How to Create Productive Partnerships With Universities

Too often, companies pursue collaboration with university researchers in an ad hoc, piecemeal manner. But by giving more thought to the relationship structure, companies can achieve better results.

The pharmaceutical companies Novartis, GlaxoSmithKline, Merck and Pfizer have invested together in open science initiatives even though they are otherwise fierce competitors.

Image courtesy of Novartis.

Companies increasingly recognize that to successfully innovate they cannot exclusively rely on their internal R&D. Working with external partners allows them to access different pools of knowledge and save R&D costs.1 Universities are among the external partners that offer high promise, since they allow access to an enormous global pool of talent and skills.

Sometimes managers think dealing with universities equals only “technology transfer.” While the use of university-owned intellectual property2 has spurred much innovation in business, it is only the tip of the iceberg. Rather than merely licensing inventions, another often-underappreciated opportunity for companies is to get help from universities during the whole life cycle of their innovation projects.3 For example, in the United Kingdom, businesses already spend more than 20 times more on university collaboration than on licensing technology from universities.4

However, working with universities poses considerable challenges for managers.5 Two fundamental issues afflict collaboration. First, the open nature of academic science is at times in conflict with companies’ need to protect technologies they use. Second, while academic research focuses on long-term challenges and thus may move more slowly, industrial R&D is driven by time-sensitive product development projects and day-to-day project solving. As a result, companies can sometimes find universities too slow and too bureaucratic to be good partners. Given that in the Organisation for Economic Co-operation and Development countries, expenditures on higher education R&D represent about $160 billion per annum, businesses that don’t work with universities may be missing opportunities of significant proportions.6

The Leading Question

How can companies work most effectively with universities?

Findings
  • Companies’ relationships with universities are too important to be managed in an ad hoc fashion.
  • When structuring a collaboration, managers should consider two key dimensions: time horizon and degree of openness.
  • Each model of industry-university collaboration has benefits and drawbacks; the best format will depend on the goals and capabilities of both partners.

These tensions are exacerbated by the fact that companies’ collaborations with universities are often pursued in an ad hoc, piecemeal manner, led by individual initiatives rather than any corporate strategy.

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References

1. H. Chesbrough, “Open Innovation: The New Imperative for Creating and Profiting From Technology” (Boston: Harvard Business School Press, 2003).

2. Patents represent the commercially most important type of intellectual property for universities.

3. W.M. Cohen, R.R. Nelson and J.P. Walsh, “Links and Impacts: The Influence of Public Research on Industrial R&D,” Management Science 48, no. 1 (January 2002): 1-23.

4. See official U.K. figures at www.hefce.ac.uk/econsoc/buscom/hebci.

5. R. Wright, “How to Get the Most From University Relationships,” MIT Sloan Management Review 49, no. 3 (spring 2008): 75-80.

6. Calculated from OECD figures, according to which, in the OECD area, higher education expenditure on R&D (HERD) equaled 0.4% of GDP in 2009. See OECD, “OECD Science, Technology and Industry Scoreboard 2011” (Paris: OECD Publishing, 2011).

7. D. Partha and P.A. David, “Toward a New Economics of Science,” Research Policy 23, no. 5 (September 1994): 487-521.

8. See www.hpl.hp.com/open_innovation/irp.

9. See www.grants4targets.com.

10. See www.ibm.com/developerworks/university/facultyawards.

11. See www.thesgc.org.

12. C. Sheridan, “Industry Continues Dabbling With Open Innovation Models,” Nature Biotechnology 29, no. 12 (December 2011): 1063-1065.

13. See www.ibm.com/ibm/ideasfromibm/us/compsci/20080728/index.shtml.

14. K.J. Boudreau and K.R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review 50, no. 4 (summer 2009): 68-76.

15. See www.imperial.ac.uk/energyfutureslab/research/grandchallenges/cleanfossilfuels.

16. S. Lohr, “IBM and U.S. Universities Work to Open Up Software Research,” International Herald Tribune, Dec. 14, 2006.

17. See http://techresearch.intel.com/istc.aspx.

18. Association of University Technology Managers, “The AUTM Transaction Survey: FY2009” (Deerfield, Illinois: 2011).

19. On technology transfer, see D. Mowery, R. Nelson, B. Sampat and A. Ziedonis “Ivory Tower and Industrial Innovation: University-Industry Technology Transfer Before and After the Bayh-Dole Act” (Palo Alto, California: Stanford University Press, 2004); and M. Wright, B. Clarysse, P. Mustar and A. Lockett, “Academic Entrepreneurship in Europe” (Cheltenham, U.K.: Edward Elgar, 2007).

20. W.C. Johnson “The Collaborative Imperative,” in “Universities and Business: Partnering for the Knowledge Society,” eds. L.E. Weber and J.J. Duderstadt (London: Economica, 2006): 99-111.

21. National Council of University Research Administrators, “Guiding Principles for University-Industry Endeavors” (Washington, D.C.: 2006).

22. See www.scripps.edu.

23. S. Krimsky, “Science in the Private Interest: Has the Lure of Profits Corrupted Biomedical Research?” (Lanham, Maryland: Rowman & Littlefield, 2004).

24. E. Press and J. Washburn, “The Kept University,” Atlantic Monthly 285, no. 3 (March 2000): 39-54.

25. P. D’Este, and M. Perkmann, “Why Do Academics Engage With Industry? The Entrepreneurial University and Individual Motivations,” Journal of Technology Transfer 36, no. 3 (June 2011): 316-339. Our research suggests that it is premature to assume that academic research teams increasingly act as “quasi-firms”: see H. Etzkowitz, “Research Groups as ‘Quasi-firms’: The Invention of the Entrepreneurial University,” Research Policy 32, no. 1(January 2003): 109-121.

26. L.G. Zucker and M.R. Darby, “Star Scientists and Institutional Transformation: Patterns of Invention and Innovation in the Formation of the Biotechnology Industry,” Proceedings of the National Academy of Sciences 93, no. 23 (Nov, 12, 1996): 12709-12716.

i. For results of a survey of U.K. physical and engineering scientists, see D’Este and Perkmann, “Why Do Academics Engage With Industry?”; for results of a survey of companies collaborating with U.K. scientists, see J. Bruneel, P. D’Este, A. Neely and A. Salter, “The Search for Talent and Technology: Examining the Attitudes of EPSRC Industrial Collaborators Towards Universities” AIM Academic Publication. (London: Advanced Institute of Management Research, 2009). See also A. Salter, V. Tartari, P. D’Este and A. Neely “The Republic of Engagement: Exploring UK Academic Attitudes to Collaborating With Industry and Entrepreneurship,” Advanced Institute of Management Research and U.K. Innovation Research Centre, August 2010, downloadable from www.aimresearch.org/publications/academic-publications; and J. Bruneel, P. D’Este and A. Salter, “Investigating the Factors That Diminish the Barriers to University-Industry Collaboration,” Research Policy 39, no. 7 (September 2010): 858-868.

ii. M. Perkmann and K. Walsh, “The Two Faces of Collaboration: Impacts of University-Industry Relations on Public Research,” Industrial and Corporate Change 18, no. 6 (December 2009): 1033-1065.

iii. M. Dodgson, D.M. Gann and A. Salter, “In Case of Fire, Please Use the Elevator: Simulation Technology and Organization in Fire Engineering,” Organization Science 18, no. 5 (September-October 2007): 849-864.

Acknowledgments

We acknowledge support from the U.K. Economic and Social Research Council via the Advanced Institute of Management Research (RES-331-27-0063 and EP/C534239/1), the U.K. Engineering and Physical Sciences Research Council via the Innovation Studies Centre (EP/F036930/1) and the UK Innovation Research Centre (RES-598-28-0001), which is funded by the ESRC, the National Endowment for Science, Technology and the Arts, the U.K. Department for Business Innovation & Skills and the Technology Strategy Board.