Prof. Dr. Javier Revilla Diez Dipl.-Geogr. Björn Mildahn

1. Workshop: Universities and regional Development: Success factors and potential dangers of failure October 21-22 2005 The changing role of public research institutions -Private Sector Demand for Technological and Academic Inputs from Thai Universities Prof. Dr. Javier Revilla Diez Dipl.-Geogr. Björn Mildahn -------------------------------------------- University of Kiel Germany

2. Outline of the presentation • 1. Introduction • Innovation Indicators • Innovation System • Questions • 2. Theoretical Aspects of University-Industry-Linkages • Benefits/Barriers for cooperation • Linkage mechanism • Previous Studies • 3. Thailand R&D Innovation Survey 2002 • Methodology • Results • 4. Qualitative Firm interviews • Methodology • Results • 5. Conclusion • Outlook for future university-industry relations • Policy recommendations

3. Annual growth rate of GDP in Thailand and other NICs Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

4. Comparison of Science & Technology Development Indicators Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Source: World Bank 2002 Interviews Methodology/Results Conclusion Outlook Recommendations

5. Comparison of R&D indicators Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations 1 Share of R&D performing firms 2 Share of patenting firms 3 Share of firms with new or improved products / processes introduced within the last 3 years 4 Share of firms with product innovations introduced comprising over 25 % of annual turnover 5 In Thailand only R&D performing firms were asked about the patenting activities.

6. Share of companies that co-operate intensely or very intensely with partners on product innovations vertical horizontal

7. Challenges for Innovation System Introduction Innovation Indicators • High growth rates • BUT… • Thailand’s firms need to built up technological competencies because the country loses its cheap labour advantage and is confronted with new competitive pressures from liberalized trade and with more demanding global and regional production chains. • The key challenge to Thai-based firms is to move up the value-added ladder Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

8. Questions Introduction Innovation Indicators 1. What are the characteristics of firms which are cooperating with universities in Thailand? 2. What do companies demand from universities as a cooperation partner? 3. What are specific barriers which hinder stronger cooperation? 4. What measures could lead to a stronger interaction between firms and universities in Thailand? Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

9. Benefits to Industry Introduction Innovation Indicators Knowledge acquisition - complementary R&D resources - new technologies, skills, information - access to innovative networks and clusters => increasing their absorptive capacity and the productivity of their R&D processes => open-up new business fields Cost/Risk reduction - use of special R&D infrastructure Recruitment of (R&D) personnel (contact to graduates) Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

10. Barriers for cooperation Introduction Innovation Indicators • Lack in knowledge absorption capacities and innovation management capabilities • Lack of qualified personnel • Reluctance to use external knowledge • “Not invented here” behaviour • Risk-averse behaviour • Short term orientation in business strategies • Fear of loosing confidential knowledge Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

11. Formal Research Linkages Informal Research Linkages 1. Industry research consultancies 1. Personal contact w ith undertaken by academic academic staff. personnel. 2. Access to specialised 2. Industry workers appointed as literature, equipment and part - time professors/lecturers . research in university department. 3. Establishment of research contracts and conduction of 3. Attendance at seminars, basic and applied research in a conferences and general higher education department education/ training funded by industry. programmes. 4. Development , analysis and testing for industrial products and processes in university department. 5. Establishment of joint research . 6. Other industry - funded activities: patent advice, product liability/ litigation Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

12. Human Research Linkages Introduction Innovation Indicators - Students involvement in projects. - Recruitment of graduates. - Formally organised training of firms’ staff in a university. - Formally organised training of university staff in a firm. Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

13. Why do firms cooperate? Introduction Innovation Indicators Innovation System • Collaboration with universities was positively correlated with the declared importance of aiming (in a decreasing intensity order) • to access complementary resources and skills • to benefit from research synergies leading to cost savings or improvement in R&D productivity • to keep up with major technological developments • to obtain funding • share R&D cost • Caloghirou et al. (2001) Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

14. Thailand R&D Innovation Survey 2002 Introduction Innovation Indicators • 1.449 manufacturing firms (response rate 36,7%) • Survey adopted definitions and methodologies used by OECD (Frascati Manual 1993 and Oslo Manual 1997) • Similar studies were carried out in other countries in Asia (Singapore, Malaysia) and in Europe Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

15. R&D/Innovation Survey Introduction Innovation Indicators Firms are defined as innovative if they have introduced new processes or products in 2000 to 2001. = > 236 firms out of 1449 (16,3 %) Firms are defined cooperating with universities if they stated a intensive or very intensive cooperation with universities. => 44 firms (18,6 % from the innovative firm; 3,1 % from total sample) Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

16. Sector Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

17. Ownership Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

18. Firm size Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

19. R&D Intensity and qualification of work force Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

20. Qualitative firm interviews Introduction Innovation Indicators Innovation System • 34 Company interviews (April till September 2005) • Semi-structured interviews • Manager of the company; leaders of R&D department • Firms were selected from the R&D Innovation Dataset or named from universities as a cooperation partner Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

21. Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

22. Growing demand for Human Resources Introduction Innovation Indicators • Many companies state a shortage of number of university graduates particularly engineers. • The lack of sufficient number of qualified human resources is a main motivation for them to engage in internship programs. • “Company is willing to participate in co-operative education • program and would also like to take part to develop university • curriculum. So far students do too little research work and work not often enough as a team.” • BUT… • - Firms need to have “extra” personal to look after students during their internship. Many companies do not view students as a support but more as a “burden”. Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

23. Formal linkage: Analysis and testing Introduction Innovation Indicators Innovation System Questions Theory • particularly the smaller companies take the possibility to use universities laboratories for analysing and testing their products. • “We as a small company could not afford such excellent laboratories [of the universities]”. Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

24. Linkages between firms and universities Introduction Innovation Indicators Innovation System Questions • Most of the cooperation are of informal nature • - cooperation between single professors and single members of a firm. • - mostly people know each other personally before they start a cooperation • Evolution of cooperation relationship • - Most cooperation begin with a small project. If these is finished successfully a follow up project is initiated. Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

25. Different time frames Introduction Lack of Research Resources at universities Innovation Indicators “Universities do not have the staff to do the job. They have to rely on the students. However, students curriculum is not designed for such research work.” “We have to think about what kind of work universities can do for us.” Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results “Timing is the biggest problem.” Conclusion Outlook Recommendations

26. Information asymmetries Introduction Innovation Indicators Innovation System Questions “We do not know who is doing what at the universities.” “However part of the problem is self-made. Many companies do not demand any support from universities. The first step to start a cooperation is the most difficult one.” Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

27. Financing Introduction Innovation Indicators Willingness of firms to pay for university research is low “The industry perspective is the following: Universities already receiving all their money from the public, so at least they should help the industry instead of trying to commercialize their research activities themselves.” Different expectation about payment procedures. Universities expect to receive money during a project while firms are only willing to pay after the project was finished successfully. Share holders “Company is willing to cooperate with research institutes but such long term investments would be difficult to explain to the share holders”. Firms often expect external financial support to participate in university research cooperation (e.g. Thailand Research Fund) Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

28. Fragmented System: Industrial development and university system Introduction Innovation Indicators Innovation System Questions • “Normal” small Thai firms : • Very low standard of the industry, little R&D, no high tech companies => low/no demand for cooperation • “Many company still do not ask the right questions. The industry does not know what it wants from the universities”. • MNC (Foreign Direct Investments): • Many of these companies operate in new sectors in which the universities did not have any research tradition. • => highly specific demand from the industry => have difficulties to find cooperation partners in Thailand. Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

29. Success factors for cooperation identified from the firm interviews Introduction Innovation Indicators Innovation System Questions - trust - mutual respect - shared vision about the goals of a project - agreement about the intellectual property rights - win-win situation (both partners must profit from the cooperation). -number of previous joint research projects Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

30. Potential for university-industry relations in Thailand Introduction Innovation Indicators Innovation System Questions Theory • Most of the firms “feel” stronger competition and recognize the need for innovation • => higher demand for innovation related knowledge • => higher demand for highly skilled labour (graduates). • Changes in university policies • =>will make cooperation with firms easier Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

31. Recommendations Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

32. Thank you! Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

33. Accumulated net inflows of FDI according to sector (US$m) from 1970 to 2003 Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

34. Share of companies that co-operate intensely or very intensely with partners on product innovations vertical horizontal

35. Comparison of R&D indicators Introduction Innovation Indicators Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations 1 Share of R&D performing firms 2 Share of patenting firms 3 Share of firms with new or improved products / processes introduced within the last 3 years 4 Share of firms with product innovations introduced comprising over 25 % of annual turnover 5 In Thailand only R&D performing firms were asked about the patenting activities.

36. Innovation System Introduction Innovation Indicators Capability to exploit a range of collective external economies(e.g. collaborative joint investments such as R&D efforts) => require the coordinated and active involvement of actors => requires trust and communication between the actors Trust => facilitated by proximity and repeated interaction Innovation System Questions Theory Benefits/Barriers Linkages Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations

37. Why do firms cooperate? I Introduction Innovation Indicators • Collaborating with academics is more a complement to their own research than a substitute (firms which interacted increased their R&D spending and the number of patent awarded). • Adams et al. (2001) Innovation System Questions Theory Benefits/Barriers Linkages • The involvement of university researchers creates “research awareness” in the aim of the projects, this statement being grounded in observing that project involving universities are less likely to be early terminating projects than the others.Hall et al. (2000) Previous Studies R&D Survey Methodology/Results Interviews Methodology/Results Conclusion Outlook Recommendations