Previous ERC research has focussed on profiling the geographic pattern of university-business links across the UK based on analysis of data from the Business Structures Database (to give the number of SMEs) and the Higher Education (HE) – Business & Community Interaction Survey (BCI) (to give the extent of SME interaction). This has led to new measures of the ‘penetration’ of Higher Education Institutions (HEI) in the SME sector.

This new project develops this work further by using these measures alongside the UK Innovation Survey data to model the innovation and productivity benefits of SME-HEI links. The study aims to provide a robust assessment of the value of theselinks and their implications for enhancing innovation and productivity. This will be useful in informing HEI policy and specifically measures designed to influence the pattern of HEIs working with SMEs.

The analysis will consider the benefits for different types of SMEs and the differential value of links to research intensive and less research-intensive universities. The UK Innovation Survey also provides information on local, national and international university links by SMEs and it is therefore possible to compare the benefits of each type of interaction and to examine any ‘learning effects’, i.e. whether SMEs graduate from local links to those with more distant universities.


Stakeholder meeting

An initial stakeholder meeting was held to discuss this project on 16th May 2016. A brief presentation from Nola Hewitt-Dundas provided an overview of the project, key research questions and data to be used – predominantly the BSD data (for local firms), the HESA and HEBCI data to profile universities and their interactions (see below). Reference was made to two earlier research projects undertaken for HEFCE which provide some of the starting points for the current analysis.

There was some discussion of data strengths and weaknesses and the possibility of incorporating other data into the analysis including potentially information on KTPs and material from an FP7 Evaluation. Scottish government are working on a similar analysis of the value of university-business links using the UK innovation survey data.

Two potential extensions to the project were suggested:

  • The development of a parallel qualitative strand focussing on case studies of SME university interaction
  • The use of the panel data nature of the UK innovation survey to investigate whether working with a university led to a change in firms’ ability to innovate

Other discussion raised questions about the IPR outcomes of SME-university interactions and the value of also considering process changes. The role of public support in stimulating collaboration was also highlighted as was the different approaches individual universities have adopted to promote collaboration.


Mid Project Seminar – September 15th  2016

An interim stakeholder meeting was held to discuss the progress-to-date of this project on 15th September 2016. An interactive presentation by Stephen Roper and Nola Hewitt-Dundas led to a fruitful discussion with delegates around a number of issues. The presentation focused on four main issues:

  • Why the definition of innovation as New to the Market (NTM) innovation is deemed more appropriate for the analysis. First, data from the UKIS indicates that the levels of NTM innovation have been declining in recent years. Second, there is some evidence to suggest that NTM innovation is positively related to business growth and therefore exploring ways to promote NTM may have broader organisational and economic effects. Third, given the focus on the effect of University collaboration on innovation, it is more likely that the outcome of such collaborative efforts would result in a New to the Market innovation rather than the adoption / imitation of products or services already being offered by competitors in the market.  The implication of this is that the analysis is therefore examining the effect of university collaboration on the introduction of NTM as compared to the introduction of innovations that were new to the firm.
  • The second issue is related to causality. Prior research has typically adopted either a cross-sectional analytical approach or ignored the latent decision making process behind the decisions to introduce new to the market innovation and to collaborate with a University.  As a result there has been a lack of clarity as to the causal relationship between collaborating with a university for innovation and introducing new products/services. During the presentation it was outlined how a panel dataset had been established spanning the 2002-2012 period (waves 4 to 8 of the UK IS) and although this had dramatically reduced the number of valid observations, at the same time it had created a much more robust database on which to examine the presence of endogeneity between NTM innovation and business-University collaboration. Initial output analysis was presented and discussed by the delegates. This analysis demonstrated that these decisions are indeed jointly related, and after controlling for this, university collaboration has a strong positive effect on the introduction of NTM innovation by businesses.
  • The strong positive effect on NTM innovation, for businesses of collaborating with a university is consistent across businesses of different sizes (Small <50; Medium 5-250 and Large +250 employees). Indeed, further analysis indicates that for a business not collaborating with a University, where they to introduce a university collaboration, they would increase the probability of introducing a NTM innovation by around 24 per cent. To put it simply, for a business moving from not collaborating with a university to forming a collaborative innovation link, would increase the probability of introducing a New to the market innovation by 24 per cent. Again this finding is consistent across businesses of different sizes, suggesting that the effect of collaborating with a university is positive and significant irrespective of business size (ranging from 21 to 24 per cent increase in probability of introducing NTM innovation).
  • Building on evidence of a positive causal effect of University collaboration with the introduction of NTM innovation the analysis further examined how the location of the University partner affected the probability to introduce a new to the market innovation. UK IS data enables the identification of university collaborations which are (i) in the same region as the business, (ii) national or (iii) international. Interim results indicate that collaborative links with Regional universities have a positive and significant effect on NTM innovation in small and medium sized businesses (

Reflecting on the findings of this research project to date the delegates suggested a number of tentative recommendations.  First and foremost, there is evidence that encouraging businesses to collaborate with Universities will have a positive effect on the probability of them introducing NTM innovation. The next step in this research is to better understand the relationship between NTM innovation and business performance. Second, efforts to stimulate University-business collaboration are relevant for firms of all size bands in terms of increasing the probability of introducing NTM innovation, irrespective of business size. Third, our results suggest that university-business collaborations need to be better understood in relation to the other external partners with which businesses collaborate.  For example, our findings indicate that smaller firms NTM activity may benefit from collaboration with customers and universities but for large businesses collaboration with consultants and universities may be more important in leading to NTM innovation. Fourth, there is strong evidence that the National University system is having a strong positive effect on businesses’ NTM innovation. This effect is less apparent for international business-university collaborations.  Efforts to further strengthen collaborative links between UK-based businesses and universities is likely to have a strong positive effect on the introduction of NTM innovation.


Project Seminar – December 2016

The ERC held a project seminar on 13th December 2016 at the WBS offices in The Shard. The day was split into two sessions with the morning dedicated to discussions on findings from projects we have coming to a close in our current core research programme, and in the afternoon inception presentations for the new projects starting in early 2017.The event was attended by over 40 stakeholders, and generated interesting discussion and useful feedback to help inform the research.

CompletionNovember 2016
KeywordsSME, university, innovation, productivity, links
ThemeInnovation
Project Lead Nola Hewitt- Dundas