Is your park really sparking?

January 9, 2004

Do universities really benefit from science parks? Colin Lizieri assesses dubious assumptions

Like the latest children's toy, science parks have become must-have developments for universities. Science parks are said to support knowledge and technology transfer, encourage entrepreneurship and business incubation, gain from clustering and embed the university in the local economy. From this, benefits are assumed to flow back to the university.

Recent research by the University of Reading, however, casts doubt on such assumptions of a two-way flow of benefits.

Although science parks are linked to stronger research, 40 per cent of park tenants interviewed described themselves as service firms, with only 30 per cent claiming a pure research and development function.

And there is little evidence of strong linkages back to the university. About 50 per cent of firms had some link to the local higher education institution. Of those, only half agreed that technology transfer had taken place. Most of that transfer was from the university to the firms. Only 15 per cent of firms had employees who worked part time with the university or had seconded staff. Shared facilities between firms and the university were extremely rare. Local spillovers were limited.

Firms locate on parks for various individual reasons. Less than 10 per cent of tenants identified the presence of similar tenants as a very important factor, which casts doubt on supposed cluster benefits. Less than half the tenants thought links to research units in the university were important.

Barely a third cited the presence of business support services.

Eighty per cent of the firms surveyed said they would still have located in the same area whether or not the science park existed. The biggest motivating forces by far were related to property. Key factors were the quality of business space, its cost, flexible leasing arrangements and the ability to relocate within the park in response to business expansion.

This suggests that if universities are committed to the knowledge-transfer and technology spillover model, the conventional separated campus model may need reconsideration. If they wish to maximise financial gains, they might be better focusing on science parks as a real-estate investment.

What science-park model might work? First, the park needs to establish and maintain strict entry criteria. These need to be linked to areas of exploitable research excellence and include a requirement for interaction with the university and agreements on intellectual property rights and the sharing of profits.

One solution might be a "virtual science park", with firms distributed around the campus, sharing space and facilities and interacting directly with the academic community. Such a model raises the probability of productive linkages and spillover effects, but has organisational costs.

A second approach would exploit science parks as property investments. This requires professional management. With institutions more prepared to accept multi-let property and short leases in their portfolios, opportunities for joint ventures and capital gains have increased.

Whichever strategy is followed, clarity of focus and purpose is essential. The gains for the university, and for the local economy, have to be identified and exploited, not simply assumed.

Colin Lizieri is professor of real-estate finance at the University of Reading Business School. The research team included Neil Crosby, Joe Doak and the late Mike Breheny. The work was sponsored by Turnberry Consulting, from which the full report may be obtained.

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