Is Europe lagging behind the US in university technology licensing?

Annamaria Conti , Patrick Gaulé 30 July 2009

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In an increasingly knowledge-based economy, it is widely believed that the quality of university-industry linkages is important for growth. On several occasions, the European Commission has argued that while European research institutions are good at producing academic research outputs, they are not successful in transferring these outputs to the economy – the so called ‘European Paradox’ (European Commission 2007). Reforms in the organisation of technology transfer are thus needed to improve knowledge transfer from public research institutions to firms.

The existence of the “European Paradox” has been contested by academics. Dosi et al. (2005) suggest that European weaknesses reside in its system of academic research and in weak industry. Aghion et al. (2009) show that university autonomy and competition account for the better performance of US universities in terms of academic research output compared to European ones.

It is clear that European universities are producing less research output than US universities – hardly a surprising fact considering that the US spends about 3% of GDP in higher education, whereas the average for the EU-19 is 1.3% (OECD 2007). However, that does not preclude the existence of problems specific to the organisation of technology transfer in Europe. Here the evidence is less clear. For instance, Crespi et al. (2008) and Lissoni et al. (2008) show that while Europe lags behind the US in terms of university-owned patents, the gap becomes smaller when university-invented patents are taken into consideration.

Assessing the technology transfer gap

In a recent study (Conti and Gaulé, 2009), we attempt to make a contribution towards understanding whether there is a gap between Europe and the US in terms of university technology transfer, measuring the latter by the number of licenses and license income earned by university technology transfer offices. While these variables are routinely used as metrics of success by technology transfer offices, comparisons have been hampered by lack of good data on licensing outcomes in Europe. We assembled a data set representative of research-intensive universities in Europe and in the US through our own survey of European technology transfer offices and publicly available data on US technology transfer offices.

A first look at the raw data reveals that in 2007 US technology transfer offices concluded more license agreements than their European counterparts (Figure 1). The mean number of licenses for European universities is only 7.8 compared to 26.4 for the US. This difference is not due to just a small number of strong performers in the US. In fact, the median number of licenses for European universities is significantly lower than for US universities. A similar picture emerges when we examine the license income earned by university technology transfer offices (Figure 2). Compared to American schools, very few European universities had license revenues exceeding €1 million, whereas a large number of them earned license revenues below €30,000.

Figure 1. Number of licenses per university

Figure 2. Licensing income per university (thousands of euros)

In our analysis, we relate the differences in the number of licenses concluded and license income earned to differences in the quality of the universities and their orientations, the size of the pool of available technologies, policies on intellectual property rights, technology transfer office staffing levels and experience, and demand for technology. Transferring knowledge from university to industry requires three main ingredients. The first is a pool of technologies that a technology transfer office can potentially offer to industry partners. The size (and the quality) of this pool is clearly affected by the quality and the academic orientation of a university. The second is represented by the technology transfer offices, which are institutions bridging between the university and industry. Their main tasks are evaluating academic inventions, finding potential users among firms, and assisting academic researchers in negotiations with industry. Intellectual property policies and the way technology transfer offices are organised may impinge on these activities. The last ingredient is the demand for university technologies from firms. Obviously, we could not speak of university-industry technology transfer if there were no firms to use university technologies.

Conclusions

Our main finding is that while these factors explain most of the difference in terms of the number of licenses, they only account for part of the difference in license income earned. The lower performance of European technology transfer offices in terms of license income need not in principle be a cause for concern, as there is nothing in economic theory suggesting that welfare is maximised when university technology transfer offices maximise their revenue.
It is troublesome, however, that European technology transfer offices report caring about generating revenue as much as their US counterparts. In those circumstances, the gap in license income may reflect underlying structural problems in the organisation of technology transfer in Europe. Survey evidence reveals that US technology transfer offices tend to employ more staff with experience in industry and to have greater flexibility in managing their budget, which might allow them to offer better salary terms and attract personnel with higher human capital.

References

Aghion P., Dewatripont M., Hoxby C. M., Mas-Colell A. and Sapir A. (2009): "The Governance and Performance of Research Universities: Evidence from Europe and the U.S.", NBER Discussion Paper, No. 14851.
Conti A. and Gaulé P. (2009): “Are the US outperforming Europe? A new perspective on the European paradox”, CEMI working paper.
Crespi G. A., Geuna A. and Verspagen B. (2006): "University IPRs and Knowledge Transfer. Is the IPR ownership model more efficient?", SPRU Electronic Working Paper Series 154.
Dosi G., Llerena P, and Labini M.S. (2006): "The relationships between science, technologies and their industrial exploitation: an illustration through the myths and realities of the so-called 'European Paradox", Research Policy 35.
European Commission (2007), "Improving knowledge transfer between research institutions and industry across Europe: embracing open innovation --Implementing the Lisbon Agenda", Communication to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions.
Lissoni F., Llerena P, McKelvey M and Sanditov B (2008) "Academic patenting in Europe: new evidence from the KEINS database" Research Evaluation 17(2)
Organisation for Economic Co-operation and Development (2007): “Education at a Glance”.

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Topics:  Education Productivity and Innovation

Tags:  Universities, research, technology