April 15, 2005 | Volume 2, Issue 1
Aligning Universities and Industry Clusters
Executive Summary
Universities have emerged as central assets in regional economic development efforts around the nation and the globe. This is especially true in regions seeking to start and grow technology-based economies. Despite a widely held notion that universities play a critical role, little is understood about the mechanisms by which they impact the region ‘s economy and even less is understood about the current status of university efforts. At the same time, the cluster approach is emerging as a dominant economic development strategy in many regions and states. Cluster development recognizes that the connections and interactions between firms and between the public and private sector fuel development and competitiveness—and these interactions are inherently grounded in regions. As such, cluster development strategies tend to be tailored to individual regions, creating a wide variety in the implementation of programs and policies.1
This research establishes a foundation for a critical review of the role of universities in cluster development. Practice often precedes policy and such is the case with university- and cluster-based strategies. States and regions have jumped on the bandwagon before there is established knowledge of the costs and benefits of these approaches. The bandwagon results in part from a natural inclination to deliver only the good news, such as “best practice” reports. Selecting only cases with known best practices or with ideal outcomes can identify common factors that might indicate a connection between the practice and the outcome, but it does not distinguish whether these factors and practices are also present in unsuccessful cases. This research is based on a cross-case approach that looks at both positive and negative cases. With this approach the factors that are unique to the desired outcome or undesired outcome are the most critical. Factors that are common in relation to the desired outcome, but are also associated with the undesired outcome will represent conditions that may be necessary but not sufficient to impact the desired outcome.
Universities that are highly engaged with regional industry clusters have diverse and complementary units that broadly address the needs of the cluster. Rather than a compartmentalized approach, engaged universities are sources of research and technology but also address other aspects that affect cluster growth such as business, marketing, legal, and workforce issues. In order to have an impact on a regional industry cluster, the university must have a significant base of research aligned with the needs of that cluster. In the case of research and technology assets, size does matter. The university must have a base of research and development greater than $100 million annually in order to significantly impact an entire cluster rather narrowly benefiting only a few firms. The university must also have expertise and resources in appropriate areas that align with the needs of the clusters in the region. Less important is the structure or processes of the technology transfer function. Universities also must realize they cannot defy the forces of the market. Established clusters with mature products and processes are less receptive to innovation, especially from universities and other external sources. Even if they are receptive, a cluster may lack the ability to absorb people and technology produced by the university. Clusters that are oriented externally rather than regionally may even facilitate the diffusion of university-derived benefits outside the region. The university can produce the seeds of new firms and industries, but the region must offer a fertile climate for them to flourish. The key factors related to the industry cluster are its pattern of organization, market trends, and the life cycle stage of the industry or technology.
University-based cluster development is a difficult path that requires commitment, time and patience from all stakeholders. The success of a university-based cluster initiative requires more than an active, engaged, high-quality university. It is also necessary to have appropriate conditions within the regional industry clusters. Within a region, universities are best able to affect the growth of young, emerging clusters, but it takes a broad commitment of significant university resources across a variety of departments aligned with the needs of the cluster.
Findings
Universities are increasingly recognized as key partners in state and local development efforts and in some instances they are actively engaged in initiatives to promote cluster-based development. Cluster development occupies a shifting middle ground at the intersection of industrial, technology, and regional policy. Industrial policy seeks to improve the performance of a specific sector of the economy (Storper 1995). Technology policy promotes the advancement and diffusion of knowledge and innovation, and in its pure form does not target individual firms (Storper 1995, Best 2001). There is sufficient overlap between industrial and technology policy, so by and large they can be considered one in the same for most purposes. Regional policy aims to develop the economy or improve the socio- economic condition of geographically-targeted places. As it has been embodied in federal and state programs, technology-based economic development contains elements of all three of these policy domains. Cluster policy is a hybrid of regional and industrial policy, over which no level of government has clear authority or responsibility (much like in regional policy). This ambiguity provides both opportunities and challenges for policymakers and practitioners.
Understanding the role of the university requires an appropriate framework. In what has become known as the cluster diamond, Michael Porter mapped four interactive dimensions that impact cluster competitiveness. These are factor conditions, demand conditions, firm strategy and rivalry, and supporting industries. The manner in which firms compete is key in productivity growth and essential to increasing the standard of living. Competition shifts the focus of firm strategy to innovation rather than lowering costs, especially for labor (Porter 1998). Market- and growth-oriented firms can push innovation in a regional cluster, but there must also be sufficient local demand or sensitivity to external demand that provides innovation pull.
Figure 1: Cluster Policy
Cluster theory also describes how factors external to the firm impact competitiveness and innovation. It is not just the characteristics of firms that create a truly competitive cluster; there are regional factors external to the firm that matter as well, such as social and professional networks, institutional capabilities and the sophistication of local demand (Porter 1998).
The cluster framework is important for examining the role of universities in cluster development. Universities are part of the fabric of relationships within a region, which makes them a regional factor that impacts all of the dimensions of cluster competitiveness. On the one hand, universities are an asset that increases the quality of inputs and producers by upgrading human capital and disseminating knowledge. Universities also promote economic diversity. The key economic role of the university is not to grow the economy but to diversify it by constructing new opportunities out of the old. The university is the creative side of economic destruction. Without the context of the cluster, in which the university is one factor, there is the danger of magnifying the role of the university such that one can mistakenly link any observed effect to a university cause. Working within this framework helps to control for this bias and determine which aspects of the university matter most.
University Factors
There are three dimensions in which universities contribute to their local economies. The first is through purchasing and procurement activities. Numerous economic impact studies have demonstrated the significance of this role in terms of the job and income multipliers generated by these functions of the university. However, thisdoes not represent an economic contribution that is unique to universities; the scale of these impacts may differ from other large institutions and employers but they are not substantively different. The second dimension is the traditional function of universities in expanding human capital through education and training. The impact of universities in this regard is equally well documented and generally agreed upon. The only problem is that when universities upgrade human capital they make it more mobile. People with more education are more likely to move longer distances to new states or metropolitan areas, and they are more likely to move for work-related reasons (Schachter 2001). Unless the region has a healthy economy and job market, many graduates will leave. If regions want to maximize the human capital benefits provided by universities, then we have to consider the final aspect of how universities contribute to local economies. Related to their role in education and training, universities are creators of knowledge, sources of innovation and generators of economic development. It is this final role in which universities have the greatest potential to affect economic development.
One of the formalized linkages between universities and industry is the technology transfer process. Technology transfer is the commercialization of technology created by university researchers. Technology transfer can be defined as “the transfer of the results of basic and applied research to design, development, production, and commercialization of new or improved products, services, or processes” (Matkin 1997). Technology transfer became more formalized as a university function in the late 1970s and is becoming increasingly important at universities across the country as a source of revenue, a stimulus to the regional economy, and a method of bringing research into practical use. Technology transfer activities are now placing greater emphasis on a range of activities beyond patenting and licensing, such as research consortia, industrial extension (technical assistance) programs, industrial liaison or affiliates programs, spin-off enterprises, research parks, start-up firm incubators, consultant services, and venture-capital funds (Matkin 1997, 32). Tech transfer can also include the spread of knowledge through more informal means, such as meetings between academics and industry professionals.
Figure 2: Models for Organizing University Tech Transfer Activity
The structure of technology transfer operations varies from university to university. There are some basic characteristics that distinguish different organizational arrangements. The integrated organization is run by university faculty and is part of a university department. An integrated technology transfer office does not have its own administrative space and is sometimes considered to be a university entity. In the second-most common organizational arrangement, non-faculty professionals run peripheral offices supervised by a member of the university ‘s administration. Unlike the integrated office, the peripheral office has its own administrative space and staff. The subsidiary organization is a separate legal entity, usually a non-profit corporation, in which the university holds equity. The third type of arrangement is the interdependent organization that is also a separate legal entity in which the university does not hold equity. In the case of WARF, the Wisconsin Alumni Research Fund, the University of Wisconsin provides WARF with intellectual property rights in exchange for research funding. Independent organizations tend to have a contract or informal arrangement with the university, but the university does not have control and usually does not hold equity in the organization (Matkin 1997, 33–35).
While these frameworks can be used to organize and classify the technology transfer function at various universities, as well as to differentiate institutional approaches, very little research has been done on which organizational structure is most effective. Examining the case study universities, there is some variation in the technology-transfer activities of the engaged universities. Technology transfer activities at the case study universities were classified using Matkin ‘s criteria and classifications (Matkin 1999). The case study universities were distributed into one or more of three of Matkin ‘s prototypes.
Figure 3: Tech Transfer in Case Study Universities
Of the case study universities, only Virginia Tech and New Mexico State follow the subsidiary model, while the others are peripheral organizations in Matkin ‘s (1997) framework. New Mexico State University is similar to Virginia Tech in that it has a nonprofit technology transfer corporation, but this has not resulted in higher levels of startups, industrial R&D or licensing income. Virginia Tech has performed well in terms of startups and industry R&D compared to the other case study universities. The University of Michigan differs from the peripheral model somewhat as it operates through satellite technology transfer offices for the College of Engineering and the Medical School; it was therefore classified as a peripheral-integrated hybrid. This structure would seem to add a level of confusion for the community as well as faculty if the commercial product is based on interdisciplinary research that requires coordination across one or more of the offices. However, the University of Michigan has generated more startups than the other universities in this study and is also strong in generating licensing income and industry R&D. Florida State ‘s technology transfer function is organized as a university administrative office; it has been very successful in generating license income, primarily from its best-selling anti-cancer drug, Taxol, but has had less success in generating startups.
Universities have to respond to a variety of priorities not related to economic development. Chief among these is generally the academic mission. In the technology transfer domain, the obligations of the Bayh-Dole Act may encourage a university to license a technology rather than support a start-up. Furthermore, not all R&D is equally effective at generating spin-offs or other benefits that can be captured by a regional economy. Federally-sponsored research is geared toward national goals, whereas some industries, such as the life sciences, require more time and money to yield commercially viable ventures. This does not mean that technology transfer is unimportant, but it has to be placed within a context of broad university engagement. It is possible that a pattern might emerge based on a study of all universities ’ technology transfer structure and outcomes, but the evidence from the case studies is that the structure of the technology transfer office does not determine a university ‘s performance in generating economic impact.
Research, policy and practice have focused too narrowly in terms of assessing the ability of the university to spur economic development. Much of the literature and policy debates regarding the role of universities in fueling economic development have focused on the formal processes of technology transfer and the role of the university as a generator of knowledge.2 This focus has resulted in a misplaced emphasis and disregard for critical factors in leveraging university assets for growth. As these case studies demonstrate, the organization and operation of technology transfer does not explain differences in generating regional impact.
What makes an innovative university does not automatically make a high-impact university. From another perspective, what is good for the university does not always benefit the region, and vice versa. The challenge is how to achieve a mutual benefit for the university and the region, which requires a better understanding of the role played by universities. Universities are an excellent resource for transforming the economy through the creation of new industries, but the ability of these industries to grow the region is related not to the character of the university but to the character of the region, the state and of the industry itself. The three factors related to the university are:
- Broad engagement
- Strong R&D Assets
- Regional alignment
Broad Engagement
An interesting model of university-based economic development by Loydesdorff and Etzkowitz (1998, 25) portrays the university, industry, and government as being intertwined in a DNA-like formation. In this model the knowledge sector plays an important role as: “three institutional spheres (public, private, and academic) that formerly operated at arms-length in laissez faire societies, are increasingly interwoven with a spiral pattern of linkages emerging at various stages on the innovation and industrial policy-making processes” (Etzkowitz, Webster, and Terra 2000, 315). The authors describe two cycles that universities must go through in order to become more active players in the innovation process. The first includes making research a part of the academic mission, and the second involves taking on a role in regional economic development through research and teaching. Once these changes have taken place, the university has a new organizational structure with “mixed disciplinary departments, interdisciplinary centers, new disciplines, self-generation institution, [and] increased social space” (Etzkowitz et al 2000, 329). While industry and government remain independent, they also change in ways that make it easier for universities to become primary participants in the innovative process.
Universities are becoming increasingly entrepreneurial and engaged with business and industry. At this point, most research universities have created some kind of technology transfer program or industrial-liaison program to interact with the business sector (Rahm 2000, 45–46). Economic development has become a more common focus in the mission statements of many universities. The Georgia Institute of Technology which is known for its focus on the local economy, states in its Strategic Plan: “Georgia Tech is a leading center for research and technological development that continually seeks opportunities to advance society and the global economic competitiveness of Georgia…” (Tournatzky et al 2002). Purdue University announces on its website that it is a “powerful resource for the economic development of Indiana.” (Tournatzky et al 2002).
Every university is engaged with its region or local community in multiple ways and assessing that involvement is a difficult task. Furthermore, universities are a collective of entities (schools, departments, centers and institutes) and individuals that are direct agents of interaction with the external world. Assessing the breadth of involvement across a university requires an aggregation of the involvement of all of these agents. What really distinguishes a university that is highly engaged is that the involvement of these units is broad and complementary, rather than compartmentalized. Universities need to address business and legal issues, workforce education, infrastructure, and industry relationships, as well as technology and R&D capacity, in order to yield regional benefits. The most engaged universities demonstrate these kinds of diverse, integrated commitments across administrative and academic units, including the schools of business, engineering, law, medicine, and public policy.
Lehigh University is highly engaged across the administrative, academic and research units. The President of Lehigh University has staked out an active role that is proclaimed on the website and maintains staff that handle federal, state, and community relations (www3.lehigh.edu/about/economicdevelopment.asp, accessed August 2003). Industry and community relations are not exclusive to this office, as the Office of Corporate and Foundation Relations, the Vice Provost for Research, and the Office of Government Relations are also active with regional industry and community groups. A variety of entities throughout the university provide support to local companies. The Manufacturers Resource Center works with manufacturing companies; the Musser Center for Entrepreneurship and the Small Business Development Center, both affiliated with the College of Business and Economics, mentor local entrepreneurs; and the Ben Franklin Technology Center, an independent nonprofit located on the Lehigh campus, supports technology-based economic development. There is also an incubator operated on the Lehigh campus that has achieved national recognition. Lehigh faculty and staff play leadership roles on boards and committees of all four of these organizations, as well as other community economic development organizations. Students are also able to support regional and urban economic development through the Lehigh CORPS.
West Virginia University has expanded its role in local economic development efforts in conjunction with the introduction of several new federal facilities. Existing programs in energy research have been supplemented by efforts in forensics and biometrics. The university, state and local development organizations are explicitly targeting areas where they can combine their joint resources to leverage federal investment. In part this degree of coordination is possible because WVU does not have to compete with any other research universities in the state. Therefore, the university is both a key contributor and beneficiary from strategies to develop technology, health sciences and entrepreneurship. The university and several federal research centers are the anchors of the emerging I-79 High-Tech Corridor.
In addition to its many research centers developing new technologies, West Virginia has an EDA center, an Entrepreneurship Center at the College of Business and Economics, the Bureau of Business and Economic Research that monitors the local economy and the nationally recognized Regional Research Institute, as well as several other specialized business and economic policy centers. The Center for Entrepreneurial Studies and Development (CESD), affiliated with the College of Engineering provides services to local firms in the areas of training, operations and business development. CESD also serves as the champion or institutional home for several economic development initiatives including a regional entrepreneur ‘s forum. There are few efforts in Northcentral West Virginia that don ‘t connect back to West Virginia University.
Virginia Tech has both breadth and depth of involvement with community and local industry. Virginia Tech ‘s resources include the office of Corporate and Foundation Relations, VT Connect, the Economic Development Assistance Center (EDAC), the Corporate Research Center, and the Office of Outreach and International Affairs that provides a variety of outreach and continuing education programs. Virginia Tech has more than a hundred research centers and institutes, many of which are regionally active. To access the expertise and resources of these centers, businesses and individuals can tap VT Connect or the Virginia Tech Expertise Database.
The university ‘s outreach activities are both extensive and unique. Continuing education programs at the university reach as many as 8,000 people annually, nearly 5% of the regional population. One of the unique aspects of outreach is Virginia Tech ‘s Center for Organizational and Technological Advancement (COTA). Since 1994 COTA has connected the university to Virginia organizations and individuals. COTA provides small grants for fellowships that ”...focus university resources on specific realworld problems and areas where university expertise can make a distinct contribution” (www.cota.vt.edu/content/what.html; Internet; accessed 3 November 2003).
An important element of Virginia Tech ‘s engagement with business and the community is the EDAC, which is funded by the Economic Development Administration. The EDAC provides technical assistance throughout southwest Virginia ‘s planning districts. Virginia Tech ‘s efforts support a variety of industries, including automotives, aeronautics, polymers, and biotechnology. The university has helped transition parts of Virginia from tobacco and textiles to new industries. There are community-oriented efforts as well, such as the Blacksburg Electronic Village, the construction of a modern conference center and the renovation the Hotel Roanoke. The engineering and business schools at the University of Michigan work extensively with the automotive and information technology industries. Research is distributed throughout the university and nearly every academic unit conducts research. The university recently made a $100 million investment in the Life Sciences Institute to bring an interdisciplinary perspective to life sciences research. The university is active in regional economic development planning, particularly with the Michigan Economic Development Corporation and the Washtenaw Development Council. Collaboration between the university and state government resulted in the Life Sciences Corridor and the Michigan Universities Commercialization Initiative. The business school holds symposia for area businesses. The Wolverine Venture Fund can help find funding for startups or make a direct investment. The Institute of Labor and Industrial Relations provides economic and labor market outlook reports. The Center for Local, State, and Urban Policy examines problems facing states, cities and metropolitan regions. The Program for Research on the Information Economy is focused on the economics of information and information systems. The Institute for Social Research, affiliated with the Ford School of Public Policy, is one of the oldest and largest policy research centers in the nation.
Strong Research Assets
Regional development interests often encourage universities to do more to create new commercial enterprises, but research about the influence of universities on the formation of new companies has been mixed. Bania, Eberts, and Fogarty have found mixed evidence for the role of university research and development in the creation of new firms (classifying firms by SIC code). They only found a significant relationship in Electrical and Electronic Engineering (Bania, Eberts, and Fogarty 1993). However, because their data was from 1976–78, it is possible that if they used more recent data they would draw different conclusions. Many researchers have written about the importance of MIT in the creation of new firms around Route 128 in Boston, as well as Stanford ‘s role in Silicon Valley ‘s technology start-ups.
The Association of University Technology Managers tracks a number of indicators of technology transfer activities, one of which is startups. The AUTM Survey documented that in 2000, 454 new startups were reported by universities responding to their survey, up from 344 in 1999 (AUTM 2001). The average startup rate for all universities from 1998 â 2000 was one per $69 million in R&D expenditures, but there is no significant correlation between R&D spending and the generation of startups, particularly if the outliers are removed (Figure 3). The relationship between startups and research is a skewed distribution. Only four universities in the U.S. were able to spin-off more than ten firms annually, and all of them spent nearly a half billion dollars in annual R&D. Few universities with annual R&D expenditures of less than $100 million generate more than one or two spin-offs annually.
Figure 4: Annual R&D Spending and Start Ups
This relationship holds true for the case study universities as well (Figure 4). A large R&D base is necessary but not sufficient to generate economic impact. Without a large R&D base, preferably of at least $200 million annually, even highly engaged universities are not able to exert enough impact to make a difference in a small economy. Lehigh University is highly engaged in the regional economy and regional activities and it is a world leader in several technology areas, but due to its small size the positive spillovers from the university can be overpowered by other events. For example, in 2003 Agere Systems, a maker of communications networking products, announced a shift in market focus and manufacturing operations, moving some of the manufacturing out of the region. The decision by Agere was not made on the basis of university R&D or even on regional characteristics but on industry conditions and competitive pressures. The consolidation of administrative and research personnel in the Allentown headquarters mitigates but does not replace the loss of manufacturing jobs. Agere is a major anchor, but the region maintains several thousand jobs in this cluster. The uncertainties around Agere may turn out to be only a temporary psychological setback but the situation illustrates the limits of university leverage on a cluster.
Figure 5: Start Ups and R&D Expenditures, 1998–2000
Regional Alignment
If a large R&D base is not sufficient for generating regional industry clusters, then what does matter? The alignment of university assets, skills and expertise with regional industry clusters maximizes the regional benefit. Some regions may have a substantial research presence, but companies in the surrounding region are not able to absorb the resulting technology. In these cases innovation is more likely to flow out of the region. It is also a matter of how the geography of university impact aligns with the boundaries of the region and local industry clusters. If the boundaries of the industry cluster overflow the regional boundaries, the impact of the university will be dispersed.
The case study universities and regions were compared on the basis of their cluster concentration and research intensity. Cluster concentration was examined using data from the Harvard Business School ‘s Cluster Mapping Project. For each region, the location quotients for cluster employment provide an estimate of the concentration of employment in the region relative to the total cluster employment in the U.S. 3 A value greater than one indicates that the region ‘s share of employment in an industry exceeds the national share. Research intensity was measured for each university based on how the cluster-related academic R&D expenditures per cluster employee in the region varied from the national average. Using these two measures creates four possibilities of alignment between the university and the cluster, each of which suggests a different strategic need (Table 2). University- Cluster examples from the case studies illustrating these alignment options are presented below.
Figure 6: University-Cluster Alignment
The University of Michigan exemplifies alignment of R&D activity and cluster specialization in several of Ann Arbor ‘s clusters, particularly in information technology (IT) and the life sciences. The university ‘s research intensity in the information technology cluster is just above the national average, but the university is actively engaged with the cluster in several areas. A group of University of Michigan professors helped to initiate the IT cluster strategy, referred to as the Ann Arbor IT Zone. These professors aimed to emulate the success of Palo Alto, California, by coordinating industry, government, and academia in developing an IT industry (www.annarboritzone.org/history.asp; accessed 27 August 2003). They believed Ann Arbor had the resources to begin such a cluster, and formed the IT Zone in response, creating “a partnership of the University of Michigan, businesses and local government to stimulate and grow the IT industry in the area” (www.wdc- econdev.com/rankings.html; accessed 27 August 2003). The IT Zone holds networking sessions for executives, brings together people working in information technology, and works to bring new IT companies to Ann Arbor. Through the Wolverine Venture Fund and the Zell-Lurie Institute, the business school has extensive interaction with IT companies in the region. The fund works with other venture capitalists in the region and also invests its own funds in companies after conducting due-diligence tests. The Zell-Lurie Institute holds symposia twice a year, showcasing the development of new technologies while bringing together entrepreneurs and venture investors.
Ann Arbor ‘s IT cluster is still relatively small and the region is only slightly more specialized than the nation in IT, but regional development efforts in Ann Arbor have concentrated on growing the IT industry in recent years. The Michigan Economic Development Council, a public-private partnership that serves as the state ‘s economic development arm, is also an active participant in the IT strategy. It has a variety of supporting initiatives, including industry parks, an angel investor network, workforce training funds, the Michigan Council for IT Executives, and property tax abatements. On a local level, the Washtenaw Development Council is an active participant and incubated the Ann Arbor IT Zone/Business Accelerator. The Accelerator helps IT companies relocate to Ann Arbor/Ypsilanti. The Washtenaw Council also tracks the IT industry in the region; in 1995 they conducted a survey of the IT industry in the region and found 200 firms with 3,500 employees; by 2000 these numbers had increased to 1,000 companies with 20,000 employees (Washtenaw Development Council, rankings.html, accessed 27 August 2003).
Figure 7: University of Michigan Alignment
Lehigh University and the Lehigh Valley region provide a range of examples with clusters in every quadrant. The Lehigh Valley, like much of Pennsylvania, has pursued a deliberate strategy of diversifying the economy to avoid over-dependence on any one sector. As a reflection of this approach, there are five emerging clusters targeted by regional development groups with potential university synergy. These clusters tend to pay above-average wages, require technology or knowledge-based skills and have the potential for high-growth. The emerging clusters are chemical and allied products, health-related companies, technology intensive manufacturing/service companies, engineering management and business consulting firms, and financial and insurance services. These clusters are broadly defined, making it difficult to assess the university ‘s impact, or to compare the clusters across regions.
Figure 8: Lehigh Alignment
The analysis here focuses on biopharmaceuticals and medical devices, which are often considered together as part of the life sciences cluster. The life sciences cluster is an emerging cluster in the Lehigh Valley, however, medical devices is a larger and growing presence in the region than biopharmaceuticals. In biopharmaceuticals, the region faces the challenge of growing the cluster and increasing university R&D. In medical devices the cluster is more established in the region. According to the Cluster Mapping Project at the Harvard Business School ‘s Institute for Strategy and Competitiveness, between 1990 and 2001 medical devices was the fifth largest job producer among all traded clusters in the region (Cluster Mapping Project, Institute for Strategy and Competitiveness). OraSure, the creator of an oral HIV test and a client of the Ben Franklin incubator, is one of the region ‘s most successful spin-outs; it is now the 147th largest employer. B. Braun, a manufacturer of disposable surgical and medical supplies, is the 19th largest employer in the Lehigh Valley (Lehigh Valley Economic Development Corporation, 2003). The challenge for the medical devices cluster in the region and its alignment with Lehigh is to enhance the university ‘s R&D in that area. This should be helped by the National Science Foundation ‘s recent award of $1.38 million to Lehigh University to enhance its bioengineering program.
Promoting the growth of the life sciences cluster is the role of the Life Sciences Greenhouse of Central Pennsylvania (LSGPA), whose mission is to enhance and translate life sciences innovation into economic development in central Pennsylvania. The LSGPA has identified three areas of regional significance that have strong synergies with the expertise and resources of Lehigh: translate life sciences innovation into economic development in central Pennsylvania. The LSGPA has identified three areas of regional significance that have strong synergies with the expertise and resources of Lehigh: translate life sciences innovation into economic development in central Pennsylvania. The LSGPA has identified three areas of regional significance that have strong synergies with the expertise and resources of Lehigh:
Figure 9:
Lehigh is one of seven university participants in the LSGPA and brings a number of high quality resources into the initiative. Lehigh ‘s Center for Optical Technologies is a national leader in optics research, and has attracted commercial activity to the region. Demonstrating the cross-disciplinary nature of Lehigh, much of this optics research has applications in the life sciences field. Lehigh ‘s Biopharmaceutical Technology Institute focuses on the improvement of processes in biotechnology and in pharmaceuticals.
The LSGPA has a $10 million gap fund where early stage firms can get up to $350,000 for marketing, business development or building a management team. The LSGPA ‘s Technology Development Fund provides up to $100,000 of convertible debt for one year, with the goal of moving technology toward commercialization. These funds can be used for prototype, proof of concept and commercial feasibility. The LSGPA is encouraging small-business university collaboration, both explicitly in its guidelines but also in requirements for matching funds and the ability to meet federal standards for life sciences research that often favor the involvement of established firms or universities. The LSGPA strategy and programs are designed to address the critical needs of the life sciences cluster, building both industry resources as well as enhancing research assets.
Wright State University ‘s alignment with various segments of the Dayton economy presents an interesting example of cluster-university interaction. The R&D intensity at Wright State is below the national average with several of the largest clusters, due in part to the size and concentration of these clusters in the Dayton region. Dayton has a diversified economy, although many of the clusters support the two most dominant industries â automotive and aerospace. In fact, even these sectors may be converging. In a recent announcement, Delphi Automotive Systems and the Air Force Research Lab at Wright-Patterson Air Force Base (WPAFB) are collaborating to implement Brake-by-Wire technology in passenger vehicles. Much of the R&D to support this sector is conducted not by Wright State or other universities in the region but by the Air Force Research Lab. Wright-Patterson Air Force Base is the economic anchor in aerospace, technology and manufacturing, conducting several billion dollars of research annually. Wright State has positioned itself to complement the cluster and not duplicate the specialties of other local institutions. The best example of this may be Wright State ‘s program in aerospace medicine that combines the resources of the medical school in a unique way with the aerospace cluster.
Figure 10: Wright State Alignment
Conclusion
Universities can play a powerful role in the development of industry clusters. There are many examples of how new industries form from university research. Similarly, new industry clusters have re-ordered the ranking of major economic regions. Unfortunately the path from university research to cluster development and finally to regional economic benefit is not simple or direct. The assets of the university must be properly aligned with clusters that are appropriate targets for the regional economy. This report concludes that the characteristics of the cluster are as important if not more important than the characteristics of the university. The task for the university (and for regional stakeholders) is to identify and support areas of university expertise that align with clusters of opportunity for the region.
For the university these clusters of opportunity are defined by an area of significant university expertise. A large base of research and development is required but notsufficient. The university must also address the business, workforce, and community issues. The university must be aligned with regional interests and industry clusters across a broad spectrum, not just in terms of technical knowledge.
Notes
As a result of the case analysis and resulting criteria, several universities were identified as engaged with the regional economy. These universities ranked highly on the objective criteria and were consistently identified as partners in a variety of aspects of regional development related to research and education activities, as well as providing other resources and support for regional development. These universities are not merely targets or assets that the region seeks to use, but are a partner in the regional development enterprise. These engaged universities were analyzed to determine what factors differentiated the ability of the engaged universities to impact their regional economy.
These cases did not explore the full historical development of either the regional economy or the university. Such history and tradition can be important in understanding current conditions. Furthermore, universities and regions are not monolithic; they are comprised of many parts. In reducing these complex entities for analysis, some elements are emphasized at the exclusion of others, and the complexity of the whole is oversimplified. This approach is particularly evident during discussions of how engaged or aligned universities are with local economies, especially when some university units or components are significantly involved with local industry and others are not.
Figure 11: Case Taxonomy
The criteria used to select and evaluate cases are regional in scale and thus they blur significant achievements that may be achieved in a specific town, industry or firm. Using the criteria of regional employment growth, rather than cluster growth establishes a higher standard of performance, but one that is more meaningful. It is a hollow victory to grow one industry cluster if the rest of the economy is in decline. If local successes are not having regional impact, they are not fully recognized in our analysis. The goal is to assess the impact of universities on regional clusters and economic development, not to denigrate local achievements.
Assessing University Involvement
The initial selection of cases was influenced by the university ‘s technology-transfer activity, which we termed “industry-oriented.” This decision was based in part on the literature review and on the availability of relevant data on universities. The wide availability of technology-transfer data makes it a useful resource for screening the population of universities, but it is not the best representation of a university ‘s involvement with industry. Secondly, a university ‘s involvement with industry may not translate directly into benefits for a region. Our case analysis led to a broader set of criteria for assessing a university ‘s engagement with the regional economy. These factors are described in Table 3 and differentiate engaged universities from non- engaged.
Figure 12:
Figure 13: Factors for Engaged Universities
Figure 14: Data Sources for Statistics
Figure 15: Data Soures for Statistics continued
