scale. The foundational and applied R&D, prototyping, regulatory validation, design work and high-value manufacturing often happen right here in labs, universities, and pilot sites across the UK. And when those activities are embedded in local ecosystems, the returns extend well beyond the immediate economic returns.

Case for Place-Based Acceleration

The argument for investing in local innovation ecosystems is not new or theoretical. The UK has decades of experience in using public funding to catalyse regional R&D activity, most notably through the European Regional Development Fund (ERDF). Between 2014 and 2020, ERDF channelled over £3.7 billion into research and innovation across the UK, with a particular focus on levelling up less prosperous areas. Evaluations consistently showed that ERDF-backed innovation projects helped SMEs overcome critical barriers, enhanced research infrastructure, and created highly skilled jobs in regions that had historically been underserved.

Following the UK’s exit from the EU, the UK Shared Prosperity Fund (UKSPF) was introduced as its domestic successor. UKSPF is still maturing, and the evidence base is limited, but early delivery plans suggest it is taking a similarly place-based approach: supporting business-led innovation and regional skills development, often through local authorities and civic partners.

The Engineering and Physical Sciences Research Council has gone a step further with the launch of Place-Based Impact Acceleration Accounts (PBIAAs). These accounts are strategically designed investments intended to strengthen regional innovation systems by accelerating the translation of research into economic and societal value, anchored in specific geographic areas.

Two promising examples of currently ongoing PBIAAs are Tay Health Tech in Tayside and the Industrial Biotechnology Innovation Catalyst (IBIC) in the North West of England.

• Tay Health Tech brings together regional NHS partners, universities, and SMEs in the Tayside region to co-develop and translate digital and community health technologies. The programme offers funding towards the acceleration of the impact of medical device use in the community, complemented with expert technical and commercialisation support, as well as access to the local NHS innovation infrastructure. Tay Health Tech has a strong focus on responsible innovation and community engagement in R&D with the goal of creating new solutions that can drive the use and impact of healthcare technologies in the community. The purpose of this ecosystem is to help reduce health inequalities across Tayside.
• IBIC is focused on industrial biotechnology and the bioeconomy, a globally competitive sector with significant climate and manufacturing implications. Led by a consortium of North West England universities, IBIC supports R&D at early stages of innovation to move towards real-world impact and scale-up through funding for commercial development, access to scale-up facilities and acceleration of knowledge exchange and skills development in the industrial biotechnology sector.

These examples show what happens when R&D investment is tied to place but not limited by it. Instead, these clusters are building ecosystems that can deliver globally relevant innovation from a local foundation and ensure that the social, economic, and institutional benefits of that innovation remain in the region long after the technology moves on.

Local ecosystems benefit from their part in global value chains

One of the recurring misconceptions in innovation is that if a region is not the final commercial destination for a product or service, it will not see any real benefit from being involved in its development. In practice, regions that host the early stages of innovation activity can experience a range of durable, compounding benefits.

Local talent development

Regional R&D activity strengthens the pipeline of skilled people who can drive future innovation. Universities and research centres involved in collaborative programmes don’t just produce IP but also train researchers, engineers, data scientists, clinicians, and technologists who are embedded in the local community. Many of these individuals go on to join local SMEs, set up spin-outs, or stay in the public sector, where they carry forward innovation-ready mindsets. The presence of high-quality, applied R&D work makes it more attractive for those in the early stages of their careers to stay in the region, helping to counter any brain-drain effects.

Collaborative infrastructure

R&D does not happen in isolation. It relies on physical, digital, and organisational infrastructures to bring together universities, industry, and the public sector. Place-based accelerators like IBIC or Tay Health Tech help to establish and sustain a collaborative infrastructure that will outlast individual projects, becoming assets for future innovation across adjacent sectors or technologies. They also have the potential to create trusted relationships between local actors which improves the speed of knowledge diffusion.

SME engagement and diversification

SMEs are central to innovation, yet many find existing funding routes inaccessible due to low success rates, heavy administrative burdens, and regional disparities in award allocation. For some, this creates the perception that innovation is not for them. Place-based accelerators help address this by offering locally accessible funding, lighter-touch processes, and embedded support. By making innovation feel achievable and relevant, these models draw SMEs into new collaborations, build confidence, and open pathways for diversification and long-term capability growth.

Spin-out activity and domestic IP reuse

Not every innovation ends up scaling globally in its original form. In many cases, IP developed for one use case or market is repurposed or reconfigured to meet local or adjacent needs. This creates opportunities for new spin outs or licensing arrangements that keep economic value close to where the original R&D was carried out. Regions that house early-stage innovation are often first in line to adapt or localise the solution for their own systems and processes.

Public sector capacity and institutional readiness

Finally, place-based innovation activity builds the capacity of public sector organisations to engage meaningfully with new technologies. This is a long-term asset. Health boards, councils, and local enterprise partnerships involved in place-based accelerators learn how to procure innovation, shape demand, and co-develop solutions with end users. This makes them more agile and responsive in the future, able to adopt and scale innovation more effectively.  In turn, this positions the region as a preferred testbed or pilot partner, attracting further innovation investment.

Making Place-Based Acceleration Work

At the IBIC 2025 conference, Professor Richard Jones, the Vice-President for Regional Innovation and Civic Engagement at The University of Manchester, set out four principles for how place-based R&D funding should be shaped to maximise turning public investment into meaningful regional impact:

• Place-based R&D funding should be focused on raising regional productivity. The primary goal should be to drive long-term economic performance across the UK, not just to redistribute activity. That means linking R&D investment directly to local productivity gaps and opportunities.

• Place-based R&D funding should focus on topics building on existing industry clusters and support regional industrial strategies. Funding should not be scattergun. It should align with the strengths and priorities of local economies that are approaching a critical mass of expertise and infrastructure.

• Where industry clusters cross political boundaries, places should collaborate. Innovation systems don’t follow administrative lines. When clusters naturally span regions, funding models should enable collaboration across boundaries, not reinforce silos.

• The goal should be to raise private sector R&D by supporting existing businesses, promoting start-ups and spin-offs, and providing support for them to scale up. Public investment must act as a catalyst for business-led innovation. This means supporting not just research, but also commercial translation, venture creation, and the infrastructure required to scale.

Based on our work at Optimat, focused on cluster analyses and industry forecasting across a range of technological sectors, we suggest three further principles to guide maximisation of return on investment into place-based R&D:

• Place-based innovation needs long-term commitment. One-off project funding can kick-start activity, but ecosystems take time to build. Lasting impact depends on continuity, allowing trust, governance structures, and shared infrastructure to take root and mature.

• Local actors need easier access to funding and support. Access to funding is often challenging for SMEs due to very high competition, strict eligibility criteria, and the time required to develop a compelling application and manage the follow-on reporting. The administrative burden should be reduced, processes simplified, and funding mechanisms made flexible enough to reflect local realities.

• We need a shared national approach to learning best practices. A coordinated effort to capture and share learning across place-based initiatives would help scale what works, avoid duplication, and inform future policy design. This requires both formative and summative evaluations that not only assess outcomes at the end of a programme, but also actively generate learnings throughout delivery. It also calls for deep-dive research into the specifics of local innovation systems, including their strengths and weaknesses, and defining what makes regional innovation ecosystems successful. National agencies should support mechanisms to identify and share best practices across regions, so that promising models can be adapted and adopted elsewhere.

Conclusion

Place-based impact acceleration models are promising mechanisms to support regional growth across a range of technologies and sectors. From health and industrial biotech to digital and net-zero technologies, place-based models can accelerate innovation while strengthening regional economies. They offer a route to more inclusive growth, more resilient supply chains, and deeper engagement between research institutions, SMEs, and the public sector.

Scotland and the broader UK have the right ingredients for success that include a strong research base, specialised industry clusters, and growing momentum for collaboration between academia, industry, government, and civil society. The opportunity lies in building regional innovation ecosystems that are globally connected, locally rooted, and nationally significant. This will only be facilitated through shared learning of best practices in place-based acceleration.