1. The Impact of Higher Education on Regional Economies Research Initiative University-Industry Knowledge Exchange: Demand Pull, Supply Push and the Public Space Role of Higher Education Institutions in the UK Regions Maria Abreu, Alan Hughes, Michael Kitson and Vadim Grinevich Centre for Business Research University of Cambridge 10th October, University of Strathclyde, Glasgow

2. The Impact of Higher Education on Regional Economies Research Initiative Research Objectives Identify the factors that affect the incidence, form, effectiveness and regional impact of knowledge exchange activities between business and HEI in the UK. Identify the way these interactions vary across UK regions and within those regions. –Knowledge exchange includes the full range of ways in which the businesses and the higher education sector interact Consider the objectives and the evaluation of their success from both a business (or 'demand' side) perspective and from the academic (or 'supply' side) perspective. Draw implications for public policy in the area of knowledge exchange and regional development.

3. The Impact of Higher Education on Regional Economies Research Initiative Research Background: Collaboration and CBR Research Expertise Collaborator: Council for Industry and Higher Education (CIHE) – Philip Ternouth Related Previous Projects –International Innovation Benchmarking and the Determinants of Business Success (funded by the Cambridge-MIT Institute) –Regional Variations in Innovation and Absorptive Capacity (funded by DTI) Related Expertise –CBR Survey and Database Unit

4. The Impact of Higher Education on Regional Economies Research Initiative Project: Methodology Stage 1: scoping case studies –develop and refine the questions in the national surveys (stage2). Stage 2: development and empirical analysis of large scale surveys –Businesses –Academics Stage 3: detailed case studies of knowledge exchange activities in selected sectors and regions (informed by stages 1 and 2)

5. The Impact of Higher Education on Regional Economies Research Initiative Background: the Evolution of University – Business Knowledge Exchange The ‘laissez faire’ model –Importance of chance, luck and serendipity The standard model –Focus on a narrow range of technology transfer mechanisms The wider model –Focus on a wide range of interactions –Exchange rather than transfer

6. The Impact of Higher Education on Regional Economies Research Initiative The Laissez Faire Model Universities focussed on two missions – research and education Example: the ‘Cambridge Phenomenon’ developed when the University took little active interest in business engagement. In the past: –University largely ignored IP issue –Adopted a liberal attitude to what academics did –Industrial liaison merely acted as ‘window’ on what the university did – little exchange or dialogue

7. The Impact of Higher Education on Regional Economies Research Initiative The Standard Narrow Model Narrow focus on Technology Transfer Mechanisms: Patents, Licenses, Spin-outs Limitations –Model is incomplete –Potential financial returns were frequently over- estimated –Metrics distorting behaviour (Goodhart’s Law: any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes)

8. The Impact of Higher Education on Regional Economies Research Initiative The Wider Model: Multiple Knowledge Exchange Mechanisms Educating people Increasing the stock of ‘codified’ useful knowledge Problem solving Public space functions (Universities do not move) –Relatively neglected, but distinctive –Includes networking; social interaction; meetings, conferences; entrepreneurship centres; personnel exchanges, including internships Focus on exchange and interactions

9. Knowledge Exchange – Multiple Mechanisms Educating People Training skilled undergraduates, graduates & postdocs Providing public space Forming/accessing networks and stimulating social interaction Influencing the direction of search processes among users and suppliers of technology and fundamental researchers –Meetings and conferences –Hosting standard-setting forums –Entrepreneurship centers –Alumni networks –Personnel exchanges (internships, faculty exchanges, etc.) –Visiting committees –Curriculum development committees Increasing the stock of ‘codified’ useful knowledge Publications Patents Prototypes Problem-solving Contract research Cooperative research with industry Technology licensing Faculty consulting Providing access to specialized instrumentation and equipment Incubation services Source: A. Cosh, A. Hughes and R. Lester UK PLC Just How Innovative Are We? Cambridge MIT Institute 2005

10. The Impact of Higher Education on Regional Economies Research Initiative University- Business Interactions: US UK Innovation Benchmarking Survey Joint IPC MIT and CBR Cambridge Innovation Benchmarking Survey (Source: Cosh, Hughes and Lester, 2005) –Unique survey comparing UK and US 2005 –Manufacturing and Business Services –Overall Sample: 2129(UK) 1540 (1540)

11. The Impact of Higher Education on Regional Economies Research Initiative University-Business Interactions: Results from US UK Innovation Benchmarking Survey To increase innovation, businesses engaged with companies using a wide range of interactions Informal contacts are most frequent Conventional modes of university output (graduates, publications, conferences) amongst most frequently cited Licensing and patenting amongst least frequently cited

12. The Impact of Higher Education on Regional Economies Research Initiative Types of University Business Interaction Contributing to Innovation (% Companies) 0102030405060 Non-exclusive licensing of University held patents Innovation-related expenditure spent on universities Exclusive licensing of University held patents Internships Joint research and development projects Problem-solving / consulting by university staff Recruitment at post doctoral level Testing and standards Conferences Publications Recruitment at first degree, or masters level Informal contacts US UK Source : A. Cosh, A. Hughes and R. Lester UK PLC Just How Innovative Are We? Cambridge MIT Institute 2005

13. The Impact of Higher Education on Regional Economies Research Initiative University Business Interactions and Innovative Activity: Degree of Importance How important are interactions? US companies rate all interactions as highly important more frequently than UK US companies place a relatively high importance on –Licensing, joint R&D and problem solving BUT this is a low frequency activity –Post doc and graduate recruitment and internships AND this is a high frequency activity Differences less marked for informal contacts, publications

14. The Impact of Higher Education on Regional Economies Research Initiative Universities in the Innovation ‘Ecosystem’ In both countries universities are ranked low in frequency of use Customers, suppliers, competitors and internal knowledge are the dominant sources In all cases UK firms are more frequent users of external sources than US In all but 3 cases (competitors, in-house knowledge, clients and customers) US companies were more likely to rate the knowledge sources as highly important than the UK –Especially public sector, university and private research institute sources

15. The Impact of Higher Education on Regional Economies Research Initiative Use of Sources of Knowledge for Innovation: All Companies % Source: A. Cosh, A. Hughes and R. Lester UK PLC Just How Innovative Are We? Cambridge MIT Institute 2005

16. The Impact of Higher Education on Regional Economies Research Initiative The Importance of Diversity We should, however, guard against a situation where all our universities aim for the same goals. What is required is a diversity of excellence, with research universities focusing on curiosity driven research, teaching and knowledge transfer, and business-facing universities focusing on the equally important economic mission of professional teaching, user-driven research, and problem solving with local and regional companies. Sainsbury (2007): The Race to the Top: A Review of Government’s Science and Innovation Policies, p.44

17. The Impact of Higher Education on Regional Economies Research Initiative Universities and Innovation: the Importance of Diversity and Local Economic Structure A.Knowledge Generating Locations Indigenous creation of new technologies B.Knowledge Using Locations Tranplantation of new economic activity into region Diversification of existing industry into new activities Upgrading of mature industries Adapted from Richard Lester Universities, Innovation, and the Competitiveness of Local Economies: A Summary Report from the Local Innovation Systems Project – Phase I, MIT IPC Working Paper IPC-05-010, December 2005

18. The Impact of Higher Education on Regional Economies Research Initiative The Importance of Diversity Developing New Technologies - the Tale of Two Cities Strong biotechnology clusters in the Cambridges (USA and UK) But the development of the industry in the two cities reflects different trajectories and different challenges Indicates the importance of understanding the geography and history of place

19. The Impact of Higher Education on Regional Economies Research Initiative 1 mile Source: MIT Entrepreneurship Centre

20. The Impact of Higher Education on Regional Economies Research Initiative 8 miles

21. The Impact of Higher Education on Regional Economies Research Initiative University-Business Interactions: Constraints and Hurdles Misaligned Incentives Time frames Institutional Differences Vertically organised businesses Horizontal flat Universities Cultural differences ‘Language’ differences Lack of skills and competences at the collaboration interface (the ‘boundary spanning’ function) Funding (especially where the social rate of return is high but the private rate of return is low or widely spread)

22. The Impact of Higher Education on Regional Economies Research Initiative Aligning Incentives – Knowledge Exchange in which space? Consideration of Use NoYes No Yes Quest for Fundamental Understanding Source: D. Stokes (1997) Pasteur’s Quadrant Washington Brookings Institution

23. The Impact of Higher Education on Regional Economies Research Initiative Project: Key Research Questions What are the processes by which opportunities for knowledge exchange are recognised by businesses and academics? What are the key motivations and objectives of the parties to the knowledge exchange and their implications for the incidence and effectiveness of the exchange process? What factors affect the choice of modes of knowledge exchange? How do the parties to knowledge exchange measure success?

24. The Impact of Higher Education on Regional Economies Research Initiative Project: Key Research Questions What factors affect the geographical location of partners to knowledge exchange and the consequent potential impact upon the regional and sub-regional economy of the exchange process? What factors affect differences across regions and sub- regions in the incidence, form, perceived success and impact of exchange interactions? Is the region the appropriate scale at which to identify, measure and seek to develop policy in relation to knowledge transfer and can other geographical scales be identified such as the city or other sub regional grouping? What is the extent of extra regional knowledge exchange activity?

25. The Impact of Higher Education on Regional Economies Research Initiative University-Industry Knowledge Exchange in the UK Regions: The State of Play There is no one ideal model of university-business interactions Each individual case requires –a strategic view by universities of their capabilities –a strategic view by region of sectoral requirements –a careful matching of university capabilities and regional development path needs The need for more evidence on the role and impact of university-business interactions in the innovation ecosystem.