Universities in the National Innovation System
The conventional view as recently as the mid-1980s was that the most important contribution universities make to industrial innovation is in the training of industrial scientists and engineers. With the exception of the applied biological and biomedical sciences, university research typically did not generate new commercial products or technologies. The role of universities in the research process was to conduct basic research, leaving industry to focus on short-term problem solving and product development. This could be thought of as an efficient division of labor. Commercial enterprises are not well suited to doing basic research because their perspectives are narrow and, since the path from basic research knowledge to specific commercial products is long and circuitous, it is difficult to appropriate the value of advances in basic scientific knowledge. On the other hand, universities are not well suited to doing the kind of research needed to improve or bring to market new products and processes. The science involved in developing a marketable technology is usually old science. What is important in development is that researchers have a detailed understanding of user needs and existing technology. University professors are too far from the market or the factory floor to make good commercial judgments in areas of product or process development.
By the 1990s it became clear that traditional models of innovation such as the “linear model” of Vannevar Bush were too simple to describe modern systems of innovation. Modern innovation is complex and generally is not conducted within the boundaries of a single firm. Recent theories of innovation such as the “Mode 2” concept of Michael Gibbons and the “Triple Helix” theory popularized by Etzkowitz and Leytesdorff describe the modern innovation process as being collaborative, interdisciplinary, and network-based with close ties between universities, industry and, in the case of the Triple Helix theory, government.
Coincident with these changes in the innovation process have been new aspirations for what a more applied university research agenda could mean for university revenues and, in a broader context, for local employment and prosperity. Since the early 1980s, first in the United States and then throughout the OECD, there has been a push to encourage universities to engage in research with commercial application and to exploit the potential role universities could play in building regional clusters of high-technology firms. These ambitions have been supported with significant changes in government and university policies. Most notable in federal public policy was the U.S. Bayh-Dole Act of 1980 that allowed universities to patent and license inventions developed from federally funded research. Universities then moved to set up technology transfer offices, which would assist with the commercialization of university research, and science parks that would provide spatial proximity and the potential for greater knowledge sharing among high-technology tenant firms.
Evidence on the effectiveness of the U.S. Bayh-Dole Act is mixed. University-owned patents did begin to rise more rapidly after the passage of the Act, although it is doubtful that Bayh-Dole was responsible for all of that growth. Concerns that Bayh-Dole might reduce the amount of basic research done at universities and undermine the open science format of university research seem overblown and are not supported by the data. On the other hand, outside of a few “home runs,” university-licensed inventions have not generated large amounts of revenue for universities. Surveys of industrial research managers indicate that informal channels of knowledge transfer such as academic publications, conferences, and faculty consulting are more important to firms as sources of university knowledge than are licensing agreements.
With very few exceptions, most notably the Research Triangle Park in North Carolina, university science and research parks have not been successful in building high-tech clusters. While spatial proximity to a research university seems to be a necessary condition for the location of an industrial innovation cluster, it is certainly not a sufficient condition. Most major industrial high-tech clusters, including Silicon Valley, evolved through a special set of historical circumstances that would be difficult to replicate. In market economies, industrial clusters are self-organizing and owe more to local entrepreneurial spark and culture than to availability of venture capital, policies of local universities to commercialize their research, or to special relocation incentives provided by state and local governments.
Grimaldi, R., M. Kenney, D. Siegel, and M. Wright (eds.), “Special Issue: 30 Years After Bayh-Dole: Reassessing Academic Entrepreneurship,” Research Policy (October 2011): 1045-1144.
Nine papers on the Bayh-Dole Act of 1980, assembled on the occasion of the 30-year anniversary of the Act, are included in this issue of Research Policy. Some of the papers and their conclusions are (1) after looking at data for eight universities covering the period from 1983 through 1999, Thursby and Thursby find no evidence that Bayh-Dole has reduced basic research activity at U.S. universities or compromised the traditional open science format of university research; (2) articles by the editors and by Geuna and Rossi describe and evaluate legislation similar to Bayh-Dole that has been enacted by European countries; and (3) in an analysis of experiences at 90 U.K. universities, Clarysee, Tartari, and Salter find that the entrepreneurial orientation of an individual academic is the most important factor determining involvement in entrepreneurial ventures, with the operations of technology transfer offices playing a minor role.
Mowery, D., R. Nelson, B. Sampat, and A. Ziedonis (eds.). Ivory Tower and Industrial Innovation: University-Industry Technology Transfer Before and After the Bayh-Dole Act, Stanford, CA: Stanford University Press, 2004.
The effectiveness of the Bayh-Dole Act of 1980 in promoting technology transfer between U.S. universities and industry is critically assessed in this monograph. The authors provide (1) a long historical perspective on the importance of American universities to industrial innovation, focusing on the prevalence of patenting at universities before Bayh-Dole; (2) an overview of the available descriptive statistics on patenting and licensing activity at the University of California, Stanford University, and Colombia University; and (3) detailed case studies of the technology transfer process for five specific inventions patented and licensed by Colombia University and the University of California. Based on their findings and given the unique competitive landscape of the U.S. university system and the long history of university-industry collaboration in the United States, the authors offer cautioned encouragement to other countries seeking to adopt technology transfer policies similar to Bayh-Dole.
Mowery, D. and B. Sampat, “Universities in National Innovation Systems.” In J. Fagerberg, D. Mowery, and R. Nelson (eds.). The Oxford Handbook of Innovation, Oxford: Oxford University Press, 2005, pp. 209-239.
This is the principal chapter in The Oxford Handbook of Innovation on the role universities play in the process of industrial innovation. Among the major subjects reviewed are (1) alternative theories of how universities can best contribute to industrial innovation, from the “linear model” of Vannevar Bush to more recent theories such as “Mode 2” and “Triple Helix” where the optimal innovation process is collaborative, interdisciplinary, and network based; (2) findings from surveys of industrial managers that reveal the industries in which industrial research is most closely dependent on university research, the particular academic departments that industrial managers value, and the relative importance of university patents and licensing agreements as compared with other sources of university knowledge such as academic publications, conferences, and faculty consulting; and (3) a critical assessment of the effectiveness of government policies designed to strengthen the connection between university research and industrial innovation, including “science parks” and the U.S. Bayh-Dole Act.
Nelson, R., “Institutions Supporting Technical Advance in Industry,” American Economic Review 76 (May 1986): 186-189.
The findings from the important 1984 Yale Survey of 650 high-level R&D managers on the importance of universities to industrial research activities are analyzed in this report. Nelson concludes that, with the exception of applied biological and biomedical sciences, university research does not directly generate new commercial products or technologies as much as it raises the productivity of industrial R&D. In his interpretation of the survey results, the most important contribution universities make to technical advance in industry is in the training of industrial scientists and engineers.
Rosenberg, N. and R. Nelson, “American Universities and Technical Advance in Industry,” Research Policy 23 (1994): 323-348.
This is a classic and important paper on the appropriate role of university research in the process of technological advance. Using principles of economics together with a detailed historical analysis of research at American universities dating back to the mid-19th century, the authors explain how an efficient division of labor has evolved in which universities conduct basic research and industry focuses on short-term problem solving and product development. The authors agree that it is reasonable for society to expect university research to be bound by broad practical guidelines but note that the lion’s share of university research has concentrated in engineering and applied sciences. Because of the sensibility and economy of the current division of labor, it would be a mistake to incentivize universities to allocate research resources on the basis of commercial criteria and expect academic research to become a substitute for industrial research.
Veugelers, R., “The Contribution of Universities to Innovation, (Regional) Growth and Employment,” European Expert Network on Economics of Education (EENEE) Report No. 18, January 2014.
The author provides a review of 151 articles, drawn primarily from the economics literature, that deal with the contribution universities make to innovation and economic growth. The articles reviewed are mainly U.S. studies, but the review is intended for an audience of European policymakers interested in deciding whether universities should be encouraged to be more entrepreneurial in their efforts to commercialize research. The review is broad in scope dealing with topics that range from the long-run, idiosyncratic pathways from basic research findings to commercialized technologies to issues of how to operate a university technology transfer office. Specific topics reviewed by the author include (1) macroeconomic evidence on the contributions universities make to innovation and growth, including studies of the interrelationship between university and private-industry R&D spending; (2) microeconomic evidence that relates university research to innovation, including researcher mobility as a pathway for knowledge transfers; (3) issues of how to best effect technology transfer including the assignment of intellectual property rights, incentive structures, and technology transfer offices; (4) measures of technology transfer such as university patents, licensing agreements, university spin-offs, and student spin-offs; and (5) the importance of informal modes of technology transfer such as publications, conferences, and industry employment of graduate students and Ph.D.s from research universities.