Fedea Cátedra FEDEA – Santander Capital Humano y Empleo DIMETIC, Strasbourg, 11 April 2008...

DIMETIC, Strasbourg, 11 April 2008

fedea

Cátedra FEDEA –

Santander

Capital Humano y Empleo

Natalia Zinovyeva

Foundation for Applied Economic Research - FEDEA

UNIVERSITIES AND INDUSTRIAL INNOVATION:

EMPIRICAL EVIDENCE

DIMETIC, 11 April 2008

MotivationTheoretical Background

Descriptive evidenceSurveys and case studies

Econometric studiesProblems and challenges

Universities and Industrial Innovation

Motivation

Lisbon strategy: Investing in R&D, Boosting innovation, Better education and skills

Close interactions between government, university and industry

Which form should they take?






Theoretical arguments

Market failures Suboptimal allocation of resources to knowledge production Causes:

Fundamental uncertainty in research outcomes Non-proprietary nature of knowledge Information asymmetries between users and producers

System failures Inefficiencies in interaction among agents Suboptimal supportive structures Causes:

Lock-ins in existing networks Structural inertia Failures in infrastructural provision






Correction strategies

Government as a risk taker: direct procurement of research

Incentives: public procurement, taxation relives, university labs, government funding

IPR legislation Enabling collaborative schemes Collaboration between university and industry






Evidence on system failure?

Edwin Mansfield (1991, 1998) 2 samples of 76 major American firms for 1975-1985 and 1986-1994






Role of university in knowledge clusters

Silicon Valley: beginning in 1938 from Hewlett-Packard - a spin-off of Stanford University

Route 128 knowledge cluster: since the 1930s MIT has spawned 4,000 companies employing more than a million people

Do these cases represent a rule or an exception?






Methodologies

Descriptive evidence

Surveys and case studies

Econometric studies






1. Descriptive evidence on technology transfer

Claim that university presence is important Route 128 (Dorfman 1983) Silicon Valley and Route 128 (Saxenian 1985) Cambridge, UK (Wicksteed 1985)

Counter-examples High technology centers in England (Breheny and

McQuaid 1987) Some US centers (Colorado Springs and Portland)

(Rogers and Larsen 1984) John Hopkins University (Feldman 1994)






2. Survey and case study evidence: Effect of university on firms’ location

Several studies find that firms consider university presence as an important factor for firms’ location Premus 1982: 60% of surveyed US firms Schmenner 1982: 52% Other studies on the US

Counter-examples Howells 1984: only 2.6% of firms in pharmaceuticals in

England indicate university as their first reason for choosing location, ¾ that it is not significant

Gripaios et al. 1989: only 9% indicate any university effect in the Plymouth region, England.






2. Survey and case study evidence:Effect on innovation activity

Mansfield (1991, 1998)






3. Econometric evidence: Effect of university in high-tech location

Claim that university is important for high technology location Glasmeier (1991)

247 US metropolitan statistical areas in 1982 Dependent variable: High tech employment University variable: number of colleges Controls: climate, housing prices, property tax, wage rate,

migration, educational options, freeway density, poverty rate,.. Method: OLS

No effect on high tech location (Markusen et al, 1986)

264 US metropolitan statistical areas in 1977 Dependent variable: High tech employment University variable: university R&D Controls: climate, housing prices, property tax, educational

options, freeway density, business services Method: OLS






3. Factors determining the effect of university on high-tech location (Cont.)

Sectors: Some evidence of positive effect in various sectors:

Electrical and Electronic Equipment (Bania et al., 1993) Biotechnology (Audretsch and Stephan 1996, Zucker et al.

1998) Ambiguous evidence

Chemicals and instruments Ownership structure

Headquarters consider important proximity to universities, branch plants – no (Malecki, 1986)

Firm size Big firms tend to locate close to universities (Rees

1991)






3. Econometric evidence: Effect of university on private innovation activity

Positive effect of universities in the US: State level (Jaffe, 1989)

29 states in 8 years Dependent variable: Number of industrial patents Independent variables: Academic R&D investment

Private R&D investment Controls: Population size, year dummies Method: 3SLS. Instruments: number of private and public universities (in

Academic R&D equation) and manufacturing VA (in Private R&D equation)

Feldman (1994) and Feldman and Florida (1994) confirm the findings of Jaffe using innovation count data

Metropolitan statistical areas (Bania et al. 1992, Varga 1998)

Within a metropolitan area (Sivitanidou and Sivitanides 1995)






Positive effect of universities in Europe: France

Autant-Bernard 2001 Austria

Fisher and Varga 2002 Italy

Audretsch and Vivarelly 1994 Cowan and Zinovyeva 2007

3. Econometric evidence: Effect of university on private innovation activity

(Cont.)






The most important channels through which firms benefit from university research: publications, conferences, informal information channels, and consulting (Cohen et al., 1998).

Informal interactions (Bercovitz and Feldman, 2006)

Even in pharmaceuticals firms heavily rely on these channels (Gambardella, 1995)

More on the channels of technology transfer






How academic research differentiate from any other R&D company?

Different researchers: Balconi, Breschi, Lissoni (2004) Academic inventors are more persistent and more central Networks hosting scientists are larger and more connected

than other research networks Different research output: Henderson, Jaffe, Trajtenberg

(1998) University patenting between 1965 and 1988 Until mid-1980s university patents were more cited, cited by

more technologically diverse patents

Why they are different? Self-selection Other selection Incentives Tasks …






Summary:

Academic basic knowledge takes long time before being used in innovation activity

Both basic and applied academic research is important for industrial innovation activity (local, regional, national) in the short run

Academic research output has the features of general purpose knowledge/technology






Crowding out of basic research Limiting the freedom of academic research Decline in scholar productivity Affecting the culture of university oriented on public good creation Restriction on the dissemination of research results (Example:

patents on research tools (genetic materials) in biology) High cost of administrative support and reorganization Science becoming inappropriate for graduate research Decreasing quality of education

Public institutional expenditures on instruction declined by 6%, - on research rose 4%

Crowding out of private research (professors as cheap labor for industry)

…

Possible risks of increasing university-industry collaboration and challenges for future research






Thank you for your attention!

Contact: Natalia Zinovyeva

[email protected]

Foundation for Applied Economic Research (FEDEA)

c/Jorge Juan, 46

28001 Madrid






Summary of identification problems in the econometric analysis

University effects Industrial innovation

(Universities might be created in response to the needs of regional industry in human capital)

Academic research Industrial innovation

(Academics might themselves benefit from interaction with innovative industrial sector by getting more and better research ideas and opportunities)

Location unobserved heterogeneity Separating the direct effect of academic research from

the effect of teaching and ultimately graduates’ human capital






New universities have a positive effect on regional innovation in the short-run.

Some of this effect corresponds to the spillover effect via traditional channels like academic patenting and publishing activity.

New universities might push firms to rely more on collaboration with academics as a source of scientific knowledge rather than on own effort on searching the scientific literature.

CZ 2007: Hypotheses






Main features of the paper

The effect of new university departments in sciences, medicine and engineering in Italy during 1985-2000

Short-term effect of new university departments: the channel corresponding to graduates’ human capital is excluded

According to Italian Ministry of Education the decision about the distribution of university departments across Italian regions was largely independent of any features of regional economy:






Observatory for the evaluation of the university system: 1997

“The rule by which new institutions were created does not seem to have followed the logic of tailoring university development to territorial specificities. It seems not to have made reference to a demand for university education, nor to the demand for graduates or to existing infrastructure. […] So, […] at least to a large extent, the prevalent logic was the one of incremental expansion and distribution "by drops of rain", without giving evaluation opportunity to the suppressed initiatives […]”






Number of new departments open between 1984 and 2000 by regional demand for corresponding

professions






Number of new departments: Sciences, Medicine, Engineering






The estimation models

With fixed effects for each university and discipline:






Data

20 Italian regions during 1985-2001 Number of university departments (Sciences, Chemistry and

Pharmacy, Agriculture, Medicine, Veterinary, Engineering, Architecture): Italian National Statistical Bureau

Regional economic characteristics: GDP, population, R&D expenditure

Innovation activity from KEINS EP-INV database (Lissoni, Sanditov, Tarasconi, 2006): Academic and Industrial Patents Patent citations Non-Patent Literature (NPL) citations

Academic publications: ISI Thompson Science Citation Index






Annual change in the number of industrial patents






Number of patents: conditional negative binomial






Academic publications: conditional negative binomial






The channels of the university effect on short-term industrial patenting






Evidence of crowding-out? Non-patent literature citation intensity by industrial patents






Summary and conclusions of CZ 2007

New universities positively affect regional innovation activity:

Industrial Patenting responds within 3-4 years

Academic patenting and scientific activity increases already after 1-2 years

Part of the increase in industrial patents (around 30 percent) is explained by the corresponding growth of academic research

Negative correlation between new universities and NPL citation: potential crowding-out of resources devoted by industry to searching the academic literature. If this is the case, it might suppress firms’ continued development of absorptive capacity.






Descriptive evidence:

1988-2003 academic patents quadruple: 800 to 3200

1992-2003 number of US scientific publications flat, causing US decline in world article output from 38% to 30%

1988-2003: number of US patents referenced in scientific articles increased dramatically






Share of industrial R&D expenditures in total university R&D expenditures and the share of

expenditures spent on basic research, US 1953-2006

SOURCE: National Science Foundation/Division of Science Resources Statistics, Survey of Research and Development Expenditures at Universities and Colleges, FY 2006.

0

1

2

3

4

5

6

7

8

9

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

a19

8019

8219

8419

8619

8819

9019

9219

9419

9619

9820

0020

0220

0420

06

0

10

20

30

40

50

60

70

80

90

Percent of university R&D expenditures funded by industry Percent of univeristy R&D expenditures dedicated to basic research






Individual level evidence: how academic scientific productivity changes after academics’ engagement

in collaboration with industry? Zucker, Darby, several co-authors (1998a, 1998b, 2000)

Star scientists collaborating with or employed by firms, or who patent, have significantly higher citation rates than pure academic stars

Thursby and Thursby (2007) 3,241 faculty from six major US universities from 1983 through 1999 probability that a faculty member will disclose an invention increased

tenfold, the portion of research that is published in “basic” journals remained constant

Link, Siegel, Bozeman (2006) Academics who allocate a relatively higher percentage of their time to

grants-related research are more likely to engage in informal commercial knowledge transfer

Lowe and Gonzalez-Brambila (forthcoming, 2007) 15 research institutes Faculty entrepreneurs in general are more productive researchers than

control groups in terms of publication rate and the impact of their publications

Productivity does not decrease following the formation of a firm






The Relationship between Academic Research, Teaching Quality and Graduates’ Employment

Outcomes

Sylos Labini and Zinovyeva (2007) Several surveys of Italian university graduates in 1995-2001 Rich information on individual quality and socioeconomic

background No negative effect of academic patenting activity at the

faculty level on teaching quality and graduates’ employment outcomes






Public and Private R&D: complements or substitutes?

David, Hall, Tool (2000) Concern: Main focus in the literature is on publicly

funded research performed in academic institutions, and nothing on its comparison with the impacts of publicly sponsored R&D conducted under contract by industrial corporations

Public funding of research might “crowd out” private research via its generic impacts on the price of research and development inputs that are in inelastic supply

Not taking onto account price (researchers’ wage) effect leads to overestimation of positive effects of public R&D expenditures

“Investment displacement”: It is likely to exist the lobby for subsidies for projects with high private marginal rates of return, which would enable firms correspondingly to reduce their own outlays (because R&D activities are heterogeneous rather than homogeneous)






Audretsch D. and Stephan P. (1996): Company-scientist Locational Links: The Case of Biotechnology, American Economic Review 86, 641-652

Audretsch D. and Vivarelli M. (1994): Small Firms and R&D Spillovers: Evidence from Italy, Discussion Paper 953, Centre for Economic Policy Research

Autant-Bernard C. (2001): Science and Knowledge Flows: Evidence from the French Case, Research Policy 30, 1069-107

Balconi, Breschi,Lissoni (2004): Networks of inventors and the role of academia: an exploration of Italian patent data, Research Policy, Elsevier, vol. 33(1), pages 127-145

Bania N., Calkins L. and Dalenberg R. (1992): The Effects of Regional Science and Technology Policy on the Geographic Distribution of Industrial R&D Laboratories, Journal of Regional Science 32, 209-228

Bania N., Eberts R. and. Fogarty M (1993): Universities and the Startup of New Companies: Can We Generalize from Route 128 and Silicon Valley? The Review of Economics and Statistics 75, 761-766

Bercovitz, J. and M. Feldman (2006): Entrepreneurial Universities and Technology Transfer: A Conceptual Framework for Understanding Knowledge-Based Economic Development, Journal of Technology Transfer, 31, 175-188.

Breheny M. and McQuaid R. (1987): H.T.U.K.: The Development of the United Kingdom`s Major Centre of High Technology Industry. In: Breheny M. and McQuaid R. (eds.) (1987) The Development of High Technology Industries: An International Survey, London, Croom Helm, 296-354

Cohen, W., R. Florida, L. Randazzese, and J. Walsh. (1998): Industry and the Academy: Uneasy Partners in the Cause of Technological Advance, in R. Noll, ed., Challenges to the Research University. Washington, D.C: Brookings Institution

Cowan, R. and N. Zinovyeva (2007): Short-Term effects of new universities on regional innovation, UNU-MERIT working paper WP2007-037.

David, P, B. Hall, A. Tool (2000). "Is public R&D a complement of substitute for private R&D? A review of the econometric evidence", Research Policy, Elsevier, vol. 29(4-5), pages 497-529

Dorfman N. (1983): Route 128: The Development of a Regional High Technology Economy, Research Policy 12, 299-316

Feldman M. (1994a): The Geography of Innovation, Kluver Academic Publishers, Boston

Feldman M. (1994b): The University and Economic Development: The Case of Johns Hopkins University and Baltimore, Economic Development Quarterly 8, 67-66

Bibliography






Feldman M. and Florida R. (1994): The Geographic Sources of Innovation: Technological Infrastructure and Product Innovation in the United States, Annals of the Association of American Geographers 84, 210-229

Fischer M. and Varga A. (2002): Spatial Knowledge Spillovers and University Research: Evidence from Austria, Annals of Regional Science

Gambardella, A. (1995): Science and Innovation: The US Pharmaceutical Industry During the 1980s, Cambridge University Press.

Glasmeier A. (1991): The High-tech Potential. Economic Development in Rural America. New Center for Urban Policy Research, Brunswick, NJ

Gripaios P., Bishop P., Gripaios R and Herbert C. (1989): High Technology Industry in a Peripheral Area: The Case of Plymouth, Regional Studies 23, 151-157

Henderson, R., A. B. Jaffe and M. Trajtenberg (1998): Universities As A Source Of Commercial Technology: A Detailed Analysis Of University Patenting, 1965-1988, The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 119-127.

Howells J. (1984): The Location of Research and Development: Some Observations and Evidence from Britain, Regional Studies 18, 13-29

Jaffe A. (1989): Real Effects of Academic Research, American Economic Review 79, 957-970 Link A. and Rees J. (1990): Firm Size, University Based Research, and the Returns to R&D, Small Business Economics 2,

25-32 Lissoni, F., B. Sanditov and G. Tarasconi (2006): The Keins Database on Academic Inventors: Methodology and Contents,

CESPRI Working Papers 181, CESPRI, Universita' Bocconi, Milano, Italy Lowe, R. and C. Gonzalez-Brambila (2007): Faculty Entrepreneurs and Research Productivity, The Journal of Technology

Transfer, Springer, vol. 32(3), 173-194. Malecki E. (1986): Research and Development and the Geography of High-Technology Complexes. In: Rees J. (ed.) (1986)

Technology, Regions and Policy, Rowman & Littlefield, 51-74 Mansfield E. (1991): Academic Research and Industrial Innovation, Research Policy 20, 1-12 Mansfield, E. (1998): Academic research and industrial innovation: An update of empirical findings, Research Policy, 26,

Issues 7-8, April 1998, Pages 773-776 Markusen A., Hall P. and Glasmeier A. (1986): High Tech America: The What, How, Where, and Why of the Sunrise

Industries, Allen & Unwin, Boston Premus R. (1982): Location of High Technology Firms and Regional Economic Development, US Government Printing

Office Washington, DC

Bibliography (Cont.)






Rees J. (1991): State Technology Programs and Industry Experience in the United States, Review of Urban and Regional Development Studies 3, 39-59

Rogers E. and Larsen J. (1984): Silicon Valley Fever, Basic Books, New York

Saxenian A. (1985): Silicon Valley and Route 128: Regional Prototypes or Historic Exceptions? In: Castells M. (ed.) (1985) High Technology, Space, and Society, Sage Publications, 91-105

Schmenner R. (1982): Making Business Location Decisions, Prentice-Hall, Inc., Englewood Cliffs, NJ

Sivitanidou R. and Sivitanides P. (1995): The Intrametropolitan Distribution of R&D Activities: Theory and Empirical Evidence, Journal of Regional Science 25, 391-415

Sylos Labini, M. and N. Zinovyeva (2007): The Relationship between Academic Research, Teaching Quality and Graduates’ Employment Outcomes, paper for the EALE conference, Oslo, 20 – 22 September.

Thursby, J. and M. Thursby (2007): Knowledge Creation and Diffusion of Public Science with Intellectual Property Rights. "Intellectual Property Rights and Technical Change," Frontiers in Economics Series, Vol. 2, Elsevier Ltd.

Varga A. (1998): University Research and Regional Innovation: A Spatial Econometric Analysis of Academic Technology Transfers, Kluwer Academic Publishers, Boston

Varga, A. (2002): Knowledge Transfers from Universities to the Regional Economy: A Review of the Literature. In Varga, A. and László Szerb (Eds.) 2002 Innovation, Entrepreneurship and Regional Economic Development: International Experiences and Hungarian Challenges. University of Pécs Press, Pécs, 147-171

Wicksteed S. (1985): The Cambridge Phenomenon. The Growth of High Technology Industry in a University Town,. Wicksteed, Cambridge

Zucker L., Darby M. and Brewer M. (1998a): Intellectual Human Capital and the Birth of U.S. Biotechnology Industry, American Economic Review 88, 290-306

Zucker L., Darby M. and Armstrong J. (1998b): Geographically Localized Knowledge Spillovers or Markets? Economic Inquiry 36, 65-86

Bibliography (Cont.)

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