Final presentation for ERC Project 1. SME-University links and their innovation and productivity benefits

1. Assessing the effect of
University-Business
collaboration on
business innovation
Nola Hewitt-Dundas
Stephen Roper
Areti Gkypali

2. Policy Context
UK Research and Innovation (UKRI)
• Purpose: ‘to integrate research and Innovate UK functions, which offers an
opportunity to strengthen the strategic approach to future challenges and
maximise value from Government’s investment of over £6 billion per
annum in research and innovation’.
• Improved collaboration between the research base and the
commercialisation of discoveries in the business community, ensuring that
research outcomes can be fully exploited for the benefit of the UK’
Source: BIS, June 2016 The case for the creation of UK Research and Innovation, p.4
Protection of science and research funding: £1.5bn Global Challenges
Research Fund (2016-2021); £.6.9bn capital investment in new
equipment, labs and research institutes (2015-2021)
Autumn Statement announcement of £2bn new R&D spend by 2020

3. New-to-the-market Innovation
New to the market innovation
‘This business introduced a new
good or service to the market before
competitors’
New to the firm innovation
‘This business introduced a new
good or service that was essentially
the same as a good or service
already available from competitors’
High costUncertainty
Lack of
information
High risk
The proportion of UK firms undertaking both NTM and NTF innovation has fallen with a greater fall in NTF innovation.

4. Profiling UK Innovators
44.9
20.0
24.0
48.8
43.9
19.4
75.5
51.4
63.4
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
New to
Market Innov
Uni Collab Consultancy
Collab
Customer
Collab
Supplier
Collab
Competitor
Collab
In house R&D Design Exporter
All Large Medium Small

5. New-to-the-market Innovation
• Innovation Strategy will be shaped by internal resources,
organisational structures and market environment
• Dependence on internal R&D and organisational routes is
unlikely to result in new-to-the-market innovation (Stringer,
2000)
• External knowledge sourcing: reduce costs and risk, access
new ideas, knowledge and complementary skills (Un et al.
2010; Hottenrott and Lopes-Bento 2016)

6. Universities as partners – the ‘two
worlds paradox’
• Collaborating with universities will reflect the type of knowledge the firm
is seeking as well as their own internal knowledge profile (Miotti and
Sachwald, 2003)
• Provide frontier-edge knowledge for new to the market innovation (Amara
et al. 2008; Belderbos et al. 2015)
• Reduced risk of moral hazard
• Offset by two-worlds paradox (Hall, 2003; Bruneel et al. 2010) differences
in institutional logics and priorities may lead to tensions around project
timelines, rewards, commercialisation and administrative procedures
• Can learning from prior collaboration help firms to overcome this
paradox?

7. Hypotheses
NTM Sales (Success)

8. Data & Method
• UK Innovation Surveys (UKIS) 2004-2012 (5 waves)
• Stratified sample, postal, non-compulsory, bi-annual, response rate 51%
(2008-10) - 58% (2002-04): unbalanced panel. Focus on responses for 2
consecutive waves; c.1000 obs per double-wave; N=3,581
Dependent variable 1: NTM 0/1
Dependent variable 2: Sales NTM (%)
Dependent variable 3: Uni Collab (0/1)
• C.20% collaborate & more likely for larger firms
• Bivariate dynamic and recursive model allowing the simultaneous
estimation of the probability of introducing NTM innovation, conditional
on the likelihood of collaborating with a University

9. Findings
Hypothesis Expected
Sign
All
firms
Small Medium Large
1. Inter-related decisions + + + + +
2. Uni collab increase NTMI + + + + +
3. Learning other partners (-1) + + +/- + +
4. Learning prior university (-1) + + + + +
5. Learning prior NTMI (-1) + + + + +

10. NTM Innovation 0/1 NTM Sales £
dy/dx Sig Coeff Sig
All Firms University
collaboration
(0/1)
.2466 *** 4.085 *
Small Firms
(<50)
University
collaboration
(0/1)
.2214 *** 1.378
Medium Firms
(50-250)
University
collaboration
(0/1)
.2134 *** 15.860 ***
Large Firms
(250+)
University
collaboration
(0/1)
.2119 ** 12.392 ***
So how important is University collaboration
to NTM innovation and sales?

11. • University collaboration increases the probability of NTM
innovation as compared to NTF by c.22% for all sizes of firm
• This university effect is equivalent to the combined effect of in-
house R&D, design investment and exporting
• University collaboration also increases sales from NTM innovation
but note the marked difference between 12.3-15.9% for medium
and larger firms and only 1.4 per cent for small firms
• Significant learning effects from prior collaboration. But small -
increasing the percentage of firms collaborating by no more than c.
5%.
Key findings

12. UKIS, Waves 4-8 All
n=23,616
10-49
n=10,910
50-250
n=6,629
250+
n=6,053
Regional University + + +
National University + + + +
International University - +
! Fact: University Collaboration increases the probability of New to the Market
(NTM) Innovation
? Question: Does this relationship hold for all Universities, irrespective of their
location

13. • Universities are impacting significantly on NTM innovation and
sales. Are universities a disruptive influence?
• Small firms benefit from university collaboration (introduction of
NTM innovation), but appear less able to capitalise on this through
sales
• Pipeline effects are therefore different for smaller firms v medium
and larger firms. Small firms may need more help commercialising
outputs from collaborative research
• Learning effects are observed but are weak. Not sufficient to
overcome the two worlds paradox. Policy efforts to encourage
collaboration for smaller firms remain important
Implications

14. Next steps
Finalise and circulate the two research papers:
Hewitt-Dundas, N Gypali, A and Roper, S
‘Introducing new-to-the-market innovations: Can learning help
to overcome the ‘two worlds’ paradox in university-business
collaboration?’
Gypali, A Hewitt-Dundas, N and Roper, S
‘So far, so good? Accessibility, utility and learning effects in
university-business collaboration’
Along with Policy Briefings and a blog post….