Shareholder expectations

The Crown Research Institutes Act 1992 (CRI Act) defines the role of CRIs 'to undertake research' (section 4). The CRI Act provides a set of operating principles that CRIs must follow in fulfilling this purpose. These principles are to:

• undertake research for the benefit of New Zealand,
• pursue excellence in all their activities,
• comply with applicable ethical standards,
• promote and facilitate the application of the results of research and technological developments,
• be a good employer,
• exhibit a sense of social responsibility by having regard to the interests of the community (section 5 (1)).

There are also financial principles that specify that CRIs should:

• operate in a financially responsible manner,
• maintain financial viability, defined as providing an adequate rate of return on shareholders funds (irrespective of whether or not a dividend is paid) and operating as a successful going concern (section 5(2) and 5(3)).

Besides the general principles outlined in the CRI Act, shareholding Ministers prepare an annual Operating Framework for Crown Research Institutes that provides a number of reasons for ownership and expectations.

• The CRIs are seen as having a critical and increasing role in development of the New Zealand innovation system.
• They contain strategically important, and often unique, research skills in efficient and effective organisational forms.
• They maintain and enhance capability in existing and new areas of economic, social and environmental importance.
• The CRIs are expected to originate and commercialise intellectual property but are owned primarily because of the public-good aspect of their overall capability.

In pursuit of the public good, shareholding Ministers expect CRIs to:

• have close regard to Government policy,
• pay close attention to existing and emerging national needs in their own strategic planning,
• lead and inform debate and offer policy refinement in areas where they have expertise,
• enhance and maintain their core and future capability needs,
• build the innovation system by collaborating with other CRIs, universities, research associations, industry sectors and firms and offshore entities.

Shareholding Ministers expect CRIs to have strategic and leadership roles in the innovation system and not to be simply research providers.

Expectation tensions

CRIs can to some degree apply public funding to shape the work they do to fit their own strategic intents. However, the scope for doing so is limited by the need to satisfy the requirements of clients. This often leaves them with a wide range of tensions to manage:

• Acting as commercially sustainable entities while under the expectation that they should have close regard to government policy.
• Acting as commercially sustainable entities and custodians of science capabilities for New Zealand.
• Balancing their views of benefit to New Zealand against the different views of benefit to New Zealand held by RS&T purchase agents and client government departments.
• Balancing research-originated views of future directions for sectors against the prevailing views of the future within the sectors.
• Managing the need to work with industry partners on immediate or pressing issues of the day without unduly compromising the ability to carry out exploratory research with uncertain pay-offs in the more distant future.
• Balancing research that supports existing sectors with research that might create new ones.
• Balancing expectations about commercialising IP and acting commercially with user expectations that knowledge and technologies should be transferred readily to them.