“Bringing Cambridge to Consett? Building university-centredentrepreneurial networks in

peripheral regions” “International Experiences in Promoting University Spin Off Firms” University of

Newcastle upon Tyne, 26th November 2004Paul Benneworth (Newcastle University/

Radboud University Nijmegen)

Acknowledgements

• UK Economic and Social Research Council

• David Charles, Catherine Hodgson & Aard Groen

• Newcastle University & Twente University

• Participants in the study

www.staff.ncl.ac.uk/p.s.benneworth/test.htm

Outline

• The new knowledge economy

• University spin-offs in periphery

• The model of spin-offs and TENs

• The network methodology

• The case studies: Newcastle, Enschede

• Further analytic directions

The new knowledge economy

• Knowledge as factor of production • Competitiveness through innovation• New successful places

– Totemic sites of the new economy

• Role for less successful places?• Double problem – the “double bind”

– Poor performance– Lack of foundations for future performance

Spin-offs and the knowledge economy

• Totemic sites and spin-offs• High embodied knowledge value• Innovative and competitive firms• Entrepreneurial DNA for changing regional

mentality• Idea of spin-offs as quintessential new economy

activityBUT drawn from limited pool of exemplars An ‘ecological fallacy for LFRs?

How far can inferences be stretched?

Newcastle University in the North East of England

Newcastle Uni: long term player

• Origins in marine technology college and Medical College for Durham University– 1940s-1970s: dégagé

• Long-term decline of regional industries– Newcastle as ‘Brasilia of the North’

• 1980s – the Newcastle Technology Centre

• 1990s – HESIN, Three Rivers

Newcastle: traditional university, high technology industries

• North East: low technology, old industrial• Universities major source of R&D

• 60% Newcastle University

• Good record of NU associated companies• Sage (1981) – world-leader in SME accountancy software• MARI (1985) – was large consultancy business in 80s• Novocastra (1990) – sold after decade for €50m• Arjuna Solutions (1998) – worth €20m in 3 months

• Strong institutional commitment to promoting regional economic, cultural, social development

Twente: peripheral region

The central Netherlands and Overijssel ProvinceMap 1 Provided from CIA world factbook, universities added manually

Map2 and boundary data are copyrighted by FOTW - Flags of the world website

Twente: de proef in de bos

• 1961: Textiles in decline in the East– New university created to revitalise industry

• 1970s: national debate over future of TUT• 1980s: van Tilburg as first spin-off

– Harry van der Kroonenberg support– Creation of famous ‘TOP’ scheme

• 1990s drift and loss of focus• 2000s MESA+ and the business accelerator

UT: key summary

• UT has been an entrepreneurial university for 20 years and has close links with the region, key commercial and public‑sector actors

• Big financial pressures to generate the funds to pay off the mortgages on the new state development

• Continuing declining funding in real terms for the HE budget• Importance of third tier funding to university but importance of funds

from large funds rather than small local SMEs.• Requirement to have from 1980 proof that their research has benefit• They are an applied research university, so they do not have physics,

chemistry etc, they have applied medical physics, electrical engineering etc.

• University are a key player in the regional innovation system and opportunity to get public funds to support private activities.

Building a new knowledge economy

• 7,000 jobs created in spin-off (TOP) companies

• Attraction of 2 (3?) national research centres (LTIs) to the East (CMET, TI, …)

• Anchoring key companies in the region ?– Philips Signaal ( Thales)– Ericsson (closed 2002)– Vredestein (tyre manufacturers)

Contribution to regional economy?

• Small numbers of sustainable jobs

• Not replacing declining industries (NVQ II/ VMBO/ MBO level occupations)

• Long term strategies not matched by rising levels of new firm formation

In what sense are USOs improving regional performance?

A co-evolutionary spill-over model

University USO

Knowledge about innovation

Product innovation with IPR

University/ business relationship

Other firm

Other product innovation

Territorial knowledge pool

Source: Benneworth & Dawley, 2004 (after Muller & Zenker, 2000)

Our model of spill-over

University USO

Knowledge about innovation

USO (product) innovation

University/ business relationship

Other firm

Other product innovation

Territorial knowledge pool

1

2 3

Business support

Source: Benneworth & Charles, 2004 (after Muller & Zenker, 2000)

Key elements of our model

• University/ spin-off relationships

• Working with business support organisations & government

• Working with other high technology small firms

• Spinning-off as a ‘community of practise’

Method and sample

• 2 x 40 semi-structured interviews– University managers, professors– Spin off owners, partners– Third party innovation partners – Other key local partners

• Focus on Universities of Newcastle, Twente• Snowball from initial sample• Analysis of notes and 2d documentsBUT first cut probe to structure analysis

University/ spin-off interactions: Newcastle

• Spin-offs as research partners• Putting research back into the university

• Levering in external/ valourisation research

• Spin-offs as research users

• Professor as nexus – academic/ entrepreneur• Overlap: spinoff/ university labour markets• Third party firms drawing on commercialisation

expertises

BUT third party also adds to knowledge pool

University/ spin-off interactions: Twente

• TOP programme using ‘waste’ in university– Increasing pressure from cutback environment

• Spin-offs as research ‘atmosphere’• ‘Forcing’ new ideas into other companies• Little feedback into development of research strengths• Focus on organic growth

• Entrepreneur as nexus – full-time entrepreneurship• New models of spin-off with active commercialisation

yet to be proven• “Political value of spin-offs >> economic value”?

Universities shaping the TEN: Newcastle

• Universities in North East seen as quite good at spinning out companies – metrics

• Problem with external CoE – university not seen as source of entrepreneurship

• Government ended SMART - relied on by smallest USOs

• Finance Act 2003: university legal action still pending

Universities shaping the TEN: Twente

• UT seen as THE Dutch exemplar– Fits with Balkenende/ Brinkhorst agenda– Frans van Vrucht part of so-called Innovation Platform

• LTIs totally dependent on existing UT/ USO expertise

• UT lost out in concentration agenda– ‘broadening’ agenda never enacted!

• UT vs. Philips for new nanotechnology LTI– Regional vs. ‘national’ agendas.

USOs, universities and HTSFs: Newcastle

• Good examples of collective action1. Company works with USO on a project, and the USO MD

supervised TCSs, Ph.D.s in key areas – one TCS associate became USO employee.

2. USO had problems and solved with local micro-business, which fed back into own products

3. Chemical corporate spin-off used uni kit & USO laboratories and is developing projects with USO

4. Service (software) business populates platform with domain/ expert knowledge from the university

• Mediated through single person – bilateral?

USOs, universities and HTSFs: Twente

• Strong sequence of growth: new/ bigger/ stronger nodes & connections

1. CMET – spin-outs and research groups: still active today2. Cluster activities in the sequence: TIMP, Nanotech Valley3. MESA+ used by large companies outside the region4. Companies help to create the land-use of a high technology

economy: incubator, science park, wireless hotspot

• Mediated through single person – bilateral? • Clusters in different areas

– Near to the Spearpoint Institute areas but not perfect

Centre for Micro-Electronics

Technology Transfer Twente

3T

Aquamarijn

Twente Micro Products

Kymata

C2V

Lion Technologies

LionixMedspray

Twente Medical Products

TMP Int’l

MESA Institute (B)

MEMS research group (E)

? Oldenzaal Rubber company

? Deventer PC training company

NANOMI

Membranes research group (W)

Mosaic Systems (Breda)Phoenix

European Membranes Institute

Membrane Applications Centre Twente

Pervatech

Krabbe Engineering

Membranes research group (S)

X‑Flow

Microflown

MESA+ (R)

Axis IO

Axis MO

Smart-tipIdefix

Micronit

The nanotechnology sequence, Twente

‘Spinning-off as community of practise’: Newcastle

Little continuity between ‘regimes’ 1-31. The Manchester computer disaster (Bursar)2. NUventures (NUWater, NUGround, Newchem)3. HERO Business Development Managers4. Business Development Directorate

• Some progression from admin into companies, (regimes 34)

• Internal ‘myths’ -- great companies – demonstration effect for other entrepreneurs

• Dominance of professor/ entrepreneur model– Low rates of progression of student/ RA e’ship

‘Spinning-off as community of practise’: Twente

• Heavily personalised and antagonistic regime changes1. van der Kroonenberg as an ‘external visionary’2. ‘ERDF drift’ and ‘Empire building’ in 1990s3. Destroying the TOP programme to save it (1998)4. The Business Accelerator idea (born on a mountain top)

• Some progression from admin into companies, (regimes 34)

• Internal ‘myths’ -- personal enrichment– demonstration (distraction) effect for academics

• Dominance of ‘lone wolf’ entrepreneur model– High rates of progression of student/ RA e’ship

The revised Newcastle TEN1. Strongest element appears to be university/ USO

relationships.

2. Community of practise started slowly, but some signs that a broader ‘network’ of practise building up;

• two BDMs now CTOs for USOs

3. Universities not strong political actors and USOs not the critical asset necessary to improve political power

4. Very few “1 USO – many HTSF” relationships, so reworking existing not building new relationships

The revised Twentish TEN

• University part of strong technological network• Other (strong) nodes (sources of growth)

– LTIs

– Cluster organisations and activities– OOST (RDA), municipality, province (Elsevier)

• University very strong political actor • but Frans van Vrucht now retiring (party last Wednesday)

• Clear weakness around community of practise

Future analytic directions

• Newcastle Concentration in (1) – Cathedral in desert?

• Twente: strong (1), (3) weak (4), v weak (2)– Growth pole but longevity?

• Different types of peripherality different types of mechanisms?

• Does it all really make a difference?– Slow process of change vs external shocks