Robert Huggins Cardiff School of Management, University of Wales Institute, Cardiff

1. The Regional Pertinence of University-Generated Knowledge Robert Huggins Cardiff School of Management, University of Wales Institute, Cardiff Andrew Johnston Faculty of Organisation and Management, Sheffield Hallam University Presentation at the ‘48th Congress of the European Regional Science Association’ Liverpool, 30th August, 2008

2. University-Generated Knowledge and Regional Development • As knowledge becomes an increasingly important part of regional innovation and development processes, the role of universities has come to the fore of regional innovation and economic development policy. • Universities and other higher education institutions (HEIs) have come to be regarded as key sources of knowledge utilisable in the pursuit of economic growth, with knowledge and technology transfer attaining a more important role within universities. • However, it is often difficult to ascribe improved regional competitiveness to developments in knowledge-based infrastructure.

3. The Transfer and Commercialisation of University-Generated Knowledge • The transfer and commercialisation of university-generated knowledge is also taking a stronger role within government policies at a number of levels (e.g. Lambert Review). • Many governments and their agencies are turning their attention to the role of HEI knowledge commercialisation in developing innovative, sustainable and prosperous regional (and national economies). • However, regional contexts, and the universities located in them differ, suggesting that the relevance of these processes in both economic and policy terms will differ across regions and institutions. • In economic terms, regions may differ in their ‘dependence’ on the higher education sector as a generator of both income and innovation. • In policy terms, there is an underlying assumption that the knowledge generated by universities can be best made use of by networking it regionally (or locally), when increasing evidence suggests that the best use of knowledge is made by linking it globally (or least non-regionally/locally).

4. This Presentation • The objective of this presentation is to provide an initial (quantitative) exploration of some of these issues in the context of the 12 UK regions, covering regional differences in the: • Wealth-generating capacity of the higher education sector. • Knowledge-generating capacity of the higher education sector.

5. Value Added and Productivity • In a corporate context, Value Added is the wealth created by a company. • Value Added = Sales less Costs of bought-in goods and services. • Company Value Added can be calculated from a company’s accounts by adding together operating profit, employee costs, depreciation and amortisation/impairment charges. • Calculating Value Added for the Higher Education: adding together surplus, employee costs, and depreciation. • The combined Value Added of firms and other organisations can be aggregated as the Gross Value Added of a region or nation (similar to Gross Domestic Product). • Productivity, or more correctly in this case ‘labour productivity’, refers to the Value Added generated per employee.

6. University Productivity – Value Added per Full-Time Equivalent Employee

7. University Productivity – Value Added per Full-Time Equivalent Employee

8. University Productivity in Wales – Value Added per Full-Time Equivalent Employee

9. University Value Added and Productivity • University value added and productivity appears to be related to geography – place seems to play a role. • The ‘performance’ of universities is related to both internal capabilities and external forces. • Are these differences relevant at the regional level?

10. University Contribution to Regional Gross Value Added

11. University Contribution to Regional Gross Value Added and Regional Gross Value Added per Capita

12. Higher Education R&D Expenditure and Regional Gross Value Added per Capita

13. Higher Education Contributions to Regional Patenting and New Firm Formation Activities (2005/06)

14. Universities and Regions • Regional economic and innovation performance is inversely related to university dependence. • Universities in less competitive regions also produce less wealth. • This implies a potential problem – weaker universities with a responsibility for developing weaker regions. • But do they commercialise less knowledge? • Are problems related to knowledge supply or demand?

15. Higher Education Knowledge Commercialisation Activity (2005/06)

16. Higher Education Research Activity and Commercialisation Income(2005/06)

17. University Productivity and Income from Collaborative Research and Commercialisation

18. University Productivity and % of Knowledge Commercialisation Activity Undertaken Within The Region

19. University Productivity and Institution Size

20. University Productivity and Commercialisation • University productivity is positively related to knowledge commercialisation capabilities. • University productivity is not related to knowledge commercialisation undertaken within a respective university’s region. • Larger universities tend to have higher productivity rates. • Demand for university knowledge is predominantly non-regional (suggesting demand side limitations in some cases). • Who are the key partners and clients within university knowledge networks?

21. Final Remarks (1) • There is significant variation in the wealth and knowledge generation capabilities of universities across UK regions. • Weaker regions are more dependent on their universities for income and innovation, but often these universities under-perform in comparison to counterpart institutions in more competitive regions. • Knowledge commercialisation activity is a source of productivity advantages for universities, but many of these advantages are accrued via networks beyond the region of location. • Markets (or networks) for knowledge in under-competitive regions appear to possess demand-side weaknesses.

22. Final Remarks (2) • The capability of universities to stimulate regional demand for knowledge is probably limited. • Universities have their own bottom-lines to consider. • Universities alone cannot shoulder the burden for transforming the innovation capabilities and knowledge economies of their regions. • If universities are to continue to play a regional economic development role it is vital that knowledge transfer and networks initiatives are fully supported to ensure sustainability. • The onus being placed on universities to become the bases of commercialisable knowledge in many regions is probably too heavy.