The Nexus Between Science and Industry: Evidence From Faculty Inventions

It is largely documented that public science has a positive impact on industrial innovation. Previous studies, for instance, provide evidence for enhanced corporate patenting and improved new product and process development in the corporate sector through scientific research results. However, most of these empirical studies focus on the U.S. For the European Economic Area, scholars and policy makers are rather sceptical with respect to emphasizing a large impact of science on corporate innovation: it has been claimed for about a decade that a so-called “European Paradox” exists. It describes the phenomenon that EU countries play a leading global role in terms of top-level scientific output, but lag behind in the ability of converting this strength into wealthgenerating innovations in the business sector. In this paper, we investigate the nexus between science and industry in order to identify potential problems of technology transfer from academia to industry in the European area. Focusing on the “paper trail” from academia to industry in terms of patent applications, we compare academic inventions that are patented in the scientific domain with those that are directly transferred to industry and hence, although invented by an academic patented by a firm. Our analysis of a sample of more than 4000 academic inventions by German professors suggests that there is indeed potential for improving science-industry interactions in Europe. Concretely, our results show that academic inventions assigned to corporations are rather applied and associated with short-run profits, while academic inventions patented by the academic sector are rather complex and exhibit a higher long-term value. This suggests that firms miss the opportunity to invest in basic technologies that promise higher returns in the long run. We interpret this finding as a lack of absorptive capacity by corporations that do not succeed in identifying and exploiting basic university inventions.

Czarnitzki, Dirk, Katrin Hussinger and Cédric Schneider (2009), The Nexus Between Science and Industry: Evidence From Faculty Inventions, ZEW Discussion Paper No. 09-028, Mannheim, published in: Journal of Technology Transfer.