How does academic research really benefit business? By Federica Rossi and Aldo Geuna

imageRecent in-depth studies of companies that work with academics challenge some commonly held ideas about technology transfer. Dr Federica Rossi and Professor Aldo Geuna look at the evidence to determine the most effective ways that research can help business.

In an international economic environment where innovation processes are increasingly open and decentralized, companies’ ability to innovate often depends on acquiring knowledge from external sources: in particular, it depends on companies quickly identifying the knowledge they need and integrating it with their internal research, development and production processes. Interactions with universities allow companies to embed scientific knowledge in their internal innovation processes, an accomplishment which is particularly important in high technology sectors, but increasingly across the board.

While in recent years university-industry interactions have become the focus of a growing academic literature, much remains to be learned about the factors that promote such interactions and about how they really unfold. Our knowledge of how companies engage in technology transfer – how they access, exploit and build upon academic research – is particularly lacking.

Thanks to two original and in-depth surveys of companies and company-based inventors in North-West Italy, we have been able to shed some light on the dynamics of university-industry technology transfer from the companies’ perspective (Geuna and Rossi, 2015). While some of our findings support arguments already made by previous research – among others, that companies value science which is openly disseminated through scientific publications and conferences rather than through proprietary means such as licenses, that the more educated the workforce the better able companies are to exploit academic knowledge and, relatedly, that larger and more research intensive companies are more likely to interact with universities – they also shed light on some as yet unexplored issues, which challenge commonly held ideas about how knowledge transfer occurs.

 

Not all university-industry knowledge transfer involves universities

A lot of technology transfer occurs under the radar of university institutions, through personal contacts (and contracts) between businesses and academics. Direct interactions between industry-based inventors and academic researchers are an established channel through which companies access academic knowledge, and they are particularly important because they contribute to the production of valuable inventions. The share of companies that interact with universities exclusively through direct personal interactions with academics, without any involvement of university structures, is almost as large as the share of companies that formalize their interactions with the university institutions (alongside, possibly, direct interactions with academics).

Companies that do not collaborate with universities are over-represented among small companies and under-represented among large ones, and are less likely to invest in internal R&D. This suggests that company staff need an adequate level of education and competence in order to collaborate with academic staff. Among the companies that do not interact with universities, however, it is possible to identify different groups: those that do not interact because they find it unnecessary or too difficult and/or expensive, and those that do not interact with university institutions but instead they interact with individual academics outside of these institutional channels.

The latter companies are an interesting group because they are smaller and they are more likely to adopt open innovation strategies than the companies that interact with universities through institutional channels. Direct interactions with individual academics are, therefore, particularly appealing to dynamic small and medium size enterprises which probably find institutional channels too cumbersome.

 

The social sciences have a key role to play in regional knowledge transfer

Much university-industry technology transfer does not involve technology at all. Rather, a lot of interactions between companies and universities focus on providing solutions to legal, logistic, marketing, management and organizational problems. This is particularly so for interactions that occur between companies and universities based in the same region, while interactions between more distant universities (outside the company’s own region and sometimes even internationally) are more likely to concern technological issues.

Why do companies prefer to interact with regional universities, as opposed to distant ones, in order to solve business problems? The reason may depend on the fact that business problem-solving (for example, problems that have to do with human resource management, marketing, legal compliance, and so on) builds upon detailed knowledge of the socioeconomic and legal-institutional context in which the firm operates.

This requires direct interactions that allow the transfer of tacit knowledge. Instead, collaborations with distant universities involve more often codified and abstract forms of knowledge, the transmission of which does not require direct communications. Companies may also look at distant universities when they are seeking very specific knowledge that does not exist in the region.

Companies that collaborate with distant universities are often larger and tend to invest more, since technology-focused projects are usually more expensive than those focused on the solution of business problems. Nonetheless, collaborations with universities in the same region are very frequent and have important roles to play for the competitiveness of businesses and of the region overall.

 

Theoretical academic knowledge is particularly valuable to business

Our survey of company inventors has allowed us to investigate what modes of interaction between industrial inventors and academic researchers led to the realization of more valuable inventions. We have found that collaboration setups that involve direct interactions between industry imageresearchers and academics tend to lead to more valuable inventions. Also, interactions where universities transfer theoretical knowledge and scientific principles (instead of more applied knowledge) lead to more valuable inventions. This is an unexpected result, since it is commonly believed that the theoretical knowledge developed by academics is quite far from having an impact on industrial innovation processes. Instead the companies and the industry inventors that we interviewed find that theoretical academic knowledge directly supported their innovation processes.

 

What does this mean for universities?

In short, these results suggest three immediate implications for universities. First, universities should focus on enabling academics to interact with industry whatever the governance of the collaborations, instead of insisting on regulating all interactions between academics and companies – in fact, direct personal interactions often fit companies’ needs better and are more productive than those that are formalized through the involvement of the university institutions. Second, universities should exploit their business problem-solving competences (residing particularly in social science departments) to support the needs of local businesses and to strengthen intra-regional collaborations. Third, universities should not forget that their key source of competitive advantage resides in the development of advanced, cutting edge theories and methods rather than in the pursuit of very applied knowledge, which could also be provided by other actors in the economy.

Rather than focusing on providing solutions to immediate day-to-day problems, universities should continue to put their resources into producing the high level knowledge that very few other organizations in the economy are capable of generating.

 

Federica Rossi is a Lecturer in the Department of Management at Birkbeck, University of London, UK. Aldo Geuna is Professor of Economics at the University of Torino, Italy.  Their new book The University and the Economy:athways to Growth and Economic Development is published by Edward Elgar.


References

Geuna, A., F. Rossi (2015) The University and the Economy Pathways to Growth and Economic Development Cheltenham: Edward Elgar.

See also:

Bodas Freitas, I., Geuna, A., Lawson, C. and F. Rossi (2014) How do industry inventors collaborate with academic researchers? The choice between shared and unilateral governance forms, in Patrucco, P. (ed.) The economics of knowledge generation and distribution. The role of interactions in the system dynamics of innovation and growth, London: Routledge.

Bodas Freitas, I., Geuna, A. and F. Rossi (2013) Finding the right partners: Institutional and personal modes of governance of university–industry interactions, Research Policy, 42(1): 50-62.

Bodas Freitas, I., Rossi, F. and A. Geuna (2014) Collaboration objectives and the location of the university partner: evidence from the Piedmont region in Italy, Papers in Regional Science, 93(S1): S203-S226.

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2 Comments on “How does academic research really benefit business? By Federica Rossi and Aldo Geuna”

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  1. How does academic research really benefit business? | Blog @HEC Paris Library - April 24, 2015

    […] the Edward Elgar blog, Dr Federica Rossi and Professor Aldo Geuna explore the most effective ways that research can help […]

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