CBR Summit: Innovation and Governance 29-30 March 2006 Universities, Innovation, and the Competitiveness of Local and National Economies Richard K. Lester Director, Industrial Performance Center Professor of Nuclear Science and Engineering Massachusetts Institute of Technology
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CBR Summit:Innovation and Governance 29-30 March 2006
Universities, Innovation, and theCompetitiveness of Local and National
Economies
Richard K. LesterDirector, Industrial Performance Center
Professor of Nuclear Science and EngineeringMassachusetts Institute of Technology
CBR Summit:Innovation and Governance 29-30 March 2006
“We believe the United States’ economic andpolitical standing are fundamentally bound up inour capacity as a society to innovate. We believecompanies that do not embrace innovation as acore business value will fall to global competition –and that innovation in universities and governmentis crucial to unleash America’s national innovativecapacity.”
-- “National Innovation Initiative”Council on Competitiveness
July 2004
!2006 Richard K. Lester
‘Standard model’ of universityengagement in the local economy
Laboratory research Discovery/invention Disclosure Patenting Licensing Spinoffs
But the model is incomplete. University role isn’t just about ‘tech
transfer’.
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Myth #1: Economic significanceof university spin-offs
New business formation around universitytechnology, though increasing, is still a smallcontributor to the total number of business starts(2-3% or less in the U.S.)
*Startups licensing university IP; total number of university-relatedstartups: 8,000-10,000/yr
CBR Summit:Innovation and Governance 29-30 March 2006
University contributions to businessinnovation
• Industry interactionswith universities arewidespread and multi-faceted
• Informal contacts,recruiting, publications,and conferences arethe most frequentlycited contributors inboth UK and US
• Licensing of universitypatents is among theleast frequently citedinteractions
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At MIT, even patent holders downplay the role ofpatenting and licensing in university tech transfer.
Source: Agrawal and Henderson, “Putting patents in context”, Management Science, Jan. 2002. Basedon interviews with 68 MIT faculty in Mech E. and EECS with at least one patent and license.
CBR Summit:Innovation and Governance 29-30 March 2006
Universities compared with other sourcesof knowledge used in business innovation
• Internal knowledge, customers,suppliers, and competitors arethe most frequently citedsources of knowledge relevantto innovation.
• Universities are less frequentlycited.
• UK companies cite use of allexternal knowledge sourcesmore frequently than their UScounterparts.
CBR Summit:Innovation and Governance 29-30 March 2006
Uses of partnerships and collaborativearrangements by innovating firms
• Other firms, customers, andsuppliers are the most frequentpartners/collaborators in bothcountries.
• UK firms are somewhat morelikely to partner with universitiesthan their US counterparts.
• In both countries, firms aremore likely than twice as likelyto collaborate with other firmsas with universities.
CBR Summit:Innovation and Governance 29-30 March 2006
Selected summary
• Interactions between firms and universities are wide-ranging and multi-faceted.
• University-industry interactions are more pervasive in theUK than in the US, but UK firms attach less importanceto these interactions than their US counterparts.
• Universities are seen by industry in both countries as arelatively small contributor to overall innovation-relatedknowledge flows.
• ‘Traditional’ university contributions -- education andtraining, conferences, publications, informal contacts --are seen by industry in both countries as significantlymore important than patenting and licensing.
!2006 Richard K. Lester
The LIS Project: An international,interdisciplinary collaboration
SponsorsAlfred P. Sloan Foundation
National Science FoundationTEKES
Norwegian Research CouncilCambridge-MIT Institute (UK)
UTRI (Japan)
Research UnitsIndustrial Performance Center, MIT
SENTE, University of TampereHelsinki University of TechnologyCenter for Business Research,
University of CambridgeRogaland Research Institute
University of Tokyo
DisciplinesManagement science
Entrepreneurship studiesEconomics of innovation
Engineering systemsUrban and regional studies
Political science
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‘Outside-in’ perspective onuniversity role
How can universities strengthen theabilities of local firms to take up andapply new technological and marketknowledge productively?
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Country Location Industry/technology
USA Rochester, NY Opto-electronics
USA Akron, OH, Advanced polymers
USA Allentown, PA Opto-electronics/steel
USA Boston, MA Bioinformatics
USA New Haven, CT Biotechnology
USA Charlotte, NC Motor sports
USA I-85 Corridor, NC/SC Autos
USA Alfred-Corning Ceramics
USA Youngstown, OH Steel/autos
Finland Tampere Industrial machinery
Finland Turku Biotechnology
Finland Seinajoki Industrial automation
Finland Pori Industrial automation
Finland Helsinki Wireless
Finland Oulu Medical
UK Central Scotland Opto-electronics
UK Aberdeen Oil and gas
UK Cambridge Bioinformatics
Taiwan Taipei-Hsinchu Electronics
Taiwan Taipei-Hsinchu Software
Japan Hamamatsu Opto-electronics
Japan Kyoto Electronics
Norway Stavanger Oil and gas
LIS Case Portfolio
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LIS Interviews
714TOTAL
31Norway
84Japan
103United Kingdom
238Finland
258United States
Number ofinterviews
An additional 117 interviews were carried out in Taiwan.
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Finding I: Multiple university rolesin the local economy
Create
Attract
Unlock
Adapt
Combine
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Finding II: Firms seek different inputsfrom different universities
Help with specific problems(‘analytical’)
Staying current; participating inongoing conversations about thedirection of technologies,markets, curricula (‘interpretive’)
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Four pathways of regionalinnovation-led growth
I. Indigenous creation of new industrySilicon Valley: Personal computersBoston: Systems biology
II. Transplantation of new industry into regionI-85 corridor (NC/SC): Automotive
industryTaipei-Hsinchu corridor (Taiwan):
Electronics industry
III. Diversification of existing industry into newAkron, OH: Tires Advanced
polymersRochester, NY: Cameras, copiers
Opto-electronics
IV. Upgrading of existing industryTampere, Finland: Industrial
machineryCharlotte, NC: Motor sports
(NASCAR)
Type I:Indigenous
creation of newindustry
Type II:Transplantationof new industry
Type III:Diversification ofold industry into
related new
Type IV:Upgrading of
mature industry
• Success conditions (and failure modes) foreach of these pathways are different.
• Patterns of innovation in each case aredifferent
• Roles of educational institutions, financialinstitutions, government, and others for eachpathway are different
Bridging between disconnected actors Filling ‘structural holes’ Creating an industry identity
Problem-solving for industrythrough contract research,faculty consulting, etc.
Education/manpowerdevelopment
Global best practicescanning
Convening foresightexercises
Convening user-supplierforums
Education/manpowerdevelopment
Responsive curricula Technical assistance for sub-
contractors, suppliers
!2006 Richard K. Lester
!2006 Richard K. Lester
Summary Universities should embrace their role as actors in the
local economy. This need not be inconsistent with thepursuit of excellence in the still primary missions ofeducation and research.
The conventional view of this role is too narrow.Universities have many different ways to contribute to localinnovation processes.
A ‘one-size-fits-all’ approach to economic developmentis common but not wise. Different industries, anddifferent development pathways, demand different kinds ofparticipation in local innovation processes.
Universities need to approach economic developmentstrategically. This means aligning university efforts withwhat is actually happening in the local economy.