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The governance of
university-industry knowledge
transfer
Federica Rossi

The governance
of knowledge
transfer
155

Dipartimento di Economia Salvatore Cognetti de Martiis,

Universita` degli Studi di Torino, Torino, Italy
Abstract
Purpose The aim of this article is to contribute to the debate on university-industry knowledge
transfer and on the changing organization of knowledge creation activities.
Design/methodology/approach By integrating several strands of analysis, a conceptual
framework is developed that associates several properties of knowledge and of the institutional
context in which university-industry relationships take place, to the knowledge transfer governance
forms that are most likely to be adopted. The framework is shown to be in accordance with results
from the empirical literature, and is validated using an original dataset.
Findings The data analysis confirms that the choice of university-industry knowledge transfer
governance forms on the part of organizations involved in knowledge production and dissemination
projects is related to the key dimensions in the conceptual framework.
Originality/value The conceptual framework developed in this article allows the incentives that
drive the choice of specific governance forms for university-industry interactions to be explained, as
well as the processes and rationales that underpin the changing nature of university-industry
relationships to be explained.
Keywords Knowledge transfer, Universities, Recruitment, Governance
Paper type Research paper

1. Introduction
The term university-industry knowledge transfer is used to indicate a wide range of
interactions, at different levels and involving different activities mostly aimed at the
exchange of knowledge and technology, between universities and firms. These include
the creation of start-up firms engaged in the commercial exploitation of university
inventions, the performance of collaborative research between firms and academic
institutions, contract research and academic consulting commissioned by industry, the
development and commercialization of intellectual property rights on the part of
universities, and other activities, such as co-operation in graduate education, advanced
training for enterprise staff, exchange of researchers between firms and universities
(Debackere, 2004). When these activities are considered from the perspective of
universities, they are often referred to as third stream or third mission, terms that
emphasize the role of universities as promoters of economic development, besides their
two traditional missions of teaching and research (Lawton-Smith, 2007).
This research has been supported by a doctoral grant from the Italian Ministry of University and
Research (MIUR). The author is very grateful to Birgitte Andersen, Cristiano Antonelli and Aldo
Geuna for reading and commenting on previous versions of this article.

European Journal of Innovation

Management
Vol. 13 No. 2, 2010
pp. 155-171
q Emerald Group Publishing Limited
1460-1060
DOI 10.1108/14601061011040230

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In most advanced economies the size and scope of university-industry knowledge

transfer activities have greatly increased in the last two or three decades. Quantitative
increases have been measured in terms of university-assigned patents (Geuna and
Nesta, 2006), of papers co-authored by academic and industrial scientists (Hicks and
Hamilton, 1999), of universities income from royalties (AUTM, 2002; Feller, 1990) and
of industry funds assigned to academic research. Aggregate EU data show a trend
towards greater outsourcing of R&D from firms to universities, which is quite striking
since, at the same time, the contribution of the business sector to the funding of R&D is
decreasing (EC, 2005). US data also highlight similar trends (Slaughter and Rhoades,
1996). The extent of the qualitative changes in the nature of the relationships between
industry and academia is highlighted by the emergence of new organizational forms
among these, academic-industrial liaison offices, technology licensing offices,
industry-university research centres, research joint ventures, university spin-offs
and technological consultancies (Cohen et al., 2002; Link et al., 2007; Peters and
Etzkowitz, 1990; Rothaermel and Thursby, 2005). Empirical evidence confirms that
these relationships involve knowledge production as well as transfer and application of
existing knowledge (Geuna, 1999).
Much literature exists on the characteristics, motivations and effects of
university-industry knowledge transfer. While some attempts have been made to
develop comprehensive theoretical frameworks in order to explain the conditions that
enable such activities to take place (Bercovitz and Feldmann, 2006; Bozeman, 2000),
few have paid attention to the economic incentives underpinning different forms of
governance for university-industry relationships (Oxley, 1997). This article attempts to
fill this gap by developing a framework that relates the governance forms for
university-industry knowledge transfer to the nature of the knowledge transferred and
to some characteristics of the institutional environment in which the transfer takes
place. It is structured as follows. Section 2 reviews several models that have been
proposed in order to explain the success and organizational features of
university-industry knowledge transfer activities. Section 3 integrates several
contributions from the economics of knowledge and innovation literature in order to
model the choice of governance forms for university-industry knowledge transfer on
the basis of a combination of criteria of economic rationality and institutional
incentives. Section 4 presents some original findings that validate this framework.
Section 5 concludes.
2. Models of university-industry knowledge transfer activities
Several models have been proposed in order to identify the conditions in which
successful knowledge transfer between university and industry takes place. Bercovitz
and Feldmann (2006) have developed a model in which the possibility of successful
knowledge transfer between universities and firms in the context of formal or informal
interactions is shaped by firm strategy and industry characteristics, university
policies as well as the structure of the technology transfer operations and the
parameters defined by government policy (Bercovitz and Feldmann, 2006, p. 177). The
extent and characteristics of the knowledge transfer process are influenced by the
firms capacity and willingness to engage in multiple transactions, as well as by the
internal functioning of the university (particularly the institutional incentives for

university researchers to transfer knowledge) and by the broader legal, economic, and
policy environment.
According to Bozeman (2000), the effectiveness of knowledge transfer depends upon
five broad dimensions: the transfer agent, the transfer media, the transfer object, the
demand environment, and the transfer recipient. Most empirical analyses, however,
have particularly focused on the characteristics of the agents involved: academic
researchers, university departments and firms. For instance, Bruno and Orsenigo
(2002), using data on Italian universities, show that funds from industry to
departments are a positive function of the latters number of international publications,
and hence of their scientific reputation, while di Gregorio and Shane (2003) suggest that
intellectual eminence plays an important role in the universities ability to
commercially exploit their research. Bonaccorsi and Daraio (2002), in a study of
Italian public research institutes, show that productivity and applied research and
consultancy activities are positively related. Some contrary evidence has been found by
Mansfield (1995), who argues that in several fields many modestly ranked departments
play as large a role in industry-funded research as some of the most highly ranked
ones, and by DEste and Patel (2007) who have found that departments in applied fields
rated as low quality are more likely to engage in interactions with industry. One
explanation put forth is that less prestigious departments may be more willing to focus
on firms immediate problems (Mansfield and Lee, 1996). The quality of academics has
been identified as a key determinant of knowledge transfer success by a sample of
respondents in US and European universities (Liefner, 2003). Zucker and Darby (1996)
point out that highly productive star scientists are most often engaged in
commercialization activities, and Elfenbein (2007) provides evidence that academic
reputation impacts on the likelihood of signing licensing agreements.
From the business perspective, firm size and industrial sector are major factors
explaining the type and level of interaction with universities (Fontana et al., 2006;
Laursen and Salter, 2004; Mohnen and Hoareau, 2003) with larger firms generally
having spare resources to invest in interactions with academia.
The features of knowledge that is transferred have also been investigated. It has
been observed that researchers in certain fields are particularly active in knowledge
transfer, and that the determinants of the intensity of knowledge transfer activities are
generally specific to particular research areas. For example, Meyer-Kramer and
Smooch (1998), in a study of German academic institutions, find that departments that
are more oriented towards applied research and development have a greater share of
industrial funds within their total research budget. It has also been shown that the
relative importance of different knowledge transfer channels varies according to
scientific disciplines and industrial sectors (Landry et al., 2007). In an extensive study
of EU-funded research networks, Carayol (2001) finds that the compatibility of the
parties research agenda is a crucial determinant of the choice of governance form. In a
later paper (Carayol, 2003) he suggests that the choice of type of university-industry
collaboration depends upon the degree of novelty and risk of the research involved, the
bilateral or multilateral nature of the collaboration, and the organizational structure of
the relationship.

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3. The governance of university-industry knowledge transfer

3.1. The economics of knowledge and the rationale for qualified interactions in
knowledge production and exchange
University-industry knowledge transfer activities take place through a wide spectrum
of governance forms, ranging from the simple use of openly disseminated academic
knowledge on the part of firms to long-term university-industry partnerships whose
features are regulated by complex arrangements. It has been shown (Antonelli, 2005)
that the analysis of the economic properties of knowledge allows an investigation into
the economic incentives associated with its production and exchange, and therefore it
can help explain the variety of governance forms through which such activities are
performed.
The economic rationale underpinning the organization of knowledge production in
the open science research system according to which publicly-funded knowledge
produced by universities should be freely disseminated in the public domain has
long been explained on the basis of the economic properties of scientific knowledge
itself. When scientific knowledge is considered similar to information the symbolic
representation of knowledge content, intangible, fully codified and perfectly
transmissible its non-rivalry, its non-excludability and the asymmetry in the
assessment of its content (leading to the so-called Arrows paradox) generate serious
appropriability issues (Arrow, 1962). Appropriability problems are amplified when
scientific knowledge is the outcome of basic research activities (Nelson, 1959), which
are characterized by serendipity and uncertainty and hence by large externalities. Low
appropriability causes private returns to basic research to be smaller than social
returns, and this discrepancy leads to suboptimal private investment in science. These
market failures provide a strong economic rationale for public intervention in
supporting scientific production (Mowery, 1983). The open science system, in which
publicly-funded academic research is openly disseminated according to an established
system of rules (Dasgupta and David, 1994), guarantees that a socially efficient amount
of scientific knowledge is produced and diffused in the economic system.
An alternative scheme that is capable to ensure an efficient amount of knowledge
production is the assignment of intellectual property rights (IPRs) to inventors. The
possibility to protect knowledge through the enforcement of the patent system allows
the inventor to fully appropriate the externalities arising from knowledge production,
and hence increases the incentives for private investment in research (Dasgupta and
David, 1994). In this case, knowledge becomes a quasi-private good with high levels of
appropriability and limited externalities, and firms can specialize in its production.
When knowledge is fully codified (so that its embodiment in the IPR document ensures
its full transmissibility) and when uncertainty about its contents and applicability is
minimum (so that comprehensive contracts for the exchange of knowledge can be
designed), then IPRs allow the creation of quasi-markets for knowledge (Guilhon,
2001).
While the analysis of the economic properties of knowledge as information is able to
explain the production of public knowledge on the part of universities within the open
science system and the production of quasi-private knowledge on the part of firms
within the IPR system, this approach does not provide sufficient economic arguments
to justify forms of knowledge production and exchange that involve the setup of
qualified interactions between university and industry (Antonelli, 2005) where this

term indicates relationships among these organizations that are longer lasting than
spot market transactions, and hence require the establishment of durable
communication patterns. In order to uncover the economic rationales at the basis of
these intermediate governance structures it is necessary to develop a more articulated
understanding of the economic properties of knowledge and of the incentives
underpinning its production and transmission, as well as of the institutional context in
which qualified interactions take place.
Over time, economists have abandoned the conceptualization of knowledge as
information in favour of a broader approach, according to which knowledge refers to
all forms of intangible artifacts, whether codified like information, and hence easily
transmissible, or more tacit in nature, difficult to transmit from one person to another
(Polanyi, 1966; Ryle, 1949). Typologies of knowledge, positioned between the extremes
of full codification and tacitness, have been proposed, generally referred to the
knowledge possessed by the organization rather the individual (Blackler, 1995; Lam,
1999; Nonaka and Takeuchi, 1995). It also been recognized that tacitness does not
characterize only individual crafts and skills, but, at least to some extent, also
technological and scientific knowledge (Mackenzie and Wajcman, 1999; Mokyr, 1990;
Nelson and Rosenberg, 1994).
When knowledge is at least partly tacit, its transfer between different parties often
requires the direct assistance of the knowledge creator. This is why it has been argued
that proximity among agents cognitive, geographical, cultural, social is crucial for
knowledge transmission (Balconi et al., 2004; Boschma, 2005). This argument provides
a first rationale for the establishment of qualified interactions among the different
organizations that hold tacit knowledge, since interactions allow the construction of a
context characterized by trust and reciprocity, and hence the transmission of
knowledge among the different parties. This transmission is further facilitated by the
development of appropriate communication channels and communication codes, made
possible by the establishment of durable relationships.
Second, qualified interactions can increase the incentives for knowledge production.
While tacitness increases knowledges natural appropriability and exclusivity, even in
the absence of patent protection (Levin et al., 1987), very often knowledge
appropriability conditions do not often fall into either extreme complete lack of
appropriability, which justifies public production of knowledge, or full appropriability,
which justifies private production. Instead, knowledge is often characterized by
intermediate appropriability conditions (Dosi et al., 2006) due to partial tacitness,
serendipity, high uncertainty in terms of its nature, scope and applicability which
raise the cost of internal knowledge production. On the one hand, uncertainty,
creativity and serendipity cause agency costs: that is, they make it difficult to monitor
the effort and competence of the workers who hold and produce knowledge, who may
be induced to behave opportunistically, with negative consequences on the output and
average costs of research activities (Antonelli, 2008). On the other hand, knowledge
production activities sometimes generate outcomes that cannot be anticipated in terms
both of rate and of direction, and that can occasionally open up many more
opportunities than those that individual organizations, because of coordination costs,
can realistically exploit (Arrow, 1974; Nelson, 1959). In these cases, coordination
mechanisms based on the setup of qualified interactions among different organizations
can help solve agency problems and permit the mutual appropriation of knowledge

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externalities, thus providing incentives for the joint funding of knowledge production
(Antonelli, 2006). Less comprehensive, more flexible contracts are also more
appropriate for the management of uncertain situations.
Third, the incentives for qualified interactions are higher when the production of
new knowledge requires the recombination of existing knowledge from different
sources. When knowledge is dispersed among many heterogeneous organizations but
characterized by high indivisibility so that its integration and recombination lead to
potential benefits in terms of externalities qualified interactions allow the various
organizations involved to create a context conducive to knowledge sharing and
integration (Antonelli, 2005). Furthermore, inter-organizational interactions are often a
source of cognitive heterogeneity, which is an important ingredient in the production of
new knowledge (Fonseca, 2002; Lane and Maxfield, 1997; Nooteboom, 2004).
Finally, another set of incentives underpinning qualified inter-organizational
interactions is related to the uncertainty in the institutional context. The increasing
pace of innovation in the economic system often renders economic agents unable not
only to formulate a probability distribution over a set of outcomes as in the concept
of non-probabilizable risk that characterizes knightian uncertainty but even to
conceive a tentative list of possible outcomes, since agents are uncertain as to what
processes and what other agents are likely to affect the consequences of their own
actions. Organizations that are confronted by such ontological uncertainty (Lane and
Maxfield, 2005) are strongly incentivized to establish qualified interactions with other
organizations in order to exert some influence on the many complex processes that
affect the outcomes of their own activities. One way in which organizations can control
uncertainty is by constructing long lasting inter-organizational structures which
provide relatively stable contexts within which to engage in shorter-term interactions:
inter-firm alliances, user organizations, forums, trade associations, fairs and
exhibitions, and so on (Lane and Maxfield, 1997). Such scaffolding structures
allow organizations to confront ontological uncertainty by providing a meta-stable
context within which interactions can take place, meanings can be negotiated and
strategies can be devised (Lane and Maxfield, 2005).
3.2. An interpretative framework for university-industry knowledge transfer governance
Recognizing that knowledge is often characterized by economic properties that are
different and more complex than those of either fully public or fully private goods
partial tacitness, stickiness, idyosincracy, serendipity and recombination from different
sources (Antonelli, 1999, 2005) can help us understand why qualified interactions
among organizations are increasingly important modes of governance for knowledge
transfer. According to the arguments presented in the previous section, the incentives to
rely on qualified interactions for knowledge production and transmission should increase
with the perceived uncertainty of the economic environment, with the organizations
reliance on external sources of knowledge and with intermediate knowledge
appropriability conditions. A framework can therefore be developed which associates
these incentives to different governance forms for university-industry knowledge
transfer.
The first ingredient in this framework relates to the source and extent of knowledge
appropriability. The extent to which knowledge is appropriable by the economic agents
that produce it depends upon a combination of many elements: its codification, its

fungibility, its generality, its scope of application, the extent to which its production
depends on the use of specialized equipment and the extent to which it is possible to
enforce intellectual property rights. Appropriability can be low for several reasons:
knowledge production can be characterized by large externalities, so that a single
organization cannot fully appropriate its returns for example, when knowledge is
codified and property rights cannot be easily enforced, or when knowledge is fungible, in
the sense that it can be profitably employed in many different applications, or it is
characterized by high uncertainty and serendipity. Knowledge that has many potential
applications (i.e. it is relative to underlying principles, general relationships and theories)
can often generate large externalities, which reduce its appropriability. Also, knowledge
that is more general is often highly uncertain, which renders the application of IPR
increasingly difficult and costly with respect to the specification of pay-offs, the
monitoring of the execution of prescribed activities, and/or the enforcement of contracts
through the courts (Oxley, 1997). Therefore, fundamental or basic research activities,
which are characterized by codification, difficulty to patent, serendipity and fungibility,
are often associated with low appropriability. At the opposite end of the spectrum, the
production of knowledge that has very narrow applications (i.e. specific, relative to a
single domain, product or market) does not easily spill over to benefit external agents.
Applied research and development activities usually produce more appropriable
knowledge, either because they often involve a process of articulation of tacit knowledge,
and/or because technological knowledge can also be more easily patented.
The other two ingredients that can help us capture the economic incentives
underpinning university-industry relationships relate to the extent to which knowledge
production depends on the recombination of external sources of knowledge and the
extent to which firms perceive their institutional environment as characterized by
uncertainty. External sources of knowledge are more important the more the knowledge
base that is needed to innovate is characterized by cumulativity (building upon
pre-existing knowledge), complementarity (requiring the integration of different,
complementary types of knowledge), compositeness (requiring the combination of
different bits of knowledge that are held by many different agents) a set of features
which we synthetically define as the complexity of the knowledge base. Greater
complexity of the knowledge base induces firms to seek complementary competences
externally, and particularly to look at universities for the knowledge that they need.
Moreover, when firms are uncertain with respect to their economic environment, they
attempt to monitor numerous innovation processes by establishing relationships with
external organizations. It can be argued that technological complexity and perceived
uncertainty are positively related. As technological knowledge cumulates and expands,
firms become increasingly dependent on a wider range of scientific and technological
knowledge fields in order to develop their innovations (Antonelli and Calderini, 2008;
Geuna, 1999; Nesta and Saviotti, 2005; Powell et al., 1996; Pavitt, 1998), which increases
the firms vulnerability to development taking place in different fields and hence the
perceived uncertainty of their environment. At the same time, the more uncertain the
firm is about its environment, the more attractive is the adoption of open search
strategies in order to accelerate the pace of innovation and remain ahead of competitors,
which further contribute to increasing the complexity of the firms knowledge base.
Laursen and Salter (2004), surveying a sample of UK firms, find that firms that rely on a
larger number of sources of external knowledge for their innovation processes are more

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Figure 1.
Appropriability,
complexity, uncertainty
and the governance of
university-industry
knowledge transfer

likely to draw upon university research. Empirical research has also found some
indication that firms are more likely to collaborate with other organizations, particularly
universities, when they operate in fast-changing environments. Mohnen and Hoareau
(2003), using data from the Community Innovation Survey, find a positive relationship
between the introduction of radical product innovations and the firms likelihood to
engage in collaborative innovation. Link and Vonortas (2000) find that most research
joint ventures take place in areas that can be considered as fast-evolving science.
Baldwin and Da Pont (1996), with Canadian innovation survey data, find a link between
knowledge sourcing from universities or government labs and the occurrence of radical
innovations.
Figure 1 relates different forms of governance for university-industry relationships
to different degrees of knowledge appropriablity, on the horizontal axis, and to
different degrees of knowledge complexity and uncertainty, on the vertical axis.
When knowledge appropriability is low, incentives for private production of
knowledge are low, because of the risks and externalities involved; furthermore, very
general forms of knowledge are usually associated with early stage research, whose
exploitation for commercial purposes requires large investments. Therefore, these
research activities are usually publicly funded, and their outcomes openly
disseminated (governance form A).
On the contrary, when knowledge appropriability is high, for example because
knowledge relates to specific products or markets, the incentives for private production
increase. Although firms are highly incentivized to produce such knowledge internally
(governance form B), they can also contract universities to produce appropriable forms of
knowledge on their behalf, for example via research contracts or academic consulting
activities, whose resulting IPR generally belong to the sponsoring firm: in these cases, it
is reasonably easy to draft contracts according to which the knowledge produced by the

university is funded and appropriated by the firm and any externalities flowing back to
the academic system or to other external agents are controlled (governance form C). The
rationale for outsourcing knowledge production to universities in this case lies in the
possibility to access, at a relatively low price, high quality scientific competences that
may not be available in house, as well as, often, to access specialized equipment. In fact,
interacting with universities can prove cost effective from the firms perspective. First,
the economics of knowledge has shown that, in a static perspective, the costs of
knowledge production are lower in the academic system because of the two-part
structure of academic salaries (Dasgupta and David, 1994): the academics fixed costs are
covered by the payment they receive for their teaching activities, so that the
compensation schemes practiced in the academic system allow the supply side to operate
on a variable cost base (Antonelli, 2008). Second, apart from lower direct knowledge
production costs, interacting with universities may also guarantee lower transaction
costs. On the one hand, universities often have internal structures that facilitate the
management of interactions (dedicated academic-industrial liaison offices, technology
transfer facilities, legal offices and so on). On the other hand, the scientists affiliation to
academia provides a signal of quality and competence, based upon the reputation
acquired in the open science system (Antonelli, 2008): the presence of an independent
system that certifies the competence of academic researchers lowers the firms search
costs for high quality competences and reduces the principal-agent problems inherent in
the collaboration with knowledge workers whose skills are difficult to assess.
Intermediate degrees of knowledge appropriability produce the highest incentives
for qualified university-industry interactions (governance form D). In these cases, in
fact, the production of knowledge requires coordinated interactions both in order to
reduce information asymmetries, whose management requires monitoring and
assessment, and to better control the externalities that knowledge production
generates (Antonelli, 2005, 2008). Here, we are likely to see the establishment of
qualified interactions characterized by mutual commitment and co-specialisation of
resources: bilateral contractual arrangements such as cross-licensing or joint research
agreement, or equity-based alliances, such as joint ventures and jointly funded
research consortia (Oxley, 1997). The more uncertain and serendipitous are the
outcomes of research activities, and the less clear are its appropriability conditions, the
more we expect the relations between universities and firms to be based upon
long-term, broadly defined contracts (Antonelli, 2008). Sometimes, firms will be
involved in more basic research projects in order to monitor scientific developments,
and to have priority access to cutting edge knowledge: empirical analyses have
confirmed that this is a crucial reason for which firms engage in interactions with
academia (Meyer-Krahmer and Schmoch, 1998). Firms can also benefit from accessing
new knowledge in the form of infrastructures (such as laboratories and databases) and
from the possibility to temporarily post researchers and scientists in academic
institutions, gaining new opportunities for learning and research. In these cases, we
would expect them to participate in publicly-funded projects, rather than to fund such
research themselves.
For the reasons described above, the incentives to outsource knowledge production
to universities and to engage in joint research are higher when the knowledge base
needed to innovate is complex and when the institutional context is uncertain.
Empirical research has produced concordant results. Using data on research projects

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funded by the USs Advanced Technology Program, Hall et al. (2000) find that research
joint ventures that involve universities most often concern new technological fields,
and suggest that firms purposely involve universities in projects that are characterized
as problematic with respect to the use of basic knowledge. These results are consistent
with the interpretation that the greater uncertainty that characterizes the environment
in which these firms operate renders interactions with university more attractive.
Interestingly, Panagopoulos (2003) interprets the same results as an indication that
firms that operate with newer technologies are more inclined to keep the barriers to
knowledge protection low, thus facilitating interactions with universities, while firms
that operate with mature technologies find it easier to appropriate the results of their
own research and hence face greater opportunity costs in opening up to university
collaborations. This argument is consistent with the claim that higher appropriability
favours internal funding of R&D on the part of firms, particularly with less uncertainty
and less complex technologies; whereas in fast-changing technological fields, with high
uncertainty and technological complexity, property rights are likely to be more difficult
to allocate, and this contributes to making interactions with universities more
attractive. Meyer-Krahmer and Schmoch (1998) surveyed German professors in
different fields in order to identify the relative importance of university-industry
interactions that are collaborative, that is, characterized by a bi-directional exchange
of knowledge, and of interactions in the form of contract research, where knowledge
is primarily transferred uni-directionally from university to industry. They find that
contract research is relatively more important in production technology, the field that
has the greatest orientation towards applied research and development, while
collaborative research and informal contacts are more important in
microelectronics, software and biotechnology, areas where research presents features
that are intermediate between the more basic research carried out in chemistry and
the more applied research typical of production technology. This finding is in line
with the prediction that intermediate knowledge appropriability conditions should
foster qualified interactions between universities and firms, while higher
appropriability conditions may enable more uni-directional knowledge transfer
processes in the form of academic consulting and industry funded research contracts.
4. Empirical verification
In order to relate the economic properties of knowledge to the governance forms chosen
for knowledge production and transfer, the unit of analysis should be the actual
transaction and its economic attributes. Since data at this level of disaggregation are
difficult to find, a small original dataset has been constructed in order to perform a first
attempt at validating this framework.
Information has been collected about 127 university projects realized by six
research centres in two different UK universities. One of these centres specializes in
mechanical engineering, two in theoretical computer science, one in software
engineering, one in digital technologies for education and one in environmental science.
In-depth interviews have been conducted in the summer of 2008 with knowledge
transfer professionals at these institutions concerning the universities knowledge
transfer policies and strategies. Information about these projects has been drawn from
public sources, mainly the institutions web sites (the dataset was assembled in
October 2008). For each project the following information has been collected: source of

funding, project duration, academic partners, industry partners, partners that are
government agencies or charities, descriptions of the projects activities, objectives and
outcomes. Each project has then been allocated to one of four different categories
according to its governance form, mirroring the theoretical categories identified earlier:
(1) academic research performed without industry involvement, funded by public
or charity grants;
(2) research performed within the firm, where university involvement is limited to
the placement of one or more graduate students with the firm;
(3) academic research funded by research contracts (or consultancy) from industry
or from a government agency or charity; and
(4) joint academic/industry research.

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As can be observed from Table I, by far the largest share of projects is constituted by
academic research performed without industry involvement. Such projects are all
publicly funded and tend to have longer duration and to include a larger number of
academic partners. Projects that are funded by industry (either graduate placements or
contract research) tend to be of shorter duration and to involve a small number of
partners, often a single academic department. Joint academic-industry research, which
is mostly funded by public grants, presents intermediate features with respect to
duration and total number of partners involved.
First, we attempt to validate the theoretical relationships between different degrees
of knowledge appropriability and the different governance forms hypothesized in the
framework. The descriptions of the project contents have been used to classify projects
as characterized by high appropriability, low appropriability, and intermediate
appropriability, as follows: project characterized by high appropriability have both
narrow scope of application (they are relative to a specific product, market, or
technological implementation) and require knowledge embedded in specific
(purpose-built) technology; project characterized by low appropriability have both
wide scope of application (they are relative to underlying principles, general
relationships and theories) and do not require purpose-built technology; projects
characterized by intermediate appropriability are characterized by intermediate scope
of application (relative to a specific area but with many potential applications), and
they can require or not the use of purpose-built technology.

Governance form
A Academic research without industry
involvement
B Graduate placement in industry

N
% Average
projects total duration

Average n
industry
partners

Average n
academic
partners

73

76.8

2.03

0.00

1.97

7.4

0.20

0.11

0.14

C Academic research funded by

research contract from industry or
government agency

15

15.8

0.38

0.19

0.27

D Joint academic/industry research

32

33.7

1.01

1.14

1.48

Table I.
Duration and
composition of projects

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A revealed comparative advantage index has then been constructed, measuring the
relative incidence of a governance form for projects with a particular degree of
knowledge appropriability, with respect to the incidence of that governance form overall.
The results reported in Table II confirm that the incidence of academic research
without industry involvement is greater for projects characterized by low
appropriability, and that the incidence of both graduate placements in industry and
academic research funded by industry contracts is greater for projects characterized by
high appropriability. Joint academic/industry research is relatively more frequent with
high and intermediate appropriability.
In order to classify projects according to both their appropriability and the
complexity of their knowledge base, we perform a cluster analysis exercise on a set of
variables intended to capture these two dimensions. Appropriability is captured by the
scope of application of knowledge (high, intermediate, low, defined as above) and by
the tacitness of knowledge (knowledge is considered tacit if the project requires
purpose-built technology, codified otherwise). The complexity of the knowledge base is
captured, very roughly, by the number of different research units involved in the
project, whether academic, industrial or government/charity.
The divisive clustering algorithm (Kaufman and Rousseeuw, 1995) returns three
robust clusters (divisive coefficient 0.9949893), characterized as follows. Cluster 1
comprises 45 projects, all of which are characterized by general scope, codified knowledge
and intermediate complexity (average number of partners is 2.24). Cluster 2 comprises 19
projects, all of which are characterized by limited scope, tacit knowledge and higher
knowledge complexity (average number of partners is 3.89). Cluster 3 comprises 63
projects, most of which are characterized by intermediate knowledge appropriability, 36
percent of which are characterized by codified knowledge and the rest by tacit knowledge,
and with quite high knowledge complexity (average number of partners is 3.6). The
addition of the knowledge complexity variable therefore does not change the allocation of
projects between three groups, one characterized by high appropriability, one by limited
appropriability and the latter by intermediate appropriability.
The distribution of projects across governance forms is exactly the same as that found
in Table II, with projects in the low appropriability/intermediate complexity cluster
(cluster 1) being more likely to use academic research without industry involvement,
projects in the high appropriability/intermediate complexity cluster (sluster 2) being
more likely to use governance forms like graduate placements in industry and academic

A
Academic
Number research without
industry
of
involvement
projects
Table II.
Knowledge
appropriability and
choice of governance
forms

High appropriability
Intermediate
appropriability
Low appropriability

C
Academic research
funded by research
contract from
B
industry or
Graduate
government
placement
agency
in industry

D
Joint
academic/
industry
research

19

0.27

2.86

2.23

1.67

63
45

0.83
1.55

1.15
0.00

1.34
0.00

1.20
0.44

research contracts from industry, and projects in the intermediate appropriability/high

complexity cluster (cluster 3) being more likely to use either joint academic/industry
research or academic research contracts from industry.
Besides the choice of governance form, our data allow us to consider several other
features of the projects in each cluster. Table III shows that projects in cluster 1,
characterized by low appropriability (and most often performed through academic
research without industry involvement), are all publicly funded and they all generate
outcomes in the form of publications that are openly disseminated, without the
enforcement of IPR. The involvement of industry partners is very low, as expected.
These projects mostly conform to the open science model for the production and
transfer of scientific knowledge. Projects in cluster 2, characterized by low
appropriability, have a relatively high incidence of graduate placements in industry
and of academic research contracted from industry, and a relatively high share of private
and mixed funding. Outcomes are most often in the form of products, and few of these
outcomes are not protected through IPR. The features of these projects are consistent
with our expectation that projects with financial involvement from industry should be
characterized by high appropriability and by outcomes that are business-specific and
patent-protected. Finally, projects in cluster 3, characterized by intermediate
appropriability, have a relatively high incidence of joint academic/industry research
and of academic research contracts from industry. Some have private and mixed
funding, although most are funded by public grants. Most of them result in publications
but about half also generate products; generally, outcomes are not protected through
IPR. This confirms that with intermediate knowledge appropriability industry
involvement often takes place through the participation to publicly funded,
open-ended research collaborations, suggesting that in many of these cases industry
cooperates with university for the purpose of monitoring scientific developments.

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167

5. Concluding remarks
Building upon several contributions from the economics of information and knowledge
and from the economics of innovation, a framework has been developed that relates the

IPR protection
No (%)
Industry partners
Average number

Cluster
2

97.8

36.8

68.3

1.86

1.97

2.28

Project outcome
Publication (%)
Product (%)

100.0
2.2

15.8
73.7

73.0
49.2

Project funding
Public (%)
Private (%)
Mixed (%)

100.00
0.00
0.00

63.16
21.05
15.79

74.60
14.29
4.76

Table III.
Features of projects in
different clusters

EJIM
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168

economic characteristics of knowledge and of the institutional context to firms

incentives to engage in different types of interactions with universities.
Knowledge appropriability conditions which affect the enforceability of property
rights to knowledge and the incentives for its private production and the complexity
of the technological base needed to innovate, crucially influence the shape of
interactions, whether they are regulated through market exchanges or whether they
require the setting up of more articulated and long-lasting relationships. The more
firms are uncertain about their environment and the more complex their knowledge
bases where these two dimensions are not independent, as they are both affected by
the rate of technological and organizational change present in the system the more
uncertain are appropriablity conditions and the more advantageous it is for firms to
build qualified interactions with universities in order to pursue their innovation
activities, which results in more open and distributed innovation processes.
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About the author
Federica Rossi currently holds a Post-doctoral researcher post at the University of Torino. She is
also Associate Lecturer in Economics at the University of Modena and Reggio Emilia, and
Research Fellow at the Centre for Innovation Management Research of Birkbeck College,
University of London. She has worked on numerous interdisciplinary research projects,
including the EU-funded projects Understanding the relationship between knowledge and
competitiveness in the enlarging EU (U-KNOW), The information society as a complex
system (ISCOM) and Complexity in education and training (CETRA), as well as projects
funded by the Italian Ministry for University and Research (MIUR), the Italian Department for
Economic Development and Tuscanys Regional Administration. Her areas of expertise are
industrial economics and the economics of science and innovation. She has written on innovation
networks, innovation theory, university-industry knowledge transfer, and the economics and
policy of higher education. Her PhD dissertation focused on the analysis of university-industry
relationships and the effects of the introduction of competitive measures in higher education,
using Italian data. Federica Rossi can be contacted at: rossi.federica@unito.it

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