Electronic copy available at: http://ssrn.

com/abstract=2026857
Cambridge Journal of Economics 2012, 1 of 19
doi:10.1093/cje/bes004
Government policy, university strategy
and the academic entrepreneur: the case
of Queenslands Smart State Institutes
Mark Dodgson and Jonathan Staggs*
Signicant new university initiatives are usually analysed from the perspectives of
government policy, university strategy or the entrepreneurship of particular
individuals, but rarely from the view of their interdependencies. This paper reports
on the creation of four Smart State Institutes at the University of Queensland in
Australia and the concatenation of circumstances, decisions and actions that led to
their formation. In the course of just over a decade, these Institutes, addressing
biotechnology, nanotechnology, neuroscience and the molecular and cellular basis
of disease, have developed into a cluster of scientic research of global signicance,
raising over $1 billion in investment and employing 1300 staff.
A case study approach was employed in the analysis, involving 59 semi-structured
interviews with key individuals involved at the organisational, regional and national
levels. A range of archival data were collected and analysed to help construct
a rigorous chronology of the key events, reports and actions that led to the
development of the Institutes.
Our research identies the importance of the policy context, at both the Federal and
State levels, conducive to the investment in the new Institutes. It shows how the
Universitys leadership and strategy took advantage of policy conditions, with
a number of individual academic entrepreneurs providing the actions necessary to
shape and guide the creation of the Institutes. Private philanthropy played a crucial
role as animateur amongst the contributors. We argue the importance of the mutually
reinforcing and concurrent contribution of all these actors and draw lessons for
future government and university policy.
Key words: Universities, Science, Policy, Entrepreneurship, Philanthropy
JEL classications: I23, L26, O38
1. Introduction
Our understanding of universities as strategic actors in the knowledge economy can draw
upon a burgeoning and diverse literature. This literature addresses issues ranging from the
changing role of the university and its contribution to economic development and national
innovation systems (McKelvey and Holmen, 2009; Mowery and Sampat, 2005); the
Manuscript received 28 October 2010; nal version received 8 November 2011.
Address for correspondence: Mark Dodgson, UQ Business School, University of Queensland, St Lucia,
Queensland 4072, Australia; email: mark.dodgson@uq.edu.au
* University of Queensland Business School.
The Author 2012. Published by Oxford University Press on behalf of the Cambridge Political Economy Society.
All rights reserved.
Cambridge Journal of Economics Advance Access published March 20, 2012

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Electronic copy available at: http://ssrn.com/abstract=2026857
commercial relationships between universities and industry, both encouraging (Etzkowitz,
2008) and cautious (Nelson, 2004); the emerging strategies of universities (Bok, 2003);
and actions and consequences of academic entrepreneurs (George and Bock, 2009; Wright
et al., 2007). There is surprisingly little literature examining the inter-relationships
between all these issues.
This paper argues that understanding how universities act strategically by developing
signicant new initiativesi.e. make irreversible choices about where to investis a highly
contingent and serendipitous process that cannot be explained by the single perspectives
adopted by much of the literature. The national policy context is certainly important, as is
the preparedness of universities to make bold decisions and the institutional and academic
leadership provided by key individuals. Philanthropists can play critical catalytic and
animateur roles. Success in these initiatives also involves elements of good fortune as much
as good planning, and negotiating the realpolitik of personal inuence and organizational
realities in the political processes within university structures.
The paper reports on the circumstances, decisions and actions that led to the formation
of four major research institutes at the University of Queensland (UQ), Brisbane,
Australia. They are the Institute for Molecular Bioscience (IMB), the Australian Institute
for Bioengineering and Nanotechnology (AIBN), the Queensland Brain Institute (QBI),
and the Diamantina Institute (DI). These Smart State Institutes (SSIs), named after
a Queensland State government strategy of the same name, represent a signicant new
university initiative of global signicance in its scale and interdisciplinarity. The Institutes
now employ over 1300 researchers and have attracted approximately $1 billion of capital
investment and continuing support in just over a decade.
1
This development occurred in
a period of decreased funding for the higher education sector from government and within
a research system increasingly driven by the need for greater accountability, productivity
and utility. The SSIs offer a way to understand the complex interplay between changing
strategies and structures in the University and the wider research and innovation systems.
The multidimensionality of factors that led to their formation holds lessons for scholarly
analysis and public policies that favour single frames of reference and policy levers.
2. Background literature
Three broad literatures help frame this paper: research and innovation policy, the
entrepreneurial university, and academic entrepreneurship.
Much discussion about research and innovation policy is conducted in the context of the
virtues of the knowledge economy and innovation systems, which are seen to be the basis
for national wealth and welfare (see, e.g., OECD, 2005). This discussion encompasses the
role of the university at both national and regional levels (Cooke, 2002; Mowery and
Sampat, 2005). Some of this literature addresses institutional dynamics within national
innovation systems. Dodgson et al. (2008), for example, use the case of Taiwan to explore
the evolution of its national innovation system through the development of institutions
supporting biotechnology.
The contribution of universities has to be assessed in the context of macroeconomic
challenges and changing policy frameworks (Guena et al., 2003). The changes that do
occur in universities, however, are rarely uncontroversial. As Kuhlman and Shapira (2006)
1
Financial data are Australian dollars, which currently have parity with US dollars.
2 of 19 M. Dodgson and J. Staggs

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note, conict amongst governments, universities and rms in innovation systems are ever-
present and tend to be overlooked.
Amongst the strongest drivers of these policies over recent times has been concern to
improve the connections of university research to applications for economic and social
benet. The increasingly commercial focus of universities has been a major concern within
the literature (Bok, 2003; Nelson, 2004). Analysis of this connection has been extensively
developed over recent years with notions of the Triple Helix view of how industry,
government and universities can contribute to innovation (Etzkowitz, 2008). Analysis of
Mode 2 production of knowledge (Gibbons et al., 2001) similarly explores the changing
context in which research agendas are shaped. These conceptualisations of the growing
inter-relationships between government, business and universities capture an increasingly
core element of the development of science and technology policy. In countries such as
Australia where the vast majority of university research is funded by central government,
research policy has a strong bearing on their strategies.
A key policy challenge is to ensure that public investment addresses immediate needs
and at the same time supports the long-term research that may produce new, unforeseen
opportunities. The UKs Lambert Review (2003) argued how universities have to improve
their identication of areas of research strength and how this has implications for public
funding of research strategies, as it creates a tension between funding world class research
and research that has value within the innovation system. The challenge of meeting
multiple policy objectives by government and universities remains profound and un-
resolved. This is especially challenging as initiating and facilitating change in a university
system is a lengthy task, because universities are bureaucratic organizations traditionally
designed to primarily advance their teaching and research missions (Feldman and
Desrochers, 2004). The reticence of academics to divert from their self-generated research
agendas is well known (Garrett and Davies, 2010; Rothaermel et al., 2007). It is notable
that for all the emphasis on business/university collaboration, evidence continues to
support the contribution of universities that lead in fundamental research (Manseld and
Lee, 1996; Mowery and Sampat, 2005).
The increasingly commercially orientated strategies in universities invariably link with
notions of the academic entrepreneur and his/her willingness and ability to successfully
interact with rms and industry in general (Lambert, 2003). There is a large and growing
literature on entrepreneurship as it relates to universities in the promotion of technological
development, local spin-offs and business clusters, and regional development. Wright et al.
(2007), for example, argue that as governments in the 1980s sawemerging opportunities in
technologies such as biotechnology and information and communication technology, their
policies came to include actions to stimulate entrepreneurship in public sector research
organisations. Academic entrepreneurship, once considered to be fortuitous and personal,
became seen as something to be managed through the establishment of technology transfer
ofces (TTOs) and the development of capabilities in the area of invention disclosures,
patenting and licensing.
The effectiveness of these strategies has been shown to be contingent on having in place
effective management systems and a culture that values entrepreneurship. The outcomes
of these strategies are by no means clear cut and the tension between norms of public sector
research versus commercial interests are well documented (Powell and Owen-Smith, 1998;
Slaughter and Leslie, 1997). The idea has been explored of the role of the TTO as an
institutional entrepreneur to explain how changing relationships in universities are
managed within a socio-political context (Jain and George, 2007). This research
Creating the University of Queenslands Smart State Institutes 3 of 19

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underscores the institutional context that both researchers and universities must navigate
in their activities and in developing strategies. The challenge to academic work brought
about by legislation and government expectations for public sector research sees most
scientists are reluctant to forgo their existing role identity and endeavour to preserve their
role as scholars when they participate in commercialization activity (Jain et al., 2009).
The forms of engagement used by academics are, however, much wider than through
TTOs and vary between different disciplines (Abreu et al., 2009), and do not therefore
necessarily impinge on academics views of their profession. When the approach is taken,
however, to encourage academic entrepreneurship by strategic management processes and
decision-making about university areas of research strength, this can challenge academic
norms and strategic decisions taken by university management in relation to research
focus may be taken as an attack on academic freedom and integrity (Wright et al., 2007,
p. 191).
A number of general shortcomings can be identied in these literatures, especially in
regard to explaining the role of different agents and their interactions (Gertler and Wolfe,
2004), and how the organisational rigidities within rms, governments and universities
that constrain the ability to adapt and act entrepreneurially to opportunities (Boschma and
Sotarauta, 2005) can be overcome. In response, scholars have called for empirical studies
that explore howsuch relationships are mediated by factors such as political leadership and
governance (Atkinson, 1991), and there have been calls for greater attention to be paid to
the historical processes by which innovation systems develop over time around centres of
science (Garnsey and Heffernan, 2005). We believe that an empirical study of the
development of the SSI can go some way in addressing these shortcomings. These
Institutes, in our view, have served as a type of focussing device by bringing together
academic entrepreneurs, university administrators, public servants, politicians and
philanthropists, and provide us with an opportunity to explore dynamics within the
research and innovation systems (Hoyssa et al., 2004). In light of the lack of theoretical and
empirical attention to the interplay between actors, the case of the SSI provides an
opportunity to explore the process of convergence between university, government and
private philanthropic action.
3. Research methods
This paper is based on a case study, an approach well suited to explore the key events,
organisations and actors involved in the establishment of the SSIs and their inter-
relationships. Fifty-nine semi-structured interviews were conducted, as well as 15 follow-
up interviews, encompassing virtually all of the major actors involved, including a former
Australian Prime Minister, four former State Premiers, key academic researchers and
executives, and inuential public administrators. The interviews were supplemented with
extensive document analysis that provided a level of condence in establishing the
chronology of the case. These included government reports, public statements and
extensive university documentation: reports, reviews, minutes of the Research Committee
and funding proposals. This document analysis helped the researchers investigate possible
antecedents of various policies and funding programmes that have gone on to have an
important bearing on the development of the SSI.
At certain junctures a number of reports, such as Backing Australias Ability (BAA;
discussed below), were conspicuously effective in inuencing the policy conditions in
which the development of the SSI has occurred. These reports have arguably served as
4 of 19 M. Dodgson and J. Staggs

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mechanisms to shared understanding and consensus among participants in the eld
(Phillips et al., 2004).
The researchers iterated between interview and documentary data to delve into the
reasons for key actors to make decisions. The depth and range of these interviews and
documentary analysis led to condence in the researchers ability to understand how, over
time, decisions led to the formation of the Institutes.
Criticism exists about the generalisability of case study research and what we can
reasonably infer from the ndings. But the investigators have aimed to move beyond
surface-level narratives to present a comprehensive view on how decisions were made and
an enhanced view on the events, actors and reports that led to key funding decisions. This
approach has the potential to overcome limits of a case study, to provide important lessons
and insights for future strategies and policies.
4. Findings
4.1 The case study: brief details of the SSIs
2
The SSIs are situated in or near the UQ precinct within the city of Brisbane. The
conception and establishment of these Institutes spanned a 12-year period from 1995.
They are trumpeted by the Queensland Government as being iconic representations to the
world and magnets for recruiting talent (Department of the Premier and Cabinet, 2005).
Their existence is underpinned by a belief that strategic research infrastructure provides
a foundation for Queenslands innovation system (Smart State Council, 2006).
Each SSI developed in its own way. Their development was mutually reinforcing,
however, and lent weight to arguments for greater research capacity in and around UQ and
south-east Queensland in general. Table 1 includes basic details for each Institute.
4.1.1 Institute for Molecular Bioscience. The IMB was established in 2000, the rst of the
SSIs to be built. It formed part of the Queensland Bioscience Precinct (QBP), which
houses 750 researchers. The QBP was established in conjunction with the Commonwealth
Science and Industrial Research Organisation (CSIRO), Australias largest scientic
research organisation. The $105 million QBP brought together an extensive range of
molecular biology researchers working across traditional boundaries with a wide variety of
applications.
While the Queensland Governments Smart State strategy was fully realised through the
development of subsequent Institutes, the idea behind it lay with the original suggestion for
the IMB presented to the State government in 1997. This National/Liberal government,
led by Premier Rob Borbidge, had pledged funds to Professor John Mattick and Professor
Peter Andrews, the Institutes eventual Directors, for the development of the IMB. The
idea was presented again to the Labor government led by Peter Beattie in 1998. The IMB
was formed by integrating two complementary research groups: Andrews Centre for Drug
Design and Development and Matticks Centre for Molecular and Cellular Biology. It was
believed the combination of strengths in chemistry and commercialisation in the former
with those in biology and basic research in the latter could play a signicant role in
medicine, agriculture, energy and environmental research. The Institute drew on models
2
There are six SSIs. Our focus lies with the four working in the broad areas of biological and health
sciences. The remaining two institutes are dedicated to sustainable minerals and social science, with the
former in particular being of considerable international signicance.
Creating the University of Queenslands Smart State Institutes 5 of 19

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Table 1 Basic details of the Smart State Institutes
Smart State Institute Incepted Initial funding support Operational funding
Institute for Molecular
Biology
(IMB)
$55 million
400 staff
2000 Atlantic Philanthropies:
$10 million
UQ: $15 million
Commonwealth Government
(Federation Fund): $15 million
State government: $15 million
$77.5 million of continuing support (over 10 years) was based
on outcomes as set out in an operating grant agreement
between the IMB and the State government
IMB was co-located in the $105 million Queensland
Bioscience Precinct with a $50 million investment from
Commonwealth Science and Industrial Research
Organisation
Queensland Brain
Institute
$63 million
300 staff
2003 Queensland Government:
$20 million
Atlantic Philanthropies:
$20 million
UQ: $23 million
Queensland Government provided operational funding
support of $25 million (over ve years)
$10 million from the Commonwealth Government for
equipment purchases
Australian Institute for
Bioengineering and
Nanotechnology
$72 million
340 staff
2002 Queensland Government:
$24 million loan
3
Atlantic Philanthropies:
$17.5 million
UQ: $30.5 million
$15 million operating establishment fund from UQ (over ve
years)
$14 million in support from Commonwealths National
Collaborative Research Infrastructure Scheme (over four
years)
$3.2 million from Australian Research Council
$6.5 million from the Queensland Governments State
Innovation Building Fund
Diamantina Institute
(part of the Translational
Research Institute (TRI))
$354 million
200 staff
2007 Commonwealth Government:
$140 million
State government: $107 million
Atlantic Philanthropies: $50 million
Queensland University of
Technology: $25 million
UQ: $10 million
Remaining funding came from other
organisations in the TRI
Commonwealth Government Teaching and Research Income:
2008, $3.3 million; 2007, $0.5 million; 2006, $0.4 million
UQ grants, fellowships, infrastructure: 2008, $1.1 million;
2007, $0.6 million; 2006, $1.8 million
NHMRC: 2008, $5.1 million; 2007, $3.9 million; 2006, $2.8
million
Commercial income: 2008, $12 million; 2007, $9.4 million;
2006, $1.4 million
3
In contrast to the IMB, the AIBN did not secure a grant from the Queensland Government through the Smart State Research Infrastructure Scheme. This loan
needs to be repaid after 10 years. NHMRC: National Health and Medical Research Centre.
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of research organisation based around scientic problems, found, for example, in the
Scripps Institute in the USA. A $1 million collaboration fund was established between the
amalgamating centres to begin to harness the synergies envisaged.
The proposal for the IMB was originally supported by UQs Vice-Chancellor, Professor
Brian Wilson, and subsequently by his successor, Professor John Hay. A crucial event
occurred when Hay met Chuck Feeney, an Irish-American businessman with a philan-
thropic organisation, Atlantic Philanthropies. Feeney contributed $10 million to the IMB,
with UQ putting in $15 million. The IMB also received $15 million from the
Commonwealth Government through its $1 billion Federation Fund. Perhaps what is
most notable about the development of the IMB was the unprecedented recurrent core
funding that Premier Peter Beattie agreed to provide. This continuing core funding totals
$127.5 million over a 15-year period, dependent on meeting various performance reviews
held every ve years. The State government had a particular concern for job creation in its
measures of performance and also included commercialisation objectives of licensed
intellectual property. To avoid dispute over pre-existing intellectual property, a commerci-
alisation organisation, IMBCom, was established separate from UQs main commercial-
isation arm, UniQuest.
4.1.2 Australian Institute for Bioengineering and Nanotechnology. The AIBNbegan its life
in 2002, moving into a new building in 2006. The development of the AIBN occurred very
differently from that of the IMB. In contrast to the concept for the IMB, which came from
researchers, the AIBN was conceived of at the executive level of the University. An
opportunity was seen to conduct research at the interface of the biological, chemical and
physical sciences. The Institute enjoyed a close association with its intellectual architect,
UQ Vice-Chancellor, Paul Greeneld, and its key planner and facilitator, Professor David
Siddle, then Deputy Vice-Chancellor Research. AIBN is headed by Professor Peter Gray,
a world-leading biopharmaceutical researcher.
Professor Paul Greeneld, UQs Senior Deputy Vice-Chancellor at the time, was
travelling overseas with Premier Peter Beattie when news of Queenslands failed bid for
a synchrotron was announced (see discussion below). The disappointment of failing to get
this major piece of research infrastructure, in the face of competition from another State,
became an opportunity for discussions between the Queensland Government and UQ for
the creation of a nanotechnology institute.
The $72 million AIBN was announced in 2001 and was subsequently established with
funding of $24 million from the Queensland Government, $24 million from Atlantic
Philanthropies and the remainder from UQ. The Institute has also been able to secure
subsequent funding of $14 million from the Commonwealth Governments National
Collaborative Research Infrastructure Scheme. Its mixture of fundamental and strategic
research has a strong industry focus and it has attracted support from the Australian
Research Councils Linkage Grants, requiring academic and industrial partners.
4.1.3 Queensland Brain Institute. The QBI developed concurrently with the AIBN and
was established in 2003. The University executive had identied the area of neuroscience
to be an emerging area of research strength dating back to a research centre in Vision,
Touch and Hearing established at UQ in 1993. The QBI was modelled on a number of
institutes around the world that have taken an integrated approach to a range of disciplines
and technologies in neuroscience.
Creating the University of Queenslands Smart State Institutes 7 of 19

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Funding for the $63 million Institute included $20 million from the Queensland
Government, $10 million from the Commonwealth Government and $20 million from
Atlantic Philanthropies. The remainder was provided by UQ through its funding for
strategic projects. At the opening of the Institute in 2007, the Queensland Government
announced operational funding support of $25 million. The QBI is headed by Professor
Perry Bartlett, a world-leading neuroscientist. Staff at the QBI were mostly recruited
externally, with the expectation that the majority would win their salaries competitively.
Professor Bartlett, for example, was a recipient of a Federation Fellowship, a scheme
created by BAA, which covered his salary for ve years. Researchers in other Institutes have
also won these highly prestigious awards.
4.1.4 Diamantina Institute for Cancer, Immunology and Metabolic Medicine. The last SSI
to be developed was the DI. It was established through the merger of UQs Centre for
Immunology and Cancer Research and the Centre for Diabetes and Endocrine Research.
It is co-located with one of Brisbanes major hospitals, the Princess Alexandra (PA)
hospital, near UQ. The DI is focussed on the intersection of clinical research and basic
biomedical research.
The DI was developed largely through the reputation of its Director, Professor Ian
Frazer, and the commercialisation of the cervical cancer vaccine, Gardasil, which he co-
developed. In 2008 global sales for this vaccine exceeded US$2.2 billion, from which UQ
will generate royalties until 2026.
The DI is one of the major centres in the $354 million Translational Research Institute
(TRI) at the PA hospital. The TRI has received Commonwealth Government funding of
$140 million, State government of funding of $107 million, Atlantic Philanthropies
contributed $50 million, Queensland University of Technology $25 million, with $10
million from UQ, as well as in-kind contributions from the Mater Medical Research
Institute and the PA hospital. The aim of the TRI is to develop the capacity to fully trial,
commercialise and manufacture new research breakthroughs, and move from bench to
bedside to community. The timing of Gardasils commercialisation gave Frazer and UQ
a platform for making approaches to State and Federal government for facilities that would
improve commercialisation opportunities. As Professor Paul Greeneld has pointed out, in
the past Australias limited infrastructure for the testing of drugs capped the value that
could be generated from breakthrough research.
4.2 Policy context
The development of the SSIs has to be understood within the context of national research
and innovation policy. In Australias federal structure the Commonwealth Government
holds scal dominance over the States. Tax reform in the late 1990s, through the
introduction of a Goods and Services Tax, shifted this balance to some degree and arguably
State governments have more discretionary funds, some of which have been used to fund
science and innovation-related initiatives.
A respondent noted at State level: It was a golden age really. We had a lot of money in
those days . . . at this time we invested heavily in two thingsinfrastructure and scientic
research. Other people would have no doubt invested in different things, but we had a fair
amount of free cash to play with.
Queenslands Smart State strategy was a beneciary of this nancial position. One of the
main stimuli for the Smart State policy is reputed to have occurred in 1998 when Professor
8 of 19 M. Dodgson and J. Staggs

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John Mattick described the potential of genomics and biotechnology to the Premier at the
time, Peter Beattie (Department of the Premier and Cabinet, 2005). Beattie appreciated
the potential of this science and very actively promoted further investment into scientic
research, aiming to shift Queensland from its traditional economic base as a rocks and
crops resource-based economy (Beattie and Loukakis, 2005).
The generosity of the State government towards the development of the SSI was not
unbounded. With the exception of the IMB, the investment made into SSIs was based
on government loans. The IMB was the only institute to receive a grant, and this was
a hard-fought battle. As one respondent remembered: It was like being dragged over
broken glass. You would have thought we were a can factory, not a world-class research
institute.
But it was policies at Federal level that were most inuential at the time the SSIs were
created. In addition to the scal dominance that the Commonwealth Government has over
State governments in Australia, it also controls to a large degree the policy settings in the
research and innovation system, including funding for universities. One of the most
signicant inuences was the BAA funding package. Prime Minister John Howard
personally announced funding for BAA in 2001, signalling its political importance to the
government. This was at a time when the opposition Labor Party was gaining some
traction over the perceived neglect of research investments by the ruling government. As
one respondent observed, I dont think that the Opposition . . . should be underestimated,
because the Howard government was responding to a political pressure. The Opposition
had nailed its colours to the mast on this issue. The Labor party argued about the need for
urgency in knowledge investment, creating emerging industries and overcoming a crisis in
Australias R&D performance.
BAA was a ve-year funding package, separate from the annual budgetary and
expenditure review processes, and was an outcome of a series of initiatives,
including a National Innovation Summit. The initiative for the Summit originally
came from the Business Council of Australiaa body representing the CEOs of leading
companiesbut the momentum was taken up by a well-organised science lobby (Marsh
and Edwards, 2009), which managed to negotiate a signicant increase in the science
budget.
BAA led to a shift away fromblock funding for research towards competitive grants. The
strategy of research organisations that had normally relied on block grants had to change to
compete in the new funding landscape. The SSIs, built mostly on the promise of winning
competitive grants, were an organizational form that complied with this policy environ-
ment. A second component of the policy, BAA2, was announced in 2005, maintaining the
thrust of BAA.
At this time, the Commonwealth Chief Scientists ofce was engaged in priority-setting
exercises that shaped and signalled the direction of Commonwealth funding. As a result it
became increasingly important for research organisations to articulate their overarching
strategies in order to be funded. In combination, these factors go some way to explaining
how scientic research institutes came to become a highly favoured organisational form
within the research and innovation systems.
4.3 University strategy
Numerous respondents observed how strategic management has been a central feature
of those Australian universities that have thrived in the last decade of tight nancial
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constraints. Strategic management in the UQ case has included the identication and
pursuit of areas of research strength. Beginning in 1996, Vice-Chancellor John Hay
initiated a programme of change through which the faculties were to identify key areas
of strength and priority areas. He then helped obtain external funds that would go to
directly support these newly identied priority areas. In this way there were very clear
nancial consequences for the areas with priority and those that were deprioritised. In
this manner the UQ executive supported strategic projects such as the AIBN and QBI
out of the ordinary funds of the University. This selection process has not necessarily
been top-down and has also included selection at the faculty level of projects capable of
attracting external funding. Respondents have noted this move towards strategic
management has not been without pain and cultural change within the University has
taken time.
As early as the mid 1980s the University did not have a clear strategy and had not, for
example, formally identied molecular biology as a major area of study, despite the
remarkable advances in this area in the late 1970s and early 1980s. One respondent
remembers: The budget was doled out and the so-called fairest way was to just allocate
a little bit to all the departments. This meant that we were not in a position to invest in
growth areas.
Strategic management decisions, and the policy changes described above, have been
made in the context of a range of different forces in Australia, such as the greater
internationalisation of the Australian economy, declining productivity and threats to
competitiveness, which have contributed to pressures being placed on the higher education
sector to be more productive. Institutes are organisational forms suited to winning
research funding that is increasingly aimed at interdisciplinary projects and greater
accountability to the public purse.
Numerous other virtues of institutes were extolled by respondents. They are believed
to promote interdisciplinarity and can circumvent traditional academic decision-
making processes. They are believed to provide a critical mass of researchers and
research infrastructure that serves a magnet for world-class staff. Respondents argued
disciplinary boundaries between engineering, bio-informatics and computing are
becoming blurred, and these new organisational structures allow collaboration to
occur. In the case of the SSI, the physical infrastructure has often been designed to
facilitate greater collaboration among researchers in complementary disciplines. While
this was quickly achieved in many regards, the integration of the CSIRO with the IMB,
however, was less successful, possibly due to a lack of incentives. One respondent
reected, It never quite worked out quite as we hoped in as much as I thought there
would be a lot more collaborative projects, but actually I think its more of a shared
building for convenience actually.
The SSIs all have similar recruiting strategies aimed at researchers capable of winning
competitive grants. The culture is entrepreneurial in the sense that, according to one
Institute Director, winning competitive grants means staying on our toes where no one
rests on their laurels. He argues a strong internal selection environment is necessary to
match the competitive funding landscape.
4.4 Key individuals
Politicians, policymakers, academic and research leaders, and a philanthropist all played
important roles in the creation of the SSIs. In a nation of very short electoral cyclesthree
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years federally and in the State of Queenslandthe contribution of politicians to the SSIs is
especially unusual. The unprecedented investment in scientic research in Queensland
and the powerful leveraging with Commonwealth funding required the conviction of
various ministers, Premiers and the Prime Minister of the time to make investments
when there was no immediate electoral advantage and most returns would accrue many
years after they left ofce. In a number of ways these individuals demonstrated political
leadership in higher education in a manner rare since the nation-building efforts
to establish the Australian National University in the 1940s (Foster and Varghese,
1996).
University leadership was evident in the actions of researchers, such as Mattick,
Andrews and Frazer, executives such as Wilson, Hay, Greeneld and Siddle, and those
leading researchers such as Bartlett and Gray who bought into the vision of the SSIs,
moving from prestigious posts elsewhere.
Key to the establishment of the SSIs was the extraordinary generosity of Chuck Feeney,
who by 2010 had donated around $0.25 billion dollars to UQ. Feeneys rst philanthropic
donations began in 1981 at Cornell University. He has invested considerably in the country
of his birth: providing substantial support to all seven universities in the Republic of Ireland
and two in Northern Ireland. Feeneys Atlantic Philanthropies also invested $220 million
in Vietnam between 1998 and 2006.
Based on the success of his model in Ireland and Vietnam, Feeney began to look for
opportunities in Australia. In Brisbane, he used his friend, former tennis great Ken
Fletcher, to be a kind of spotter to look for opportunities and bring them to our attention
(OClery, 2007, p. 257). This led to the meeting between Feeney, the Lord Mayor of
Brisbane, Jim Soorley, Director of the Queensland Institute for Medical Research
(QIMR), Lawrie Powell and John Hay.
While Feeneys approach was to liaise with somebody with knowledge of the country
who would survey the landscape for himand suggest investment ideas when an opportunity
presented itself, Atlantic Philanthropies thereafter carefully assessed the proposal. His
philanthropy was opportunistic but he didnt give randomly. He investigated and
scrutinized and some times tested the people involved with small initial grants. It always
came down to his instincts about the quality of the people involved (OClery, 2007, p.
245).
In UQs case, Atlantic Philanthropies support for the SSIs only came after Feeney
brought in a teamthat probed researchers and administrators with questions about howthe
Institutes would develop. As one observer noted: While Feeney was on board with
the development of the Institute, it was his nancial guy that we needed to keep happy. In
the case of the QIMR, the Director Lawrie Powell remembers he was on the telephone with
Atlantic Philanthropies night after night as they assessed the proposal and argued that the
project could be done cheaper.
Feeneys role was not simply to provide funds. His advocacy and negotiating skills, along
with John Hays, proved essential in leveraging funds from Commonwealth and State
government.
These individuals, to paraphrase Marx, made history, but not in circumstances of their
own making. Having the right people at the right time was hugely important, but their
actions have to be considered within the context of key strategic reviews, the production
and passage of inuential reports and briefs, the existence of powerful personal
connections, and the difcult negotiations and decisions that needed to be made over
many years in order to enact strategic change.
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4.5 Related inuential institutions
Assessment of the factors that led to the creation of the SSIs has to include the activities of
related institutions. These include the strategies of the other seven research-intensive
universities in Australia and in similar overseas institutions, research councils and other
research agencies. Thus the Australian Research Council, for example, faced especial
pressure in the late 1990s from central departments within the Commonwealth
bureaucracy wanting greater accountability, and even from Ministerial intervention in its
peer-reviewed decisions. Within these circumstances a number of normative conceptions
emerged as to how research organisations should act. One of these was leveraging public
funds to demonstrate importance and relevance. At the same time, under the leadership of
its CEO, Dr Geoff Garrett, the CSIRO was changing from its past research discipline and
industrial sector structure towards large-scale, interdisciplinary Flagship programmes
(Dodgson et al., 2011). Demonstration of its ability to mobilise multiple disciplines
towards problems of national signicance led to increases in the Organisations funding
(Marceau, 2007).
QIMR played an inuential role. It is a statutory authority set up under the
Queensland Health Department, and its reputation reinforced and contributed to the
development of the SSIs. According to several respondents, QIMR was the genesis of
Chuck Feeneys interest in investing in Queensland through its standing, particularly in
the area of research into liver disease. His initial interest was persistently pursued and
developed by QIMRs Director, Lawrie Powell, who was described by one respondent in
his interactions with the Queensland Government as a dog with a bone. One account
suggests that the initial interest that Feeney expressed was rebuffed by the Queensland
Treasury Department. The anonymous (at that time) benefactor seeking leveraging to
extract government funds was not initially well received, and it took advocacy by QIMR
to change minds.
4.6 Timing
Numerous respondents referred to the time being right for the creation of the SSIs. The
coincidence of economic conditions, policy circumstances, political, research and
university leadership, and the great fortune of nding a generous and strategically minded
philanthropist contributed immeasurably to the SSIs. A number of temporal issues are
worthy of note.
In the rst instance the SSIs built upon signicant past investments. Whether in the case
of IMB, with its merger of existing groups, or QBI and DI building on established research
centres, fortune, to paraphrase Pasteur, favoured the prepared mind.
The investment in SSIs benetted from an upturn in fortunes in the electoral, budget
and business cycles. Pressure from the opposition Labor Party and advantageous
Commonwealth and State budgetary circumstances provided favourable conditions for
increased investment in science. The idiosyncrasies of timing were seen in the case of the
IMBs receipt of $15 million from the Commonwealth Government through the
Federation Fund. Throughout the previous year representatives of the IMB had submitted
the same proposal to the Fund through a number of avenues without success. Then the
relevant Cabinet Minister requested details of the proposal two days before Cabinet was to
meet to decide on which projects were to receive funding. The outcome of this proposal
was positive. Arespondent reected: We must have sent themsomething 20 times over the
previous year but you know obviously it never got to the right level. Wed made all these
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fancy pretty submissions and everything else but eventually it was just a quick two pager.
Funny how things work!
The timing of proposals can be as important as their quality.
Long-term horizons are essential as the development of scientic capabilities and the
ability to recruit world-class researchers takes many years. The SSIs have had to mobilize
support incrementally through a process of bricolage and bootstrapping (Garud and
Karnoe, 2003). The Directors of the budding research institutes were able to attract
a number of esteemed international researchers by improvisation in their recruiting
strategies, providing a mixture of research autonomy and seed funding to build their own
research teams. The executive of the University also assisted these budding research
groups by providing initial infrastructure. The story of the development of the SSI is how
funding from the State and Federal government, and Atlantic Philanthropies, built on
a long-term process of research selection within the University to create a point where
external funding could be mobilised.
4.7 Realpolitik
During the course of this study respondents have been generous and open, and the account
unveiled, we believe, is as accurate as can be independently determined. Inevitably,
especially as large amounts of money were concerned, decisions were reached under the
inuence of personal and organisational power, allegiances and conicts. Many of these
stories will never be told, but sufcient evidence has been collected to emphasise the
realities of the idiosyncratic processes that led to the SSIs.
Respondents, for example, referred to examples of how decisions were only made
because certain committees and rules were circumvented or avoided. Such behaviours can
only be sanctioned in bureaucratic organisations, such as universities, through the
patronage of leaderssomething not universally popular within themor the misguid-
ance, or foresight, of committee chairs and faculty deans regarding whether or not they
should be involved in decisions.
The mobilisation of resources is nested within the systems and processes of universities
and public sector organisations, which can often appear interminable. Successful out-
comes have often depended on how well these have been dealt with. Seemingly small
changes can be hugely signicant. The hiring of a manager pivotal to the development of at
least two of the Institutes was made possible, for example, only due to reform of howmuch
a non-Professor could get paid at UQ.
Politics was also inuential on a larger scale. Australian federalism is complex, providing
an odd arrangement of State governments that unite against centralist tendencies in the
Commonwealth Government, but can also ercely compete against each other. In June
2001 the Victoria State Government announced its decision to build a national
synchrotron facility, pre-empting a national competition running at the time to decide
its location. According to a number of respondents, key stakeholders in the Queensland bid
for the synchrotron were very upset. Shortly thereafter the Queensland Government
announced its decision to provide support for a nanotechnology research centre, arguably
in response to the actions of the Victorian Government. The creation of the SSI in
Queensland cannot be understood without reference to the competition between Queens-
land and Victoria. Queensland policymakers acknowledge extensive benchmarking and
even analogous policy justications. Three Institute directors came from the powerful
cluster of medical research in Victoria.
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The decision by the Commonwealth Government to invest in the SSIs derived from
both effective scientic and policy debate, but the importance of personal lobbying has to
be recognized. There was extensive direct representation to the various Ministers at the
State and Commonwealth levels. Chuck Feeney himself went to Canberra to discuss
funding options.
While the contribution of Atlantic Philanthropies to the SSIs is crucial, and in many
ways the most important factor explaining howthey came to be formed, some considerable
interpersonal and political hurdles had to be overcome in the process of its involvement.
Initially, Feeney and Atlantic Philanthropies insisted on anonymity, posing signicant
challenges to decision-makers at UQand the Queensland Government. Harvey Dale, a key
member of Atlantic Philanthropies, ran the organisation like the CIA (OClery, 2007),
enforcing condentiality so severely that you had to almost sign your life away to receive
a donation (OClery, 2007, p. 132). Proposals that hinged on money from this anonymous
donor were not met with enthusiasm. One respondent remembers being thrown out of the
Treasury ofce, and it was only after a direct negotiation with the Premier that the
Queensland Government began some due diligence and dealings with Atlantic Philan-
thropies. The difculty was not only in testing the legitimacy of these anonymous funds
and their source, it also lay with the leveraging that money sought from government funds.
One observer, reecting on how Feeney was rebuffed by a Premier of another State
government in Australia, argued: He didnt want to be told by some Irish American how
and where to spend his governments money!
Successful proposals were also based on appealing to the Commonwealth Governments
penchant for greater collaboration among research groups around its infrastructure
investment. In other words, the Commonwealth Government would be more inclined to
invest in major infrastructure if it was not seen to be backing winners or prioritising one
industry or region over another. To that end, one of the strategies employed by those
writing proposals was to couch their approaches in national terms.
The high reputation of medical research amongst the Australian public has also to be
taken into consideration in assessing the atmospherics surrounding the SSIs. Policy
attention was also raised by government reviews, notably in this case the Wills Report on
Health and Medical Research, published in 1999, that led to a tripling of funds for medical
research. The most highly regarded civil award in Australia is Australian of the Year. The
past Director of the renowned medical research centre, the Walter and Eliza Hall Institute,
Sir Gus Nossal, was a winner and he has directly and indirectly inuenced the amount of
funding for medical research and for Australian science in general. Professor Ian Frazer,
Director of the DI, was another, more recent, winner, increasing his authority when
promoting the cause of investments in medical research.
Institutes have advantages, but in contrast with many other research institutes in
Australia that are autonomous, the SSIs are part of UQs structure. This required them to
be embedded in an existing academic organization. This has not always been easy, with one
respondent commenting: The university is an organisation that is built up around faculties
and schools. Institutes sit somewhere between a faculty and a school. We were ghting
battles like that, like a square peg in a round hole, not quite tting; the Institute was
different from the faculties, different focus, different way of operating.
Institutes can pose challenges for existing faculties as they can be more attractive to
research stars, PhD students and research funders. According to one respondent, they can
separate the research and teaching focus of the university, balkanising the two different
functions. Another respondent argued that being a research-only organisation meant that
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there was a certain degree of fragility if competitive funding dried up. Some sentiment has
been expressed by respondents that the Institutes tend to forget that the success of the SSI
was to some extent contingent on support from the faculties.
One of UQs responses to problems of faculty/Institute differences has been to make it
a requirement for Institute group leaders to spend a certain amount of time teaching in the
faculties. It is believed this time would enable the researchers to be exposed to the students
and the faculties to get the benet of those people teaching in the programmes. It also
aimed to encourage collaborative research between people in faculties and Institutes.
Another way by which UQ has attempted to manage this tension is through joint
appointments between faculties and the Institutes. One respondent, however, reected
that the University hadnt gone far enough with joint appointments to achieve the balance
between teaching and research, and that there was a potential risk of creating a two class
system. There remain a number of difcult governance issues around joint appointments
when it comes to calculating the research income of the faculties and the Institutes. As one
respondent commented, The difculty for us is that we have that complex relationship
(that) means our research income is halved. We are sort of down because of that
relationship and the systems of the university dont actually accommodate that.
Universities can readily deal with these challengesby making joint appointments,
sharing research income, creating collaborative research funds, etc.but the administra-
tive challenges of new structures in bureaucratic organisations are ever-present. One
respondent, for example, remembered how difcult it was to get Institute staff on the
University email lists.
5. Discussion and conclusions
Explaining the creation of Queenslands SSIs cannot be undertaken by separate recourse to
the academic literature on research policy, university strategy or academic entrepreneur-
ship, but can be better comprehended by examination of their mutual dependencies. This
research uncovers the conuence of events and convergence of factors that led to the
creation of the SSIs. They cannot be explained without reference to serendipity and luck,
the fortune of good timing, and the realpolitik of political rivalries, the character of key
personalities and the delicate negotiation of innovation in conservative university
structures.
The development of the SSIs is largely due to the decade-long nexus between key
individuals, such as Premier Peter Beattie, Vice-Chancellor John Hay and philanthropist
Chuck Feeney. But their contributions have to be placed in the policy context. As well as
being partially involved in the initial construction of the Institutes, the Commonwealth
Governments BAA1 and BAA2 also helped indirectly shape the SSIs. Queenslands Smart
State initiative also inuenced and itself developed alongside the SSIs. The link between
science, knowledge and innovation became a strategic template for policymakers and was
accepted and legitimized at the State and Federal levels of decision-making. It became
a hook on which proponents for the SSIs could hang their hat, and the role of scientic
research infrastructure, such as these Institutes, provided a central component in the
development of regional and national innovation systems.
It would be wrong to assume that universal consensus about the SSIs was reached. The
internal politics in each of the actors involved, the negotiations between political leaders
and central agencies, faculties and Institutes, were, however, sufciently resolved to allow
action. For this to occur, in the words of one respondent: a large number of planets needed
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to be aligned. And these were very diverse planets. Courage and conviction was provided
by a variety of leaders for proposals for funding not linked to immediate, direct and
measurable outcomes. Decisions about research strengths within the University accorded
with the changing policy environment. Institutes that capitalised upon selection processes
within universities required grass roots, local support, or at least acquiescence, amongst
those whose budgets were adversely affected.
A university is embedded in an institutional context of various rules of the game,
including legislation, funding and priority-setting mechanisms, and views by politicians
and the public on what it ought to be doing. These complex interdependent relationships
with multiple levels of government shape university strategy as to what capabilities and
structures are needed to capitalise on opportunities in the external environment.
The role of philanthropy in acting as animateur within a set of fecund but not necessarily
well-connected conditions is of great policy signicance and worthy of further research.
The contribution of great philanthropists to university formationsuch as Rockefeller at
the University of Chicago and Carnegie at Carnegie Mellon Universityis well known.
Less well known, we suggest, are the changes that can be encouraged within universities
through the astute and strategic investment of individuals concerned not with short-term
commercial or political payoffs, but with a strategic view of what a university and
government can achieve by working together. In our case, a philanthropic organisation had
sufcient will and resources to help the University cut through signicant organisational
and political inertia.
The study shows the relevance of the three strands of literature we framed it within:
research policy, university strategy and academic entrepreneurship. Each contributes
partial explanations. Fuller accounts require combinations of these literatures, something
to be encouraged, and improved theorisation will build upon further inductive cases such
as the one we provide. There is value, we contend, in future inductive studies adopting
similarly actor-centred views (Kuhlmann and Shapira, 2006) on the way universities and
governments respond to the demands of the knowledge economy. The foresight, energy
and skill of the individual proponents of the SSIs deserve recognition, but the emergence of
new academic forms, in this case study scientic research institutes, is bounded by the
institutional context. This means that our view of academic entrepreneurship is a messier
and more fractured process than might be expected. The policy implications lie in
comprehending the way that outstanding individuals cannot deliver results unless they are
operating in supportive policy and strategic circumstances, and supportive conditions are
insufcient without exceptional individuals.
Rich empirical case studies, such as the one offered here, capture the interplay between
events and various actorspoliticians, bureaucrats, university administrators and
researchersover a sustained period. The way this case showed the complexity of
contributing factors and the impact of such elements such as fortuitous timing and
realpolitik suggests that the obstacles to a governments investment into science research
infrastructure, and hence attempts to position itself in the knowledge economy,
are formidable. While decisions to invest in science research infrastructure can be
partially explained by their appropriateness as strategic templates for government and
for universities, future studies need to explore longitudinally the complicated processes
by which decisions to take action are made and how they are implemented. The
policy implications lie with understanding the extraordinary set of circumstances
leading to the creation of the SSIs, and the difculties in their reconstruction and
replication. The consequence being that having enjoyed these especial conditions and
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made substantial investment, it would be unwise to compromise them for any short-term
considerations.
Similar empirical research in future will improve theory of academic entrepreneurship
by locating it within the wider institutional context in which universities and governments
operate. Universities can be torn between contested pathways of scholarship or
entrepreneurship (Thornton and Flynn, 2003). We found in this case that academic
entrepreneurs saw the SSIs as vehicles to promote world-class scholarship and attract
signicant government support for research and, at the same time, as mechanisms with
which to commercialise research. They acted entrepreneurially as bricoleurs (Garud and
Karnoe, 2003), managing laboratory facilities and equipment, mobilising collaborative
networks, and accessing a variety of sources of funding to a variety of ends, requiring
a variety of external engagements. Their entrepreneurship did not occur in isolation.
Entrepreneurial universities depend not only on their relationships with business, but on
entrepreneurship and risk taking by politicians and public servants. In the case of the SSIs,
important actions were taken by these external entrepreneurs by their funding and
protecting key research programmes on which the Institutes have depended.
As a concept, entrepreneurship, with its broad focus on risk taking, innovation and
strategic action, has much to contribute in the way of discussion and theorisation about
institutions such as universities in the knowledge economy (Acs and Audretsch, 2003). Yet
the concept of academic entrepreneurship or an entrepreneurial university runs the risk of
being inchoate unless they are carefully located within an institutional and temporal
context. There may be fragility, for example, in perceived successful academic entrepre-
neurship when it is based on soft money and its payoffs are long term. Academic
entrepreneurship may depend on continuing entrepreneurial support from within
government well beyond its foundational stages. Academic entrepreneurship is perhaps
best theorised as an element of the broader, long-term socio-political process of
institutional entrepreneurship (Jain and George, 2007).
It has not been our purpose here to examine the performance of the SSIs, but to examine
the conditions of their creation. Nevertheless, it is worth noting the ndings of a university-
commissioned review of the SSIs, conducted in 2011 by Allen Consulting, one of
Australias leading economic consultancies. It notes that between 2000 and 2009 the
Institutes produced 3,400 peer-reviewed publications and spun out seven spin-off
companies. It argued their non-quantiable benets to UQ include cost savings, for
example fromshared equipment, and the creation of critical mass and synergies in research
efforts. It estimated the returns to the State government were between 4.2 and 6.5 times
their investment (Allen Consulting Group, 2011). Another, partial and imperfect,
indicator of the impact of the SSIs is seen in UQs entry into the Shanghai Jiao Tong
University top 100 ranking for the rst time (no. 86) in 2011. Given the heavily science-
based nature of this indicator, it is likely that the SSIs contributed to this position and it
conceivably would not have been achieved with the previous faculty-based structure. Vice-
Chancellor Paul Greeneld argues the value of the SSIs in increasing UQs capacity for
interdisciplinary research addressing big problems, and improving the quality of research
across the University as Institutes prove attractive to researchers in faculties through
opportunities for collaboration and access to equipment.
We can observe, however, that the promises made of the potential contribution of the
SSIs obviously places pressures on their delivery. Political patience is usually brief and
political will transient. There will be signicant pressure on the SSIs, and not all of it
sensible. As an example, the success of Gardasil attracted funding from the State
Creating the University of Queenslands Smart State Institutes 17 of 19

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government, but it may expect this type of success in developing a breakthrough drug to be
regularly repeated. One respondent noted: This may have been a one in 25-year discovery.
And now Treasury is looking for the next one.
These Institutes are experiments in a new organisational form for their host institution.
They have the potential to attract new and increased sources of funding, generate exciting
new ways of creating and using knowledge, and redening how interdisciplinary collabo-
ration can occur. Yet we do not yet know enough about what these Institutes mean to the
University and what impact this organisational form will have on its culture and
performance. Their signicance in and of themselves does not indicate that the University
is efciently and effectively using resources to best effect and making its most optimal
contributions to the innovation system. There is no capacity to assess a counterfactual of
what would have happened in their absence. It may well be that the organisational template
of an Institute is an unreective institutional response of a university to a particular set of
temporary circumstances. The SSIs are by any account a substantial achievement, but their
contribution, like all major academic initiatives, will take decades to properly evaluate.
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