1. The Dual Role of Universities in Industrial Innovation in Emerging Economies: A Comparative Study of China and the UK Xiaolan Fu Oxford University Jizhen Li Tsinghua University

2. Motivation Universities as a major contributor to advances in basic scientific research and the creation of innovation of great novelty. Most of the received wisdom on the role of universities is based on experiences and evidence from the developed countries. What is the role of universities in emerging economies? How does the university-industry relationship in emerging economies differ from those in developed countries?

3. Proposition Dual roles of universities in industrial innovation in emerging economies 1.Serve the traditional role of Knowledge creation 2.Decipher and adapt advanced foreign technology which is transferred to the developing countries. 3.The importance of the latter role is likely to be greater than the former in the emerging economies.

4. Theoretical Framework The role of universities in national/regional Innovation system (eg. Nelson, 1990) The multi-faceted role of universities: education, knowledge creation, problem-solving activities and public space provision (eg. Hughes, 2010) Firms are able to access a diversified range of knowledge sources (Kaufmann and Todtling, 2001) University to add industrialisation (eg. Etzkowitz and Leydesdorff, 1997; Mowery and Sampat, 2005) Collaboration with universities in open innovation era (Chesbrough, 2003; Kitson, et al., 2001; Mowery, et al., 1996; Powell and Grodal, 2005)

5. Uni. & innovation in the emerging economies The level of development of an economy will influence the role of its universities: 1.Determines the level of its indigenous tech. & innovation capabilities and the major source of technology upgrading: foreign tech. acquisition. 2.Due to the lack of sufficient absorptive capacity in the local industry, there is a need to tap into the expertise in the universities. 3.Universities in these countries are capable for both shallow and deep assimilation through reverse engineering, but mostly not ground breaking research. 4.Affect the type of industrial and technology policy the government will adopt: promote univ. to serve the industries by use-driven science policies.

6. Proposition Dual roles of universities in industrial innovation in emerging economies 1.Serve the traditional role of Knowledge creation 2.Decipher and adapt advanced foreign technology which is transferred to the developing countries. 3.The importance of the latter role is likely to be greater than the former in the emerging economies.

7. Innovation in China

8. Universities and innovation in China Before 1978: central planning, soviet system, universities play an important role in NIS 1985: S&T system reforms -Marketisation of the S&T system (planning--market) -Focus on serving economic development (defence –eco) -Acquisition of foreign technology 1995: Acceleration of S&T development 2006: Strengthen indigenous innovation Universities still play important role Advocating a use-driven science policy Marketisation provided incentives for uni-ind collaboration University owned enterprises

9. Methodology Two steps 1.Test the impact of uni-industry collaboration on innovation of different levels of novelty (distinguish the country origin of the universities) 2.Benchmark evidence from China with that from a classic developed economy: UK Measurement of innovation: % of new sales 1.Novel innovation: new to the world 2.Diffusionary innovation: new to country / firm & sig. improved.

10. Measurement of uni-industry linkage 1.Uni-industry collaboration, with: -domestic university -uni in NIEs -US & Europe -Other countries Controls: -other external R&D activities -In-house R&D -Firm size, age, sector, human resources

11. Estimation Strategy Tobit model Generalised Tobit (Hurdle) model: correction of selection bias IV estimates: control for endogeneity problem between collaboration and innovation performance

12. Data Chinese CIS: 1408 manufacturing firms, 2005-07 In 42 cities (both coastal and inland), 83.6% response rate Cleaned sample: 802 firms highly skewed to innovative firms: 95% innovators Benchmarking: UK CIS: 2002-04, 4296 manuf. firms Assume consistency in trends in a matured economy Persistence in collaboration pattern in CIS4 and CIS5 (DTI, 2008) Matched sample: by size, industry and innovativeness 793 matched firms due to industry structural diff.

13. Results: matched sample

15. Results: China, Tobit model estimates

16. Robustness check: Hurdle model Selection bias insig. Bec 95% innovators with + new sales

17. Robustness check: IV estimates IVs: location dummy, group dummy, competition, imp. of uni. Information.

18. Universities and firm innovation in selected university concentrated cities in China

19. UK: Tobit model estimates

20. Conclusions Chinese universities have played a significant role in the promotion of the diffusion of frontier technology and the creation of diffusionary innovation. The contribution of domestic universities to the creation of novel innovation is limited in China. International innovation collaboration with foreign universities appears to be fruitful in the creation of novel innovation in China; in particular the collaboration with universities in NIEs and other countries other than US, EU & Japan. Collaboration with universities in the Western industrialised economies does not appear to be as fruitful as expected.

21. Conclusions Comparing China to the UK, Chinese firms appear to have more extensive, but less effective collaboration with universities. In the UK, collaborative linkage with domestic university is the only form which contributes significantly to industrial innovations in British firms. Policy implications: domestic universities in developing countries are best positioned to help local firms in assimilation, adaptation and development of foreign tech. Future research should investigate in-depth, in both China and UK, the reasons why international innovation collaboration with universities in the most advanced economies functions ineffectively.

22. Thank you!