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Paper No. 170 What drives the formation of ‘valuable’ University-Industry linkages? An under-explored question in a hot policy debate Elisa Giuliani* & Valeria Arza** (Robert Schuman Centre for Advanced Studies, European University Institute*, Consejo Nacional de Investigaciones Científicas y Técnicas, Centro de Estudios para la Transformación**) July 2008 The Freeman Centre, University of Sussex, Falmer, Brighton B
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    Paper No. 170 What drives the formation of ‘valuable’ University-Industry linkages?  An under-explored question in a hot policy debate Elisa Giuliani* & Valeria Arza** (Robert Schuman Centre for Advanced Studies, European University Institute*, Consejo Nacional de Investigaciones Científicas y Técnicas, Centro de Estudios para la Transformación**) July 2008 The Freeman Centre, University of Sussex, Falmer, Brighton BN1 9QE, UK Tel: +44 (0) 1273 678175 E-mail: giulel@ec.unipi.it http://www.sussex.ac.uk/spru/   SPRU Electronic Working Paper Series   1 What drives the formation of ‘valuable’ University-Industry linkages? An under-explored question in a hot policy debate Elisa Giuliani *   Robert Schuman Centre for Advanced Studies European University Institute Via delle Fontanelle, 10 I - 50014 San Domenico di Fiesole, Italy Valeria Arza **   Consejo Nacional de Investigaciones Científicas y Técnicas (CONICET) Centro de Estudios para la Transformación (CENIT) Callao 796 6to piso (1023) Buenos Aires, Argentina Abstract Most of the literature on University-Industry (U-I) linkages assuming that these linkages will be beneficial   per se . We question this assumption and suggest that not all U-I linkages are equally ‘valuable’. In this  paper, we explore the factors driving to the formation of ‘valuable’ U-I linkages, conceived as those that have a higher potential to diffuse knowledge to other firms in the economy. We estimate a two-stage Heckman model using data from two wine clusters in Chile and in Italy. The quality of firms and universities is found to be a key driver of ‘valuable’ U-I linkages. We conclude that selectivity by policy-makers should  be encouraged when they promote U-I linkages.   Key words : University-Industry linkages, knowledge diffusion, social network analysis, wine, Chile, Italy. JEL Codes : O33; O31; L66 * Corresponding author. Present address: DEA, Facoltà di Economia, University of Pisa, Via Ridolfi 10, 56124 (PISA). Email: giulel@ec.unipi.it; Tel +39 050 2216280; Fax +39 050 541403. **E-mail: varza@fund-cenit.org.ar     2 1. Introduction Universities are increasingly considered central actors in the process of economic development of countries and regions. In recent times, their direct involvement with industry has increased and policies have been designed to promote University-Industry (U-I) networking. However, this enthusiasm raises concerns about the costs and time-consumption of U-I networking that may be detrimental to university research. Advocates of this latter view would suggest that, first, university research has a value  per se , independently on whether it connects to the industry or not, because it keeps alive curiosity-led investigation which is a cultural value worth transmitting to the next generation. Second, universities that link up to industry too intensively become more interested in industry-driven short-term problem-solving research – an aspect that might undermine researchers’ intellectual freedom in both the definition of their research agenda and in the way research results are used. This tension has recently sparked a debate on whether U-I linkages should be promoted or not, which has important implications for policy-making (see for example Poyago-Theotoky  , et al. , 2002). We believe there are benefits and costs involved in the U-I relations and therefore we acknowledge the relevance of that debate. However, our viewpoint is constructive and we will avoid the attempt to classify U-I linkages as something to be supported or limited. Instead, we argue that some U-I linkages are more valuable than others, in that they can have a higher potential to diffuse ‘knowledge’, thus generating positive effects on the economy. 1  In the spirit of the above debate, we then argue that, from a policy-making  perspective, it would be desirable to support only the creation of ‘valuable’ linkages. But, what factors  favour the formation of valuable U-I linkages?  We think this to be a very important but under-explored question, as the literature tends to simply focus on what affects the formation of U-I linkages, assuming that these will  per se  have a beneficial effect. More specifically, our interest here is to explore the factors that influence the formation of linkages between universities and firms that are more likely to diffuse their knowledge to other firms located in the same 1  With the term ‘knowledge’ we mean here “a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experience and information. It srcinates and is applied in the minds of knowers” (Davenport and Prusak, 2000: 5) Therefore, interaction between agents increase the potential of knowledge diffusion.   3 regional cluster (hence when this occurs, we consider the U-I linkage to be ‘valuable’). To explore this question, we use an srcinal dataset of wine producers in two wine producing areas, in Chile and Italy. We analyse the data applying Heckman two-stage selection model, so that, first we estimate probability of forming U-I linkage, second, we estimate the degree of knowledge diffusion of any formed linkage in the regional cluster. The paper is organised as follows: Section 2 presents the conceptual framework and the elaboration of the research hypotheses. Section 3 illustrates the context in which the research was set and the methodology. Section 4 presents empirical results and Section 5 concludes. 2. Conceptual framework 2.1 Fortifying University-Industry linkages? An open debate For those interested in economic development, the role that universities can play in enhancing regional and national innovations systems is certainly a matter of great and increasing interest. In effects, several studies have suggested that universities can be central players in an economic system (Charles, 2003, Cooke, 2001, Dasgupta and David, 1994, Kitagawa, 2004, Lundvall, 1992, Nelson, 1993, Nelson, 2004, Salter and Martin, 2001). Also, scholars have promoted the idea that universities should go beyond their traditional teaching and research activities, and undertake a ‘third mission’, aimed at a more direct interaction and contribution to the industry (Etzkowitz and Leydesdor, 2000, Slaughter and Leslie, 1997). A growing number of studies have documented the existence and the drivers of the formation of linkages  between universities and industry (Anselin  , et al. , 2000, Arundel and Geuna, 2004, Bonaccorsi and Piccaluga, 1994, Cohen  , et al. , 2002, Fontana  , et al. , 2006, Fritsch and Schwirten, 1999, Geuna, 2001, Gregorio and Shane, 2003, Hall  , et al. , 2003, Kaufmann and Todtling, 2001, Link, 2002, Meyer-Krahmer and Schmoch, 1998, Mowery  , et al. , 2001, Santoro and Chakrabarti, 1999, Slaughter   , et al. , 2002, Tornquist and Kallsen, 1994, Van Looy  , et al. , 2003, Velho and Saez, 2002). These studies have highlighted that there are a number of different ways through which U-I linkages are formed: including the employment of university graduates in the industry, informal meetings, joint research programmes, consultancy work
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