Universities have long been touted as key cogs in the economy, launching innovative spin-off companies and helping existing firms to create new products. “Knowledge transfer” to wider society, including the economy, is claimed to be their “third mission”, alongside teaching students and conducting research.
But controversial new analysis argues that this third mission could be “mission impossible”. The benefits of universities to regional economies have been “greatly exaggerated” and the public cash used to help commercialise research could even have limited the growth of new firms by coddling them, asserts Ross Brown, lecturer in management at the University of St Andrews.
He also makes the accusation that universities have “captured” policymaking in this area and cemented the idea that they can act as “quasi-economic development agencies”, in the face of evidence to the contrary.
“There’s strong evidence to suggest that a lot of higher education commercialisation activities are not hugely beneficial in terms of economic impact,” Dr Brown told Times Higher Education. “I’m surprised at the backlash I’ve received in raising these things. There’s a lot of vested interest” in maintaining the current agenda, he added.
Although Dr Brown focuses on Scotland in his paper, he said the problems he has identified apply elsewhere – for example the North East of England and other economically “peripheral” areas of the UK – and indeed to anywhere in the world hoping that universities can spark life into the local economy.
Judging from surveys of university spin-offs, Scottish institutions are relatively good at creating new companies. But Dr Brown argues that they tend to remain small and that many are bought out early on – often by foreign firms – because they lack the financial backing to grow.
“Peripheral” regions such as Scotland often suffer from a lack of venture capital to expand companies, he says in "Mission impossible? Entrepreneurial universities and peripheral regional innovation systems", published in Industry and Innovation last month.
Spin-off companies are heavily supported, he explains, through innovation grants and subsidised offices. This “excessive pampering” ends up pushing them to release their products too early and can also make nascent companies neglect potential customers, Dr Brown claims.
He is also sceptical that universities can help small and medium-sized enterprises grow. The statement that SMEs often fail to engage with universities is hardly controversial. It is a running theme of reports and conferences on engagement between the academy and business and is often put down to SMEs being unaware of how to work with complex universities.
But Dr Brown’s argument is that there is more of a fundamental “mismatch” between the two. SMEs are often simply unable to turn cutting-edge university research into new products and instead have “much more mundane requirements” often better served by other organisations, he told THE.
Instead of looking to universities, they often want rapid answers to business questions from customers or suppliers, he contended. “The perception that universities are always the answer seems mistaken to me,” he said. “I don’t think we’re best placed to help SMEs.”
Only part of the story
But of course spinning off companies and giving existing firms a shot of innovation is only a part of universities’ impact on the economy, as Dr Brown acknowledges – they train highly skilled graduates and conduct the basic research that ultimately drives technological progress. “I’m not downplaying the role of universities in economic development,” he said.
Commenting on Dr Brown’s argument, Kieron Flanagan, senior lecturer in science and technology policy at the University of Manchester, said: “He’s pretty much saying what the evidence suggests.”
Surveys indicate that universities have a much bigger economic impact through informal channels, such as attracting graduates to an area, rather than formal research commercialisation, Dr Flanagan said.
But David Lott, deputy director of Universities Scotland, which represents the country’s institutions, was scathing of Dr Brown’s analysis. “It makes very selective use of the evidence and creates a very narrow picture of the university role in innovation,” he said. “Scotland’s universities work with 12,000 Scottish SMEs each year and 80 per cent of that engagement is through consultancy and professional development – a contribution that the article ignores.
“Universities are not the be-all and end-all in innovation in Scotland or elsewhere,” he added. “But they are an important and constructive partner.”
Even if SMEs cannot turn the latest university research into a new product, many could benefit from academic advice, in particular from business schools, on how to manage their businesses, said Tim Hughes, professor of applied marketing at the University of the West of England. Dr Brown agreed that there is “huge scope” for this kind of interaction.
But business school academics still generally achieve promotion by publishing journal articles, often focusing on historic US economic data rather than tangible local business questions – a problem that exercised former universities minister Lord Willetts when he was in office.
As a result, “business people sometimes don’t believe academics are credible", said Professor Hughes. “When they [academics] speak to business, they don’t speak the same language.”
The holy grail for university technology transfer offices is of course Silicon Valley, which has spawned companies that have transformed the world economy through an IT revolution.
Received wisdom has it that the Bay Area began to hum with innovation after Stanford University set up its industrial park in the late 1950s, said Dr Flanagan. But the roots of Silicon Valley go back much further, as the area had a thriving electronics industry stretching back to the First World War, he added.
In other words, universities may not be as directly linked to Silicon Valley-style tech booms as popularly perceived.
In the UK, “Cambridge is the closest thing to Silicon Valley in terms of dynamism”, Dr Flanagan said. But the success of "Silicon Fen" is not really based on university spin-offs, he argued. Instead, the university has a less direct impact, by making Cambridge an attractive place to move to, drawing in highly skilled people.
But is recreating the innovation of Silicon Valley actually an unmitigated positive for a country – even assuming it is possible? The tech firms that have emerged from San Francisco may have huge market value, but they employ relatively few people, Dr Flanagan pointed out.
One school of thought argues that the start-up ecosystem simply allows big companies to outsource the risk of doing research and development, he added. For a national economy as a whole, it is “not a good strategy to try to create a Google every 50 years”, Dr Flanagan added.