Higher Education Funding Council for England
Policy Research in Engineering, Science & Technology
Scottish Higher Education Funding Council
Higher Education Funding Council for Wales

Industry-Academic Links in the UK

December 1998

HEFCE Ref 98/70

Jeremy Howells, Maria Nedeva and Luke Georghiou

With assistance from Janet Evans and Susan Hinder

PREST

University of Manchester

ISBN 1 902369 033

This version of the document contains the Contents, Key Findings and Introduction only. The full report is available in Word or RTF formats.

Contents

Key Findings

1. Introduction

2. Methodology

3. Research and Consultancy Links

4. Commercialisation of Results

5. Links in the Process of Teaching and Training

6. Staff Support and Funding

7. Structures and Policies to Support Linkages with Industry

8. Conclusions and Key Issues

References and Bibliography

Annex 1: Policy Initiatives Associated with Developing HEI-Industry Linkages

Annex 2: Research Instruments and Procedures

Annex 3: HEIs and the issue of Intellectual Property Rights

Annex 4: Teaching and training policy initiatives

Annex 5: HEI Frameworks for Industry Collaboration and Linkage

Annex 6: Regional Classifications

Annex 7: Abbreviations and Acronyms

Annex 8: ILO and CEO Questionnaires

Key Findings

There has been a spectacular growth in recent years across the United Kingdom in the scale, number and variety of linkages between higher education (HE) and industry. These linkages are manifested in research collaboration, provision of consultancy services, market transactions in the commercialisation of research, and industry's growing involvement as an interactive user of all types of teaching and training. Through surveys of industrial liaison officers and continuing education officers, interviews with senior staff, and compilation of available statistics, this report describes the status and trends of these relationships.

• Research funding by industry has grown by 30% over the past three years and by 11% in the past year. However, the level of income in 1996-97 of £183 million is highly concentrated, with seven universities accounting for one-third of the total and half of universities for 8%. Higher education colleges account for only £5 million of research funding from industry.
  
• Access to research funding is seen as the prime motivating factor by higher education institutions (HEIs), but only as a means to pursue goals which fulfil the aims of both academic and industrial partners. Mutual trust and a professional, business-like approach by the academic partners are seen as the keys to success. Keeping the linkages over time is dependent upon good personal relationships and avoiding a divergence of objectives during projects. Motivating individual academics to work more with industry requires an incentive structure of similar weight to that of the Research Assessment Exercise.
  
• HEIs are recognising the need for closer involvement with their local and regional economies and in particular the small and medium-sized enterprises (SME) sector. Local linkages with industry (within 50 miles) are principally with small firms, while linkages with large firms are less frequently locally based. Hence, 72% of respondents reported that over half their links with large firms (over 500 employees) were non-local; conversely, 75% reported that over half their links with micro-firms (fewer than 50 employees) were with local companies. Size of firms was also a source of differences around the UK: Welsh HEIs were more dependent upon research income from large UK firms than other UK HEIs, whereas Scottish HEIs estimated that SMEs provided one-third of their industrial income.
  
• Income from intellectual property rights appears to be growing, with £11.1 million reported by 31 institutions in 1996-97. This represents an increase of 58% over two years. The significant investment being made in securing intellectual property rights suggests that larger income streams are anticipated in the future. Commercialisation is also manifested by the growth in the number of spin-out companies wholly or partly owned by HEIs. Half of the responding HEIs had such companies to exploit their research, with 223 firms identified in total. Spin-out companies in which the institution had no holding were identified by 44% of respondents. Lack of seedcorn capital is the principal constraint upon commercialisation.
  
• HEIs are making increased efforts to meet industry's needs for training. At postgraduate level, 86% of respondents had work and project placements for their students; half had industrial sponsorship arrangements for their masters (58%) and PhD (54%) students; and 53% of responding institutions had masters courses specifically designed to meet the needs of a firm or group of firms. Industrial placements for undergraduates are offered by 92% of respondents, and 73% offer sandwich courses (though such placements are becoming harder to arrange).
  
• Provision of continuing education and training (CET) is highly competitive, with competition coming both from within and beyond the HE sector. Flexible delivery, close relationships with clients and niche strategies for specialised courses are generally seen as the keys to success. Universities receive half of their CET income from large firms, while HE colleges receive 92% from SMEs.
  
• HEIs are forming consortia to identify, co-ordinate and deliver research and training services to industry. These consortia are predominantly regional or local and generally provide an enhanced profile for participants. In general, institutions that are similar to each other are more likely to collaborate. HEI-industry partnerships are also developing more widely and evolving from one-off contracts to long-term strategic relationships, deeply embedded.
  
• There is increased competition among HEIs for industrial resources, driven partly by the matching-funds requirements of many public initiatives. In teaching, new technology has helped the competitive arena to move beyond regional boundaries. HEIs also have a more competitive relationship with industry through the desire to raise revenue from the knowledge they generate. But it will take some time before there is universal acceptance of a market for a previously free commodity. However, both HEI consortia and HEI-industry partnerships offer a rich and promising route for closer and more innovative industry-academic relations.
  

1. Introduction

1.1 Aims and objectives

Universities and other higher education institutions (HEIs) across the developed economies of the world have been facing major changes during the last decade, particularly in relation to their roles and responsibilities in national systems of innovation. During this period, key studies have drawn attention to the emergence of new types of relationship in the process of knowledge production (Gibbons et al, 1994). They have charted the developing relationship between HEIs, industry and government in terms of a 'triple helix' which takes into account the expanding role of the knowledge sector in relation to the political and economic infrastructure of society (Leydesdorff and Etzkowitz, 1996).

This report seeks to assess these changes in detail, particularly within the United Kingdom (UK) context, and to highlight some of the major issues and trends that HEIs in the UK are facing at the end of this century and the beginning of the next in terms of their relationship with industry.

The focus of the report is on the role of HEIs in technology transfer and the innovation process, and from this their wider contribution to national and regional economic development. Three main dimensions of the relationship with industry are examined: collaboration through research and consultancy; HEIs' commercialisation of their research; and linkages made in the context of teaching and training. Cutting across all three of these dimensions are two horizontal themes: the effect of public policies designed to support the higher education (HE) system, particularly policies directed at stimulation of the relationship with industry; and changes in the broader operating environment for HEIs which have impacted upon academic-industrial linkages. The findings are based on a survey of the UK HEIs' links with industry, sponsored by the Higher Education Funding Council for England (HEFCE), the Higher Education Funding Council for Wales (HEFCW) and the Scottish Higher Education Funding Council (SHEFC), and carried out by PREST during 1997-98.

The principal objectives of the study are to provide:

The report builds upon two previous surveys undertaken by Tartan Technology on behalf of the Innovation Unit of the Department of Trade and Industry (DTI).

1.2 Industry-academic links: historical context

Within Europe at least, the UK higher education system, has been at the leading edge of several developments in terms of the relationship with industry. As this report will demonstrate, however, this advance has not followed a single or direct pathway, but is the summation of a wide variety of initiatives at every level. As Halsey (1995, p 302) put it:

In some senses, academic-industrial links are a long-standing feature of the system. This is exemplified by the establishment of the 'redbrick' universities in the industrial heartlands of Britain in the mid and late nineteenth century (Manchester being a leading example). These universities were founded on the principle of industry and academia working together not only for scientific and technical advancement in an academic sense, but also for the benefit of the local industry and economy. The origin and core task of British civic universities was to provide a technically educated workforce (Driver, 1971, p 42). Later on, such thinking led to the creation of the polytechnic system within the UK, geared to the skill and technical requirements of British industry.

Industry-academic links thus go back a long way, to the late nineteenth century, and indeed represented the main mechanism by which industry funded research (Sanderson, 1972; Meyer-Thurow, 1982; Liebenau, 1984; Swann, 1989; Barnett, C, 1986). But it has only been since the 1970s that the industrial and policy significance has become fully recognised. Much of this renewed interest came from the United States (USA) (see, for example, the review by Peters, 1989) where a number of universities had developed close links with industry.

These linkages resulted arguably from four main mechanisms and sources. Firstly, through informal contacts and spin-outs from university departments; secondly, from contract and collaborative research performed by universities on behalf of industry; thirdly, as a result of property-led initiatives in the form of science parks; and fourthly, via the commercial exploitation of university research through the management and licensing of intellectual property rights (IPR). Europe in general, and the UK in particular, saw the United States as being at the forefront of the growth and development of industry-academic linkages. New developments and mechanisms furthering university-industry links in the USA were closely monitored and often adopted in the UK. The 1980s was a particularly significant decade during which, in 1985, the right to exploit research results through intellectual property was transferred from the British Technology Group to academic institutions (see Section 4.2). Partly to manage this process and partly to gain a share of the increasing market for research funding, institutional mechanisms began to appear in the academic system. A survey by PREST in 1989 found that 60 industrial liaison offices had been founded in UK universities within the preceding five years.

Today it is taken for granted that universities and other higher and further education (FE) institutions have a role in supporting innovation and technology transfer in their local and national economies. But the existence of this relationship has also introduced tensions and challenges which have to be overcome. The first group of tensions again go as far back as the nineteenth century, when some academics were concerned that research collaboration with industry was against the central ethos of universities: undertaking fundamental research and the education of students. They feared that links with industry could detract from this overarching mission of universities and individuals working within them, and moreover could have undesired side-effects. These centred on restrictions and distortions in the free flow of information and materials among the academic community. When individuals or departments within institutions enter research collaborations with firms, they usually have placed upon them arrangements constraining the type, amount and destination of information disseminated. This problem is also seen from the other perspective, that potentially valuable intellectual property may be damaged by premature disclosure of scientific discoveries.

A second major group of tensions arise from the possibility that staff may be distracted from their academic functions by too much industry-directed work (Organisation for Economic Co-operation and Development (OECD), 1970, p120). In the increasingly busy life of the academic in the late 1990s, competing demands upon time are a major constraint on the ability to develop and maintain external linkages. As this study will demonstrate, the strongest and most productive relationships with industry are founded upon HEIs doing what they are best equipped to do, that is pursuing excellence in research and teaching, rather than attempting to duplicate the functions of industry. The necessary cultural shift comes in terms of being able to understand the needs of industry and provide an interface which allows the swift and effective flow of knowledge and people to their most productive use.

1.3 Policy initiatives to stimulate HEI-industry linkages

Policies to promote HEI-industry linkages can be seen as a cumulative process in which new models have developed over the past three decades without necessarily displacing those which went before. Thus an initial situation of informal linkages and occasional bilateral contracts was supplemented by specific policy measures from the 1970s onwards. These measures included the concept of ring-fencing areas of research deemed to be of particular relevance to industry, and promoting them with additional resources and management support. An early manifestation was the Directed Programme. Also dating from that period are two schemes designed to support industrially relevant training: Co-operative Awards in Science and Engineering (CASE) studentships and the Teaching Company Scheme (described in detail in Annex 4). During the 1980s, beginning with the Alvey Programme and Joint Opto-electronic Research Scheme, the mechanism of collaborative research between universities and industry was introduced, and continues to the present day in the form of LINK programmes (Annex 1) and through participation by UK HEIs and industry in the European Union's (EU) Framework Programmes. The 1990s have seen a broader effort to marshall academic research towards support for competitiveness and quality of life through the Foresight Programme and redefined missions for the Research Councils. Most recently the exploitation interface has been directly addressed by the announcement of the University Challenge Fund. Current schemes are outlined in more detail in Annex 1.

1.4 Report structure

After a review of the methodology used to collect the information presented in this report, Section 3 presents the main findings about research and consultancy links, covering industry funding of HEIs and motivations for and barriers to collaboration. Data are analysed by country, region and type of institution. The section concludes with a discussion of the problems and success factors which are revealed. Section 4 moves on to present findings on commercialisation of HEIs' research results, covering intellectual property, spin-out companies and HEI-owned exploitation companies, science parks and incubator units, and company laboratories on campus. In Section 5, attention switches to the linkages with industry in the context of teaching and training. A brief review of policy initiatives designed to support the development of such links is followed by a review of postgraduate and undergraduate teaching and short courses and distance learning. The section concludes with a consideration of success factors and problems encountered, and a discussion of emerging trends and issues. Section 6 briefly presents findings on support for HEI staff from industry. Section 7 goes on to examine HEI structures and policies to support linkages with industry, including the role of research and liaison offices, continuing education offices, and changes in management and organisation to accommodate and facilitate links. Also addressed are frameworks and procedures for the management of intellectual property and spin-out companies. The role and relevance of intermediary bodies are considered. Section 8 concludes the report with a discussion of key issues raised.