3. The Role of Universities within Knowledge and Innovation Networks

1A vast majority of nowadays literature confirms that universities can be seen as a source of knowledge intensive capital which is further beneficial for technological change, innovation and economic growth (Jaffe 1989, Mansfield 1998 and Adams 2002). This chapter now firstly presents an overview of university research in Germany, and simultaneously shows support measures for university interaction. Afterwards, the impact of university research is illustrated, followed by an overview of possible types of university interactions.

3.1. University Research in Germany and Support Measures

2The university itself is the oldest organisational form amongst academia and teaches sciences as a whole, in Latin 'universitas literarum'. Thus, universities are responsible for the management and advancement of science and art by means of research, teaching, studies, and advanced training. Thereby, it is the professors, institutes, hospitals and laboratories that help to accomplish their sovereign goal. Legally, a university is a public business operation which does not serve as pecuniary reward, but is responsible for welfare provisions. Thus, it operates on behalf of the state. The traditional university is, further, knowledge-oriented and does not consider the implementation and application of its research results, as it primarily offers higher education for scientific, political, and industrial executives. Hence, universities prepare young professionals for their occupational activity with knowledge and expertise within science and art (Zißler 2011). The research of German universities as well as of German universities of applied sciences is defined within the Hochschulrahmengesetz (§ 22) as follows: “Die Forschung in den Hochschulen dient der Gewinnung wissenschaftlicher Erkenntnisse sowie der wissenschaftlichen Grundlegung und Weiterentwicklung von Lehre und Studium. Gegenstand der Forschung in den Hochschulen können unter Berücksichtigung der Aufgabenstellung der Hochschule alle wissenschaftlichen Bereiche sowie die Anwendung wissenschaftlicher Erkenntnisse in der Praxis einschließlich der Folgen sein, die sich aus der Anwendung wissenschaftlicher Erkenntnisse ergeben können. Zur gegenseitigen Abstimmung von Forschungsvorhaben und Forschungsschwerpunkten und zur Planung und Durchführung gemeinsamer Forschungsvorhaben wirken die Hochschulen untereinander, mit anderen Forschungseinrichtungen und mit Einrichtungen der überregionalen Forschungsplanung und Forschungsförderung zusammen.”

  • 14 Wilhelm von Humboldt was involved in the foundation of the University of Berlin, which is called H (...)

3However, the evolvement of the German university as knowledge and innovation generator goes even back to the beginning of the 19th century, when the University of Berlin was founded (Schmoch 2003). It was Wilhelm von Humboldt14 , a German philosopher, who influenced decisively the organisation and orientation of the German university system. Idealists like him saw research at universities as an important element of teaching. At the very beginning, research at German universities was primarily focused on disciplines such as philosophy, mathematics, and humanities. Empirical research was not recognised and had to fight for its acceptance. However, at the end of the 19th century, research at German universities had already achieved world leadership in several disciplines such as medicine, chemistry, and physics; thus, many institutes with laboratories for natural sciences had been created. Simultaneously, due to the strong demand of German industry for skilled engineers, special polytechnical schools outside universities had been established. Later on, these special schools had even become higher a higher status, being now technical higher education schools (Technische Hochschulen). Even at this early stage of the development of the German academic research system, there had already been university-industry relationships in f o rm of, for example, consultancy arrangements from the university to the industry. Thus, the first forms of knowledge transfer appeared. However, universities and technical higher education schools were mainly focused on education, whereas the government established the first official research institutes in applied sciences. In 1911, for example, the Kaiser Wilhelm Society, the forerunner of the famous Max Planck Society, was founded. After World War II, further research institutes were founded such as Max Planck Society, Fraunhofer Society, and the National Research Centers (nowadays called Helmholtz Centers). The main evolution within the educational sector after World War II was the official acceptance of technical higher education schools as equivalent to universities, so that some of them even became “Technical Universities” or even normal universities after integrating some other nontechnical areas (Abramson et al. 1997). From this time, the reputation of application-oriented research could strongly catch up with the traditional basic research (ZiRler 2011). But not until the 1970s, the German universities began to seriously regard themselves as important knowledge and innovation transmitters, and university-industry relationships, for example, finally grew by 2 5 % between 1970 and 1980, and even by 44 % during the 1980s (Abramson et al. 1997). In numbers, industrial funding of German universities rose from DM 110 Mio. in 1980 to DM 750 Mio. in 1997 (Schmoch 1999). Currently, in the year 2010, German universities spend € 12.6 Mio. on R&D. A very important programme to enhance higher education and research at German universities was the Exzellenzinitiative from 2005. At its beginning, the initiative implies three different lines of support. First, it is about the advancement of post-graduate schools in order to ensure the development of young German academics who find ideal post graduation conditions within a broad and interdisciplinary area of science. Second, clusters of excellent are highly supported to bundle research potential through networking activity at German universities. Third, it is about future prospects, i.e. universities as a whole are strongly promoted in order to strengthen t h em within international competition. Here, nine elite-universities have been chosen whose leading research and young academics shall be strongly supported. Overall, 39 graduate schools, 37 excellent cluster, and nine elite-universities have been supported with € 1.9 Billion since 2006. Then, in 2009, the German state and its federal states decided to expand the Exzellenzinitiative with a financial support of further € 2.5 Billion until 2017 in a second phase (EFI 2012). Thus, another 45 graduate schools and 43 clusters of excellence have been chosen for further financial support, as well as eleven elite-universities. The elite-universities now consist of seven former universities that had already been considered within the first phase and four new ones that could now persuade with their future prospects (BMBF 2012).

4For a long time already, German universities could not be solely financed through public means anymore. Especially within the area of natural science, the project costs often exceed university budget, as the basic funding of the federal states cannot alone support nowadays development regarding the complex university projects within any area. Thus, university research is more often dependent from third-party funds, which sometimes even exceed funds provided by state government. Hence, it is not surprising that the importance of such externally funded research continuously increases over the past years. Thereby, the external money can come from the German state and its federal states, from public- and/or private-funded research institutes, and of course from industrial firms (Misera, 2010). In 2009, the German university budget has consisted of basic financing amounting to 73%, third-party funds amounting to 20%, and administration revenues of 7%. However, as already mentioned above, especially the importance of third-party financing rose during the past years, as € 1 basic financing covered € 0.14 third-party financing in 1995, and about 15 years later, € 1 basic fund already covered € 0.27 third-party financing (EFI 2012).

5Of course, there are several different possibilities of financial support for the German universities. With regard to the German state, it is, for example, the Ministry for Education and Research (BMBF) as well as the Ministry of Economic Affairs and Technology (BMWi) that play the most important role in this regard. Thereby, the BMWi rather supported the industrial sector, as their programs are focused on the demand of small-and medium-sized firms. Their support measures are mostly found in the area of aeronautics, energy, and transport. The BMBF supports direct projects in other specific areas; currently, they are mainly engaged in new technologies, life sciences, and sustainability. On the other side, the federal states of Germany also aim at increasing their R&D expenses for collaborative innovation activities. In each federal state, the support measures consist of the increased formation of cluster, the enlarged foundation of innovative firms, and the better involvement of small- and medium-sized firms in innovation processes. Further, the German research community (DFG) generally fosters the German universities in any scientific area. Here, the long-lasting collaboration between DFG and Degussa GmbH is to be stressed, as joint projects between university and industry researchers within the nanotechnology sector are highly supported. Further, the research association “Otto von Guericke” e.V. together with partners from industry, science, and state government supports different innovative projects; its portfolio ranges from basic funds until the market launch of new projects and processes. Thereby, the central point implies the industrial joint research program (IGF) which bridges the gap between basic funding and business application. Here, new technologies are generated for the entire industrial economy, whereas the firms accompany the whole research project in order to be able to adjust each step on their demands. Last, foundations play an important role regarding the support of university linkages and complement public funds reasonably. Here, the Bayrische Forschungsstiftung and the Stiftung fur Technologie, Innovation und Forschung Tuhringen especially foster joint projects between universities and small- and medium-sized firms (Wissenschaftsrat 2007).

3.2. The Impact of University Research

6As already aforementioned, it has widely been accepted that the ability to create, access and use knowledge and technology is a fundamental determinant of long-term development and competitiveness. Hence, it is not surprising that in times of globalization universities have increasingly become involved in regional economic development and are often believed to play a key role in gaining new technologies and innovations (Miner et al. 2002, Etzkowitz 1989 and Etzkowitz and Leydesdorff 2000). Over the past three decades, the traditional university whose primary objective is research and teaching has been highly complemented by increasingly “entrepreneurial university” which generates revenue and enhances its political viability through technology transfer, the commercial transfer of innovation, the generation of spinoff companies, and direct engagement in regional development. In this context, the famous cases of Stanford University and MIT are often mentioned as they played crucial roles in the development of Silicon Valley and the greater Boston area (Etzkowitz 1989 and Etzkowitz and Leydesdorff 2000). This changing role of the university is surely a result of the shift from an older industrial economy to an emerging creative economy (Florida et al. 2006). Hence, the fully developed industrialized economies are undergoing important and fundamental economic and social changes, as, for example, pictured through substantial increases of the share of the total resources devoted to R&D or changes in the educational achievements of the labour force. These countries are also characterized by a fast expansion of knowledge-based industries and activities which basic raw material is simply new knowledge (Karlsson and Zhang 2000). Thus, it not surprising that the university, as a centre for research and technology generation, becomes increasingly essential for innovation and economic growth (Florida et al. 2006). It is given and confirmed by various studies that universities have significant effects on corporate innovations as well as on regional economic development and are seen as a core element of a region's intellectual infrastructure (Lendel 2010). Jaffe (1989) has already discovered by the end of the 1980s that a greater number of patents are generated when business is located in close proximity to universities. Anselin, Vargas and Arcs (1997) have shown that the presence of university research tends to attract joint research labs. A vast majority of nowadays literature confirms that the use of academic knowledge is decisive for technological change, innovation and growth by means of new theoretical insights, techniques, and expertise of a kind that enterprises find difficult to provide themselves with (Jaffe 1989, Mansfield 1998, Cohen, Nelson and Walsh 2002). For Rosenberg and Nelson (1994), universities are highly important factors in the development of major innovations. Mansfield (1995), for example, has found that 10% of the innovations that have been explored could not have been developed without academic knowledge. In contrast, Berman (1990) explored that industry funding of university research can be associated with subsequent increases in industry R&D expenses. According to Becker (2003), existing studies have found out that joint research with universities increases the probability of firms to be engaged in t h e development of new products and technologies. Besides, Mueller (2006) has explored that the more firms draw from knowledge coming from universities, the more those regions see economic growth. In contrast, Mansfield and Lee (1996) illustrated that universities cited by firms tend to be the leading generators of new fundamental knowledge as MIT, Stanford, Harvard, and the like. Moreover, Kim et al. (2005) found that industry increased its research employment with experience on university research projects as well as with advanced university degrees. They also discovered that the percentage of patents assigned to firms that include inventors with university expertise increased substantially. Thus, the role of universities in the innovation process has changed and increased continuously over time due to the fact that the development of new products or technologies depends increasingly on the findings of university research (Martin and Nightingale 2000 and Tijssen 2002).

3.3. Types of University Interactions

7The relationship between the university and the regional economy can simply consist of a transmitter-receiver system; i.e. the university is transmitting a signal that the regional economy must be able to absorb. Of course, if t h e regional economy does not function properly, it will not be effective to just increase the volume of the signal (Florida et al. 2006). Hence, both, the university and the regional economy must be equally developed, whereas the regions need to require an absorptive capacity to effetely absorb and use the scientific and technological results of the university (Cohen and Levinthal 1990). However, it is common sense that the innovation process itself is not a result of isolated agents (Monjon and Waelbroeck 2003). Powell (1990) has already stated that the sources of innovative capacity are mainly found between universities, research institutes and enterprises than inside them. Smith further argued in t h e mid 1990s that universities itself play three key roles within an innovation system. First, they are primarily engaged in scientific research, hence affecting the technological frontier of industry over the long run. Second, they produce knowledge to a certain extent which is directly applicable to industrial production (e.g. prototypes). Third, universities offer main inputs for industrial innovation processes in terms of human capital, either through the education of graduates, who become industry researchers or through personnel transfer from universities to enterprises (Schartinger et al. 2002). For Etzkowitz (1998), t h e interaction of universities and firms can be seen as follows: T h e product itself originates in the university but its development is done by a firm, i.e. a new product is accomplished through academic knowledge, whereas its improvement and market launch is done by a firm.

8The reasons for firms to be active in any f o rm of cooperation do not only lie in t h e fact that they want to share the costs and risks of research activities. Industrial firms also wish to have access to new markets and technologies as well as to be able to use complementary skills (Cantner and Graf 2006). Bishop et al. (2010) have also shown that firms benefit from interaction with universities in two ways. They gain from access to new ideas from fundamental research as well as from assistance with the market launch of new products. Moreover, according to Teece (1992), cooperation activity is especially necessary for competition on a level of high technological complexity. Moreover, Monjon and Waelbroeck (2003) have found that highly innovative firms benefit from official collaboration projects with universities. Loof and Brostrom (2008) have explored positive impacts for large manufacturing firms, while Miozzo and Dewick (2004) have concentrated on the question of whether cooperation enhances firm performance in construction industry and found that there are positive effects from collaboration with universities in some European countries. Besides, in t h e case of US-firms, Darby et al. (2004) have examined that firms taking part in the Advanced Technology Program (ATP) of the Commerce Department patent more often when a university also participates.

9Also, it is well accepted that collaboration activity is a significant and highly important channel regarding the diffusion of knowledge, as the number of partnerships among universities and enterprises testifies (Archibugi and Coco 2004). There are indeed many different forms of knowledge transfer as the following table demonstrates:

Table 1: Possible University-Industry Interactions (according to Schmoch 2003).

10Of course, there are plenty of possible university-industry interactions, but t h e above table covers a g o o d variety of these interactions. Thereby, collaborative research refers to interaction between an industrial and an academic unit as t h e name implies. In Germany, such research is mainly found with programmes initiated by the BMBF as such research is highly supported since 1984. In the case of contract research, one single private enterprise most often announces a project and contract money out to one single academic unit which is in charge of resolving a specific technical problem. Consulting means that professors advice private enterprise, most often in the context of additional business. Besides, consulting frequently ends up with collaborative or contract research. Informal contacts imply informal meetings, telephone calls, etc., without any contractual arrangement. Publications are the traditional instrument of scientists to distribute knowledge. As industrial researcher also frequently read professional journals, publications are a substantial source of knowledge transfer. In the context of this PhD thesis, it is not only about reading professional journals, but it is about the increasing trend of joint publication between universities and enterprises (see chapter eight). More recently, joint patents obtain a more important role in the construct of university-industry interactions as can be also seen in chapter four and six of this PhD thesis. Further, conferences and workshops serve as good places to exchange knowledge, either of informal or formal nature. On the one hand, the presentations of research results can be used and on the other hand, conference breaks are useful opportunities to foster informal contacts. The exchange of scientific personal is deemed as especially effective as there is the possibility to transfer implicit knowledge. University spinoffs appear more often during the past twenty years, and are also an important source of university-industry interaction. Besides, the central function of a university is to educate high-potentials which can be then provided to any private enterprise. Hence, the provision of qualified graduates is also very substantial within the context of university-industry interaction. Diploma and PhD theses are often conducted in close contact to private enterprises. This can be realised either through contract research at the university or through the detachment of the graduate or postgraduate to the private enterprise. In addition, several academic institutes frequently offer advanced training courses for industrial researchers. Finally, many professors are members of industrial-oriented committees, e.g. in committees of technical trade associations (Schmoch 2003).

11In order to limit the range of knowledge transfer channels, it is possible to d r aw on the work of Loof and Brostrom (2004) who have introduced four main empirical indicators that show the growing relationships among universities and enterprises. First, they refer to industrial funding of university research and partnering projects (contract research), second, they mention patenting by universities (joint patents), third, they see start-up companies from universities, and last, they mention joint authorship of articles by university and industry research (joint publication). For this PhD thesis, two principal forms of knowledge transfer are taken, namely scientific publications and patent applications. Thus, chapter four provides an extensive illustration of the data of analysis.


14 Wilhelm von Humboldt was involved in the foundation of the University of Berlin, which is called Humboldt University of Berlin since 1949 (Humboldt Universität Berlin, Über die Universität, Geschichte, URL: http://www.hu-berlin.de/ueberblick, 04.09.2012).