Presentation to the ERC seminar.

1. Accessibility, utility and learning effects in
university-business collaboration
Nola Hewitt-Dundas, Areti Gkypali and
Stephen Roper
14th February 2017

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. ERC II Project 1:
SME-University links and their
innovation and productivity benefits
Two areas of focus:
i. The link between (radical) innovation and
university collaboration
(ERC Project 1a)
ii. The geography of the relationship of (radical)
innovation and university collaboration
(ERC Project 1b)

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 (1)
New to the market innovation
‘This business introduced a new
product or service to the market
before competitors’
New to the firm innovation
‘This business introduced a new product
or service that was essentially the same
as a good or service already available
from competitors’
The proportion of UK firms undertaking
both NTM and NTF innovation has fallen
with a greater fall in NTF innovation.

6. New-to-the-market Innovation (2)
• NTMI innovation life cycles are longer, more unpredictable, have
more stops and starts, and are more context-dependent (Keizer and
Holman, 2007).
• Innovation strategy will be shaped by internal resources,
organisational structures and market environment
High costUncertainty
Lack of
information
High risk
High
Revenues
First-mover
advantages
• 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; Hotternott and Lopes-
Bento 2016)

7. University-Business collaboration for new-to-
the-market innovation: the closer the better?
• Proximity facilitates the exchange of tacit and complex
knowledge through personal interaction and shared knowledge
and experiences (Boschma, 2005).
• However, in any particular location there may be limited
availability of the range of knowledge universities or other
knowledge sources have to offer (Guilani 2007; Leiponen and
Helfat 2010).
• Emphasis is given in the dynamic nature of knowledge search
and learning processes (Vahter et al. 2014; Balland et al. 2015;
Hewitt-Dundas et al. 2017).

8. The knowledge utility-
accessibility trade-off
Local National International
UtilityAccessibility
Probability

9. Size matters?
(a) Smaller firms
Local National International
Prob.
Probability of
finding useful
knowledge
Probability of
being able to
access
knowledge
A
B
Local National International
Prob.
Probability of
finding useful
knowledge
Probability of being able
to access knowledge
A C
(b) Larger firms

10. Hypotheses
H1: The utility/accessibility trade off
Trade-offs between the accessibility and utility of external knowledge
imply an inverted-U shape relationship between distance and the
benefits of university collaboration.
H2: Local knowledge and smaller firms
Lower accessibility and higher utility will mean that local university
knowledge sources are of greater innovation benefit to smaller firms.
H3: Distant knowledge and larger firms
Greater accessibility and lower utility will mean that more distant
university knowledge sources are of greater benefit to larger firms.
H4: Learning effects
Learning effects resulting from prior collaboration will increase the
innovation benefits of collaboration with more distant university
partners.

11. 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: New to the market innovation (0/1)
Dependent variable 2: Regional University Collaboration (0/1)
Dependent variable 3: National University Collaboration (0/1)
Dependent variable 3: International University Collaboration (0/1)
• C.20% collaborate & more likely for larger firms
• Multivariate dynamic and recursive model allowing the simultaneous estimation of the probability of
introducing NTM innovation, conditional on the likelihood of collaborating with a University at
regional, national and international level :
UNICOLLAB_REGt=β0+β1NTMIt−1+β2UNICOLLAB_REGt−1+β3OTHCOLLAB_REGt−1+β4FLCt+ε2t
ΝΤΜΙt
∗=α0+α1UNICOLLAB_REGt+α2UNICOLLAB_NATt
+ α3UNICOLLAB_INTt+α4OTHCOLLAB_REGt + α5OTHCOLLAB_NATt + α6OTHCOLLAB_INTt+ α7FLCt+ε1t
UNICOLLAB_NATt=γ0+γ1NTMIt−1+γ2UNICOLLAB_NATt−1+γ3OTHCOLLAB_NATt−1+γ4FLCt+ε3t
UNICOLLAB_INTt=δ0+γ1NTMIt−1+δ2UNICOLLAB_INTt−1+δ3OTHCOLLAB_INTt−1+δ4FLCt+ε4t
𝜖 = 𝜀1𝑡, 𝜀2𝑡, 𝜀3𝑡, 𝜀4𝑡, ′
~𝑁 0, 𝚺

12. Empirical Results

13. Decisions: are they related?
All Small Medium Large
Rho (NTMI, UNICOLLAB_INT) -0.095 -0.056 -0.243* 0.006
Rho (NTMI, UNICOLLAB_NAT) -0.124* -0.097 -0.249** -0.028
Rho (NTMI, UNICOLLAB_REG) -0.119* -0.160* -0.154* -0.037
Rho (UNICOLLAB_INT,
UNICOLLAB_NAT) 0.629*** 0.762*** 0.768*** 0.372***
Rho (UNICOLLAB_INT,
UNICOLLAB_REG) 0.308*** 0.272* 0.232* 0.433***
Rho (UNICOLLAB_NAT,
UNICOLLAB_REG) 0.198*** 0.0920 0.211* 0.308***

14. All Small Medium Large
Collaboration with a
Regional University
0.062 + + (+)
Collaboration with a
National University
0.084 + + +
Collaboration with a
International University
(0.011) - + (+)
Hypothesis 1:
Don’t go too far!
Note: estimation results of marginal effects, numbers in parentheses denote non statistically significant estimation results

15. Hypotheses 2 & 3:
Size matters!
All Small Medium Large
Collaboration with a
Regional University
0.062 0.071 0.068 (0.038)
Collaboration with a
National University
0.084 0.103 0.082 0.066
Collaboration with a
International University
(0.011) -0.063 0.082 (0.039)
Note: estimation results of marginal effects, numbers in parentheses denote non statistically significant estimation results

16. Hypothesis 4: Learning
effects
• Strong persistence effects from prior
collaboration with regional, national and
international universities for each firm type
• Prior collaboration with consultants has a
positive impact for collaboration with
international and national universities while
the influence of customer collaboration is
limited

17. • An inverted-U shape trade-off relationship exists between distance
between collaborating partners and the likely cost-benefit of
collaboration.
• Small firms facing resource constraints may find it difficult to access
distant knowledge but, at the same time, may derive greater
benefit due to their weaker internal knowledge resources.
• Larger firms with stronger internal resources may be able to access
more distant knowledge but benefit less from that knowledge.
• Learning effects from previous collaboration with other types of
partners is rather weak
• Strong evidence of the persistence of university collaborations
Summarizing

18. Thank you for your
attention!