changing patterns of university – industry relations

352 COLIN MACILWAIN/MICHAEL GIBBONS

ABOUT THE AUTHOR

Colin Macilwain is senior US correspondent forNature, and has reported onscience policy from Washington for the weekly science journal since 1993. Hewas previously features editor ofThe Engineerin London, having trained as anengineer at the University of Edinburgh and at Rolls-Royce, the aeroengine manu-facturer. His interests include science in the Congress, nuclear weapons research,and the relationships between science, technology, innovation and economicgrowth.

NatureNational Press Building #968Washington DC 20045USA

CHANGING PATTERNS OF UNIVERSITY –INDUSTRY RELATIONS

Capitalising Knowledge: New Intersections of Industry and Academia,edited by Henry Etzkowitz, Andrew Webster and Peter Healy (New York:State University of New York Press, 1998), xii + 278 pp.

Minerva has had a long-standing interest in the development of univer-sity – industry relations – indeed, it has recently devoted an issue to the‘triple helix’,1 an idea originally put forward by Etzkowitz and Leydes-dorff in 1997.2 The triple helix is intended to take us beyond the simpler,linear model of innovation in which science and technology are thecrucial driving forces of the innovative process. InMinerva, Etzkowitz andLeydesdorff argued that now:

A spiral model of innovation is required to capture the evolution of multiple linkages atdifferent stages of the capitalisation of knowledge . . . There are four dimensions to thedevelopment of the triple helix model: first, the internal transformation of each of thehelices; second, the influence of one helix upon the another; third, the creation of a newoverlay of institutional structures from the interaction of the three helices; and fourth, arecursive effect of these entities, both on the spirals from which they emerged and on the

1 Minerva, 36 (Autumn 1998), 203–288.2 Universities in the Global Knowledge Economy: A Triple Helix of Academic–

Industry–Government Relations(London: Cassel, 1997).

CHANGING PATTERNS OF UNIVERSITY – INDUSTRY RELATIONS 353

larger society. Among the effects the degree to which academic–industrial collaborationchanges the role of the university as a source of disinterested expertise must be examined.3

Understanding university–industry–government relations would not bemuch advanced by suggesting that they can be described in terms of threedistinct linear models, but the addition to the model of three overlappinghelices is an ambitious attempt to introduce a dynamic element governingthe three major institutional blocks that still organize our thinking aboutuniversity, industrial and science policies.

I

Capitalising Knowledgemust be seen in the context of what the editorscall the Second Academic Revolution. The idea is that the First AcademicRevolution was about adding the function of research to the two otherfunctions of the university, that is preserving and transmitting knowledge.By contrast, the second revolution considers another major change in themission statements of universities, a change that would make participationin the process of economic development into a core value. Working withinthe larger framework of a Second Academic Revolution, this volume picksup the notion of the triple helix and tries to draw out some of its implica-tions and complexity. For example, some of the latter is well illustratedin the paper by Senker, Faulkner and Velho, which analyses knowledgeflows between university and industry in three industrial sectors: the newbiotechnology, ceramics and parallel computing (pp. 111–132).

The book itself is organized around three themes: the entrepreneurialuniversity, the capitalization of knowledge, and a third section containingsome international comparisons. Despite positing the triple helix model,most of the empirical material presented is primarily concerned with onlyone set of relationships – those between universities and industry. Thereis only one paper, by Etzkowitz and Steven, which deals at all withgovernment and the implication of the triple helix model for university–industry–government relations, and that paper is primarily concerned withthe historical development of industrial policy in the United States. Other-wise, most of the contributions are devoted to one or other aspect of thechanging relationships between academia and industry. Even the paper byWebster which sets out some of the major theoretical issues that still needto be addressed tends to focus on the university–industry relationship.

3 Loet, Etzkowitz, Henry and Leydesdorff introduction to ‘The Endless Transition:A “Triple Helix” of University–Industry–Government Relations’,Minerva, 36 (Autumn1998), 203–208, at 205.

354 MICHAEL GIBBONS

There may be a good reason for this concentration. The explosion ofinterest in university–industry relations is everywhere evident – thoughagain, most of the research and commentaries are still from the side of theuniversity, much of it of a cautionary nature, warning about the implica-tions (often negative) for universities of becoming too closely involvedwith business and industrial cultures. In most of this writing there is littlethat is of theoretical interest, much of it being devoted to case studiesof specific examples, whether good or bad, of existing, or recently intro-duced programmes or institutional reforms. This book, though, attemptsto go somewhat further than mere reporting, as important as this is in anemerging academic field. Though the examples are drawn mainly from theinteraction of university and industry, they are chosen to illustrate the factthat the context in which commercialization and technology transfer aretaking place has changed considerably.

The new element is the Second Academic Revolution, which isdrawing universities increasingly into the process of economic develop-ment whether at the regional, national or international level. The SecondAcademic Revolution has moved beyond the training of qualified gradu-ates in science, engineering, the social sciences or the humanities or,indeed, providing basic research results for industry, along the linessuggested by the now-abandoned linear model. Rather, it is capitalizingknowledge, the application to economic development of the knowledgegenerated by the universities through their own research activities, whichforms the dynamic of this second revolution. From the text one can observethat there have been at least three phases to this development, startingearlier this century with consultancy and some patenting of intellectualproperty, moving through a phase when universities gradually adjustedtheir research capabilities to make them more accessible to industry and,finally, to the present phase of investing their own resources in the processof company formation. This amounts to a comprehensive shift on the sideof universities. It is aimed at generating income through participation inthe process of economic development.

II

Increasingly, economic development is about innovation, particularly tech-nological innovation. Of course, in the past, universities have partici-pated in the innovation process principally by patenting their intellectualproperty and selling it to industry via licensing agreements from whichthey hoped to recoup royalties. In this universities have been moderately


successful. For example, some recent surveys by the Department of Tradeand Industry and the Higher Education Funding Council for England foundthat the average university derives between £200,000 and £300,000 perannum from licensing its research, less than 1 per cent of its total researchincome from grants and contracts.4 Some regard this as a disappointinglylow rate of return, but innovation is a complex process and, as far as mostuniversities are concerned, it is still early days in terms of their involvementin the commercialization of research.

More recently, universities have been restructuring their researchcapabilities, for example, by setting up specialized research units orre-labelling others, internally, so as to be more attractive, relevant andaccessible to industry. Increasingly, though the numbers are still small,universities are taking the further step and acquiring equity in newly estab-lished, ‘spin-off’ firms based upon their own scientific and technologicalcapabilities. In each of these activities – consultancy, developing special-ized research capabilities and company formation – universities make adistinct contribution to economic development. In licensing their inven-tions, they contribute to the expansion of the stock of technologies onwhich firms can draw; by adjusting their research agendas, they expandthe effective research capacity of national firms; and, through equityparticipation in the market, they contribute directly to economic develop-ment by expanding employment and increasing the flow of technologicalinnovations in the economy.

In each case, of course, there is the prospect of generating an incomestream which can be used by the university to enhance its capabilities, butthe data is still too patchy for any conclusion to be drawn about the successor failure of these initiatives in terms of income generation. Nonetheless,there is still a strong expectation that each of these several activities willgenerate income, and it is hoped that this will be large enough to allowacademic institutions to fund their own academic priorities. That, at leastis the intention. As Etzkowitz and his co-editors argue, capitalizing know-ledge, beyond simply providing industry with consultancy, involves thedevelopment of new modes of academic-industrial relations.

This is where the idea of the triple helix enters. The model is intendedto provide some guidance as to how relations between university, industryand government are changing. However, much of the case-study materialthat is presented remains rather static and, as has been indicated, tendsto concentrate on university – industry relations. There is a good deal ofdiscussion of the operation of the conventional instruments of commer-

4 Times Higher Education Supplement, 16 April 1999, 5.

356 MICHAEL GIBBONS

cialization; technology-transfer offices, arrangements for the protectionof intellectual property, the roles of small and medium-size firms andscience parks. The message that comes across is that there is still aconsiderable gap between expectations and performance, whether oneis looking at income generation from intellectual property, the financialrecord of university-based science parks, or the performance of ‘spin-off’companies. Yet, universities all over the world are embracing – in termsof policy and institutional development – the idea of capitalizing theirknowledge, and are putting in place a variety of mechanisms to allow themto interact more effectively with the market-place.

With the exception of the article by Webster on strategic alliancesin the pharmaceutical industry, most of the case-study material concernsdevelopments within universities. There seems little interest in determiningwhy industry might be interested in the knowledge being produced byuniversities or what they are doing about it. The triple helix, as a model,is well placed to suggest what some of these questions might be, but, sofar at least, research seems concentrated on developments in universities.For many researchers, it appears that the triple helix is a more complexbut essentially a static model. Much of the dynamics that Etzkowitz andLeydesdorff have built into it has yet to be picked up by the scholarlycommunity and made the basis of research design – and it needs to be. Thetriple helix envisages shifting patterns of interlinkage between universities,industry and government, but little analysis has emerged; for example,about the nature of the institutional changes that this increased interactivitymay be engendering.

Here is where the larger context of the Second Academic Revolutionmust be embraced. Indeed, it is true that increasingly innovation is seen asthe principal way for firms, and nations, to remain competitive. It is alsothe case that, increasingly, competitive advantage is seen to be a ‘created’advantage and, increasingly again, that advantage lies in the ability of firmsto generate new knowledge. It is the common interest of both universitiesand industry in knowledge production which explains why there is so muchinteractivity between them at present. The Second Academic Revolution ismeant to capture the move of the universities out of the ivory tower into amore intense involvement in the process of economic development, but itis as well to remember that the move is taking place at precisely the timewhen both industry and universities, though from different perspectives,have begun to appreciate the crucial role that information and knowledgeare going to play in their futures.


III

The wider context suggests that we are in the midst of transition froma culture of science to a culture of research. This is more than a playwith words. Research, unlike science, is inherently transgressive; it is noteasily contained. Research constantly spills out of its institutional setting,embracing then discarding expertise, as the problem context evolves.Involvement in research, in contrast to science, generates an altogetherfuzzier picture of the world in which institutions become permeable,boundaries break down, and scientific identities become blurred. This isthe world in which innovation now takes place and, in it, the universitiesare only one actor amongst many.

Etzkowitz and his co-editors have already identified one of the keyindicators of the transgressiveness of research in the finding that the organ-izational forms of research, and its attendant research practices in industryand universities, are becoming more and more alike. On the basis of thetriple helix model, this finding is not unexpected, but so far the mutualinfluence of this development on the institutions and the careers of thosewho work in them remains largely unanalysed.

What is missing in the studies presented in this volume is, I believe,the identification of the dynamic factors which would help to explain whyuniversities and industry are moving into the already identified new rela-tionships. Of course, there are resource constraints but, to some extent,there have always been resource constraints. More must be involved thanresearch funding. One way to think about the changes that are taking placeis to look afresh at the nature of competition and to distinguish between itsstatic and dynamic modes.

Briefly, the static mode of competition is based on an image of equili-brium. It is about allocating resources efficiently so as to achieve thatequilibrium, or about making minor adjustments in the patterns of alloca-tion to re-establish it should the economy begin to deviate from equili-brium. By contrast, dynamic competition, is less about allocating resourcesthan generating them. Dynamic competition, as Hayek observed long ago,has the form of a discovery process. It generates knowledge and, becauseof differences in creativity between individuals, teams and institutions,it generates not one but a variety of solutions on which market mecha-nisms can operate. Dynamic competition puts a high price on creativitybecause, in a world where comparative advantage needs to be created,innovative success demands access not only to financial resources but tointellectual resources as well. Therefore, differences may arise, in partbecause of the availability of financial resources but also, in part, because

358 MICHAEL GIBBONS

not all individuals or groups are equally creative. Within the framework ofdynamic competition, innovation is a matter not only of resources but ofresourcefulness.

Industry has long recognized this aspect of competition. It is wellillustrated in the expansion of the numbers of strategic research alliancesbetween firms and between firms and universities, as the papers in thisvolume indicate. The growth of strategic research alliances in the phar-maceutical industry analysed by Webster illustrates the importance tofirms of having access to knowledge resources which they do not holdin-house. But the reason for seeking knowledge may not be the mostobvious one. Evidence shows that when working in the field of staticcompetition, where resource allocation frameworks predominate, firmswant consultancy – problem-solving capability – from universities. Theyhave a specific problem, they want it solved and are prepared to pay for it.But the transaction presupposes no change in the relationships between thetwo institutions. In the regime of dynamic competition, by contrast, whenfirms are trying to identify the fundamental technologies they are going toneed, when the search is on for what Utterback has called robust designconfigurations, then firms need and seek a different relationship with otherinstitutions which have access to knowledge, including the universities.5

The choice of a design configuration is amongst the most importantthat a firm ever makes. To make the wrong choice can leave it in a positionof structural weakness from which it may never recover. Thus, it mattersmore to firms whether the technology for delivering classical music is thelong-playing record, the mini-cassette or the compact disc than does theprice of the individual items. And that choice, whether to back the stylus,the cassette or the laser, is crucial to every firm in the industry because theemergence of a new technology can change the competitive structure of awhole industry.

When it is observed by economists and others that competitiveness isnow dependent upon continuous innovation, what they mean is competi-tive advantage lies in the ability to configure human resources. Thesearch for robust design configurations is about generating knowledge thatcompetitors would find it difficult to imitate. Innovation, then, is seento rest upon the differential creative capacities of individuals and, morefrequently, teams. Whereas, in the static case, once the technology is moreor less settled, competition is amongst product characteristics, in dynamiccompetition it is amongst design configurations, which as we have seen is

5 J.M. Utterback,Mastering the Dynamics of Innovation(Boston: Harvard BusinessSchool Press, 1994), 27–56.


about different configurations of intellectual resources. At one level, thisis the place where universities need to be – contributing their intellectualresources to the generation of new design configurations, which more oftenthan not involves knowledge production at the forefront in many differentscientific and technological fields. If universities are serious about takingpart in economic development, they will need to put in place the structuresand invest resources internally which will allow their staff to join withindustry, and others, in the search for these design configurations.

However, if innovation is about how firms generate robust designconfigurations, then this applies to university-owned companies as well.Innovation is not so much a matter of having a new, clever idea, or even aproduct. Rather, it is a matter of identifying a robust design configurationwhich will allow the production of a stream of new products. Industry hasalready discovered that successful configurations are so complex that theyneed the help of the knowledge held by many others, including universities.But this must also be true for universities. If they are to contribute toeconomic development they will also need the help of others, includingresearchers from industry, in establishing the design configurations fortheir own companies. Herein lies perhaps the deepest implication of thedecision of universities to enter the knowledge capitalization process. Thedecision carries with it the need for an intensity of interaction on whichuniversities have barely begun to reflect.

It is therefore somewhat disappointing to read in this volume Webster’sreflections on the ‘collaborative limits’, institutionally, ethically and politi-cally, of strategic research alliances between universities and industry.For example, he points out that ‘SRAs might be regarded as setting theinstitutional limits of collaboration in as much as the inter-organizationaldemands they place on academic and corporate staff (with shared authoritystructures, research facilities, technician support, agenda setting beingpractised on a daily basis) are likely to strain the most enlightened andconsensually oriented managers’ (p. 99). Such reflections, it seems to me,ignore the essential transgressivity of research. They are still operatingfrom the side of – and perhaps within – the ‘citadel’ of the university,while in the regime of dynamic competition, as described, research is seenvery much in terms of the joint production of knowledge, of collaborationand of the mutual sharing of intellectual resources.

Of course, it is not necessary that universities enter into joint productionarrangements with industry. It is rather that, if they intend to play a rolein economic development, they may be better placed if they restrict theircollaborative activities to the regime of dynamic competition, participating

360 MICHAEL GIBBONS

in the development of design configurations where knowledge plays such acrucial role. If they did this they would simply be playing to their strengths.

IV

From the perspective of the joint production of knowledge, many ofthe traditional questions about capitalizing university research take ona different form. Intellectual property, for example, which for many isstill a matter of identifying ownership of a specific piece of knowledge(or even a design configuration) through a patent, seems rather irrelevantunder the conditions of the joint production of knowledge. If universitiesand firms jointly participate in the search for design configurations andare successful, then at the very least intellectual property will be sharedbetween all the participants. More realistically, the protection of thatproperty may be less a matter of patent protection than of the contractthat governs the collaboration and the rules which cover mobility ofintellectual resources. Further, if success in innovation is about differ-ential creativity, then comparative advantage may lie less with what hasbeen already discovered than with the continuing ability to think upnew approaches or lines of development. If so, many university-basedtechnology-transfer organizations will need to move from knowledgeprotection into knowledge-generating activities.

Increasingly, this is a matter of partnerships. Adoption of a joint produc-tion model cannot be undertaken without a major shift in universities’ corevaluesvis-à-visresearch, a requirement already well described by Markin.6

The upshot of this development is that the Second Academic Revolutionwhich these authors have described and which could well be the subtitle ofthe book, may be less about transferring the results of university researchto industry than about forming permanent partnerships with them in theinnovative process. Of course this means entering into multiple partner-ships, on the one hand, and – on the other – preserving the ability tomove from one partnership to another depending on the areas in which theuniversity is trying to establish its reputation. This, it seems to me is thesignificance of the capitalization process, and it is premature to speculateabout limits.

The Second Academic Revolution is a product and a further develop-ment of the First Academic Revolution in which the universities assumed

6 G.W. Markin,Technology Transfer and the University(New York: Macmillan, 1990),304–317.


the mantle of research and institutionalized it in the form of discipline-based science. But, as many universities and firms are discovering,research, unlike science, is transgressive, it spills out across disciplines,institutions, identities. It will not be contained, and to pursue it can leaveno institution’s core values unchallenged.

MICHAEL GIBBONS

ABOUT THE AUTHOR

Michael Gibbons is Secretary-General of the Association of CommonwealthUniversities.

Association of Commonwealth Universities38 Gordon SquareLondon, WC1H 0PFUKE-mail: [email protected]

changing patterns of university – industry relations

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