Do unis contribute to business innovation?

While in Sydney for the Mont Pelerin Society meeting last week, I was the commenter on a Shaken and Stirred dinner talk by Terence Kealey, VC of the University of Buckingham, the UK’s only private university. He’s profiled in today’s Higher Education Supplement.

Kealey is unlike most VCs. The first thing that strikes you is his personality – an extrovert among introverts. The second thing that strikes you are his political views – a university leader who spurns government funding in an industry convinced that it should receive large handouts in the ‘public interest’.

I think Kealey is right that the obsession with linking university research to industry and ‘innovation’ is largely misguided. We’ve had at least 20 years of this as a policy priority. In my comments I argued that the results here are as disappointing as Kealey argues they have been elsewhere.

For example, the ABS survey of business innovation found that less than 3% of businesses reporting innovation said they sourced their ideas from universities.

The latest university finance statistics indicate income of only $85 million from royalties, licensing and trademarks. Admittedly academics sometimes pocket the money themselves, but for universities I calculate that this represents a rate of return of only 0.27% on the money spent on applied research since the early 1990s.

On the other hand, I suspect that universities do make a more diffuse contribution to innovation. About a quarter of innovating firms reported getting ideas from ‘websites, journals, research papers, publications’, so they may be using research without any direct relationship with a university. Indeed, if the ‘public good’ argument for university research is true this might be a major way research ideas that are potential useful get to be used. Graduates rather than academics are the people who help spread ideas from their familiarity with research and ability to understand what is happening in academia and apply it to ‘real world’ situations.

Kealey points to studies that fail to find any positive correlation between publicly-funded research and economic growth. This is not to say that no publicly-funded research results in economic value. But generally research is something nations buy when they are already rich, rather than something they do to make themselves rich. When you are wealthy not everything needs to be about material advancement. You can afford to do things just because they are interesting.

4 Responses to “Do unis contribute to business innovation?

  • 1
    charles
    October 21st, 2010 02:09

    “Graduates rather than academics are the people who help spread ideas from their familiarity with research and ability to understand what is happening in academia and apply it to ‘real world’ situations.”

    I agree, but I note it is a statement you made without any research or references to hide the fact that there has been little research.

    If you take this to it’s logical conclusion, then education rather than research is the most important contribution to the economy made by the tertiary education sector and it is there you should look for the value of the tertiary education sector.

    Having been involved in research on both sides my conclusion is the difference is documentation. No, academic research isn’t that innovative, but it is well documented, in reality a phd is more about good documentation than innovation.

    Having said that, I don’t think anyone can be critical of the innovation that has came from some of the USA universities in the last 30 years, or their royalty flows.

  • 2
    Andrew Norton
    October 21st, 2010 03:23

    Charles – I was assuming that it would mostly be graduates who would have the capacity to read research papers, plus of course use whatever knowledge they acquired in their original degrees.

    I haven’t looked at the US figures for a while, but like Australian unis they don’t typically get much money from selling their research.

  • 3
    conrad
    October 21st, 2010 04:21

    “Graduates rather than academics are the people who help spread ideas from their familiarity with research and ability to understand what is happening in academia and apply it to ‘real world’ situations.”
    .
    I wouldn’t agree with that without evidence. At least for more direct stuff, there are huge numbers of people that have various industry links (just look at the ARC Linkages, for example). I also doubt that there are many undergraduates that could really do good research after graduating, and given that the number of postgraduates in many areas is stagnant or reducing (taking into account those that go home after finishing), I would think that this is the likely scenario for the future.
    .
    I do however agree that it’s a mistake of the government to try and turn too much university research into business (although I can’t blame universities for doing it). What they’re doing is pushing universities to become more and more like traditional businesses, where businesses are often already doing fine, whereas it seems more sensible to have them operating on a whole set of different constraints (and hence being cooperators, not competitors). Of course, it looks superficially good to the public (and certainly the politicians) to see universities generating their own revenue, so I guess it’s just the way it is.

  • 4
    Andrew Norton
    October 21st, 2010 04:32

    Conrad – As I said to Charles, the number I am referring to is proportion of businesses that get innovative ideas from published sources, which is ten times as many as get them directly from unis (where things like linkage grants would come in – though many of these look dodgy to me as academics get their mates in unions and non-profits to help them get grants). You don’t necessarily need a research degree to understand an academic paper, especially as many innovations do not require high levels of technical knowledge. New organisational methods are included, for example.

    I’m obviously not against unis commercialising research where there are opportunities to do so. But despite all the effort the results are unimpressive, suggesting that this isn’t what unis are good at and that they should focus on more basic research and on teaching.