Differences In Perceived Benefits From University-Industry Relationships. Carolin Plewa, University of Adelaide. Abstract

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1 Differences In Perceived Benefits From University-Industry Relationships Carolin Plewa, University of Adelaide Abstract Universities and industry organisations, while traditionally largely separated, today unite their research efforts to compete in today s marketplace. While the importance of these relationships is increasing rapidly in most developed countries with a large number of linkages failing, little is known on potential benefits motivating universities and organisations to enter into relationships. This study builds on calls in both the relationship marketing and the technology transfer literature to further our understanding of benefits sought by both parties in a relationship dyad. Qualitative and quantitative methods are used to identify most important benefits and confirm significant differences in the benefits both parties seek from a university-industry relationship. Keywords: benefits, university-industry relationships, differences, motivation Introduction Globalisation and technological change have contributed to the rapid change of today s global economy (Bower, 1993; Cartwright, 2000). In turn, these changes have driven organisations to strengthen collaboration between internal functions (Gupta, Raj and Wilemon, 1986) as well as to cooperate with other organisations and institutions in order to compete successfully (Morgan and Hunt, 1994). The relevance of relationship building in recent times has not only led to a large number of research streams in these areas, such as relationship marketing (RM thereafter) and network theory, it has also encouraged the integration of historically separated organisations and institutions. For example, universities are increasingly encouraged by Government, industry and society to work with industry entities across sector boarders (KCA, 2003). Operating in fundamentally different environments and fulfilling different roles in society (ARC, 2001), universities and private sector organisations have historically developed links limited in terms of scale and number of academics involved (Harman, 2001). However, more collective efforts have now evolved between private sector organisations, universities and government (OECD, 2003). While RM and related research areas have extensively studied relationships and networks comprising private sector entities (Wilkinson and Young, 2002; Morgan and Hunt, 1994), longer-term university-industry relationships (UIR thereafter) have not achieved the same amount of acknowledgement. The majority of studies on university-industry linkages have focused upon transaction-oriented technology transfer as well as policy, legal and financial issues (Bessant and Rush, 1995; Irwin, More and McGrath, 1998; Siegel, Waldmann and Link, 2003). Hence, a unifying framework on UIRs, antecedents and consequences is still missing from the literature (George, Zahra and Wood, 2002). Specifically, with the majority of studies focusing on only one relationship side, a lack of research on UIR outcomes and potential benefits motivating both parties to engage in an interactive relationship is still apparent (Siegel et al., 2004). The call for empirical research on UIR outcomes for both relationship sides (Lee, 2000) mirrors a similar research direction in the RM area (Sweeney and Webb, 2002) due to sparse research on bilateral relationship outcomes. This is surprising, as the creation of mutual economic value has been described as the purpose of relationship building (Parvatiyar and Sheth, 2000). Notable exceptions exist in both technology transfer ANZMAC 2005 Conference: Business Interaction, Relationships and Networks 108

2 (Lee, 2000) and RM literature (Han, Wilson and Dant, 1993; Sweeney and Webb, 2002). For example, Sweeney and Webb (2002) have developed a typology of relationship benefits, contributing significantly to the literature by offering a structured approach to analysing relationship benefits. In addition, the study reports on differing benefits gained on both sides of the relationship as well as on an organisational and individual level (Sweeney and Webb, 2002). In a university context, Lee (2000) analysed the reasons for both academics and firms in the USA collaborating with the respective other environment, also reporting that relationship parties gain different types of benefits from a university-industry linkage. While the few studies conducted on dyadic relationship outcomes suggest differences in benefits gained from relationship parties, further research is required to deepen our understanding of UIRs and their success in Australia. Furthermore, despite concerted efforts by the Australian government to foster the development of UIRs (Harman, 2001; The Allen Consulting Group, 2004), no research has yet empirically examined the motivations for universities and firms to engage in these relationships. Therefore, this paper draws on qualitative and quantitative research methods to answer the following research questions: 1. Which benefits motivate universities and organisations to engage in UIRs? 2. Are universities and organisations motivated by different benefits when entering UIRs? Following a brief discussion of the methodology, qualitative and quantitative results are discussed. The paper concludes with limitations and future research directions. Methodology As knowledge on UIRs and determinants of their success is still limited, a preliminary qualitative research step was deemed crucial for this study (Patton, 1990). A series of in-depth interviews was conducted with people involved in UIRs until a consensus was reached, leading to a total of ten key informants from a university (U#1-10) and four from an industry environment (I#1-4). Based on the exploratory findings, a survey was undertaken to gain subsequent quantified information (Ticehurst and Veal, 1999; Zigmund, 2003). Following the pre-test of a questionnaire draft, questionnaires were mailed to a sample identified from publications of Australian Research Council (ARC thereafter) linkage grants awarded between 2002 and From the effective samples of 847 university and 54 industry staff, response rates of 16.5% and 31.5% were achieved. Due to the aim of analysing relationship dyads, respondents were asked to name a contact person at their partner organisation. Based on the specified contacts, 123 questionnaires were sent to industry and 15 to university staff. The second mail-out led to 61 and 4 responses, yielding response rates of 49.6% and 26.7% respectively. A final usable sample of 207 responses was accomplished. Several features of the sample need to be considered in the analysis. First, based on both ARC publications and the qualitative exploratory step, this research examines relationships on the group level. The terms university and industry are used in this paper for the sake of simplicity, representing the research group or business unit respectively. Second, interviews focused on relationships between Australian universities and Australian companies to eliminate the impact of national culture issues. While all Australian States and Territories are represented in the sample, most respondents were located in New South Wales (27.5%), Victoria (23.2%) and Queensland (23.2%), reflecting the high university and research density in these States. Third, reported relationship lengths varied considerably from 2 months to 30 years, with 55.2% respondents being involved in a relationship longer than the general ARC grant length of 3 years. The majority of university respondents were senior researchers ANZMAC 2005 Conference: Business Interaction, Relationships and Networks 109

3 (67.7%) with the industry sample including a high number of people from senior management (50%) and middle management (28.4%). Qualitative Step Results and Discussion In consensus with recent literature (Lee, 2000; Sweeney and Webb, 2002), exploratory data revealed that both parties in a UIR seek different types of benefits. From a university perspective, U#10 described: Industry is very much focused mainly on their production line, mainly drive from their cost effectiveness, mainly drive their product development, bottom line is that industry exist to make profit: if there is no profit no industry. The academic culture is very different, academic culture is sometimes is not driven always by dollars, they are driven by the eagerness, by the passion to work in certain things,. Confirming findings on buyer-supplier dyads (Sweeney and Webb, 2002), benefits motivating organisations and individuals emerged as different also in the context of UIRs. While this paper does not further elaborate on this issue, two additional issues specific to the UIR context may be added (U#9). First, due to the highly individualistic nature of academics, differences between personal and organizational benefits are likely to be higher on the university side. Also, U#9 proposed that differences in research-oriented relationships are likely to be smaller at a personal level than on an institutional level, as curiosity is likely to be a connecting interest between individuals from both environments. Furthermore, exploratory interviews suggested that the importance of benefits might differ depending on the respondent s position in the hierarchy of the organisation or institution. Based on technology transfer and exploratory findings, the following 11 benefits were deemed warrant inclusion in the second research step: development of technology, generation of knowledge, publications, patents and licenses, human resource issues (e.g. graduate employment), profit making, funding for future research, access to government funding, basic research, applied research, and taking new knowledge to practical application. Quantitative Step The quantitative research step aimed at examining the overall importance of individual benefits as indicated by all respondent and testing potential differences between universities and industry organisations in the benefits they seek from a relationship. First, the importance of benefits was analysed. As shown in Table 1, the generation of knowledge emerged from the data as the benefit most important for universities engaging in UIRs, with a mean of Taking new knowledge to practical application and applied research follow, also showing means of over 6.1. The same three benefits were revealed as most important also for industry respondents. However, while university respondents perceived generation of knowledge as most important, industry is motivated most by taking new knowledge to practical application. Interestingly, while most research to date has focused primarily patents and licenses as outcomes of university-industry linkages (Irwin, More and McGrath, 1998; George, Zahra and Wood, 2002; Shane, 2004; Siegel et al., 2004), our data revealed them as least important for both university and industry respondents. Our findings confirm Lee s (2000) study to some degree, reporting applied research in form of research on product development and solving of technical problems as highly relevant for firms. Also, the practical application of research emerged as the third strongest motivation for academics. However, while Lee (2000) found the top three motivations for university and industry to differ significantly, our data reveals similarities regarding the three most important benefits ANZMAC 2005 Conference: Business Interaction, Relationships and Networks 110

4 motivating both sides to engage in UIRs. Surprisingly, however, the strong focus on human resource management, expected after the exploratory study and reported in other studies (Schibany et al., 2000), did not emerge from our data. Table 1: Overall Means, Standard Deviations, University and Industry Means Mean Uni. (N=133) Standard Deviation Mean Ind. (N=74) Standard Deviation Generation of knowledge Applied research Taking new knowledge to practical application Access to Government funding Publications Funding for future research Basic Research Profit making Development of technology Human resource issues Patents, Licenses Second, differences between universities and industry organisations in the benefits they seek from a relationship were tested further. A Levene s Test for the Equality of Variances was conducted to identify potential differences in variances between groups (Brosius, 2004). As shown in Table 2, unequal variances have to be assumed for six of the eleven variables. In these cases, the unequal variance estimates were utilised in the subsequent independent samples t-test (Coakes and Steed, 2003), also reported in Table 2. Table 2: Levene s Test for Equality of Variances and Independent Samples T-Test Levene's Test t-test for Equality of Means F Sig. t df Sig. (2- tailed) Mean Difference Std. Error Difference Development of technology * * Generation of knowledge * Publications * * Patents, Licenses Human resource issues Profit making * * Funding for future research * * Access to Government funding * * Basic Research * Applied research * * Taking new knowledge to practical application * p<.01 T-test results generally confirmed the proposed differences in benefits motivating university and firm engaging in UIRs. Differences in means emerged as significant for eight variables, excluding patents/licenses, human resource issues and taking knowledge to practical application. Interestingly, the specific analysis of 62 dyads included in the sample showed similar results but did not reflect a significant difference of means for the development of technology. The largest discrepancy in the perceived importance of benefits emerged for publications, followed by access to Government funding and funding for future research. The importance of funding for universities in comparison to firms may be anchored in the pressure towards universities and academics for gaining additional funds by means of ANZMAC 2005 Conference: Business Interaction, Relationships and Networks 111

5 technology transfer (Harman, 2001). In addition, while academic incentive systems and promotion strongly focus on publications, industry staff are motivated by other means. While the finding of significant differences between means confirms current literature, the high means on the university side for the majority of benefits is surprising. Analysing the variables with a significant difference of means, the university emerged as the relationship party placing a higher importance on all but one variable, namely development of technology (see Table 1). The significantly higher means for universities regarding the benefits of profit making and applied research, for example, are somewhat unexpected. Re-analysing qualitative data, the high motivational effect of profit making may be explained by the reported money-focus of some universities. For example, U#5 stated that when I talk to the people at this university and say look I've got an industry partner, and they say let's go for, let's make 300% profit. most of the companies that come to see me and want research done don't want to pay, and therefore are quite happy for us to keep the intellectual property, more than happy. But the university says no they are made of money and multiply the cost by three or something. In comparison, organisations may not relate their engagement in UIRs directly with making profit but rather as gaining access to knowledge and technologies (Santoro and Chakrabarti, 2002), talent (KCA, 2003), and potentially public awareness and image (Bell, 1993). The emphasis of applied research by universities may be rationalized with the sample profile. As all respondents are engaged in UIRs, their motivation towards applied research and collaborating with industry is likely to be higher than it would be expected for a sample of all university academics. As exploratory findings suggested the potential impact of a respondent s position on the perceived importance of individual benefits, simple regression was used to test this assumption. However, while the position was to some degree related to publications (.202, p<0.01), patents and licenses (-.161, p<0.05) as well as profit making (.180, p<0.05), other benefits did not show significant relations. Also, no correlation was found between relationship length and individual benefits. To ensure a good coverage of relevant benefits, respondents were asked to indicate other benefits they perceived as relevant to their relationship. A large range of comments was made, including issues related to the specific organisation or institution as well as advantages for the public good. For example, benefits named by more than one respondent included research for public good, conservation and heritage services, commitment to social justice, social trends and contribution to cultural change, environmental benefits, working together as a team and customer feedback. Conclusions and Future Research This study offers empirical findings on the benefits perceived as motivating universities and firms engaged in UIRs. Qualitative research revealed differences between partners and between individuals and organisations regarding the benefits sought from a relationship. The subsequent quantitative research step confirmed the overall importance of individual benefits as indicated by all respondents and individual relationship parties as well as quantitatively tested differences between universities and industry organisations. These findings suggest the importance of developing a mutual understanding of each party s motivations (Sweeney and Webb, 2002), especially in relationships spanning fundamentally different environments. Traditional separation of universities and firms imply unfamiliarity with the other party, leading to difficulties in understanding the partner s needs and wants. Future research should analyse whether firms and universities not engaged in UIRs would perceive other benefits as potentially motivating to get engaged with the other environment. ANZMAC 2005 Conference: Business Interaction, Relationships and Networks 112

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