Is the "Business-academia Collaboration Boom" a Reality? Observations of the RIETI Survey on Joint Projects between Private Firms and Universities

Senior Manager of Quantative Studies, Senior Fellow, RIETI

A business-academia collaboration boom appears to be currently underway, with the introduction of one measure after another promoting such cooperation: the enactment and expansion of the TLO Law, the implementation of the Japanese version of America's Bayh-Dole Act, and the relaxation of restrictions on secondary employment of national university teachers, but to name a few. In particular nowadays, universities are also increasing efforts to enhance partnerships with the industrial sector so as to be ready for the incorporation of national universities next year. The media reports almost daily on tie-ups between the academic and the business worlds, and symposiums and lectures on the topic are frequently held. Despite this apparent "boom," objective data and quantitative studies on business-academia collaboration and its effects are surprisingly rare. Therefore, in order to identify the current status of such collaboration, as seen from the business world, RIETI conducted a survey in February 2003 (Click here). In this article, the data obtained from that survey will be used to try and take an objective look at how the two worlds are actually working together.

The participatory base is expanding, but project budgets remain small

The first item of note in the survey results is that the scale of industry-academia cooperation is very small, though the number of participating companies (including SMEs, or small and medium enterprises) is already quite large. Questionnaires were sent to more than 7,000 companies covered by the METI Basic Survey of Japanese Business Structure and Activities (all companies in the manufacturing, wholesale, and retail industries, with 50 or more employees and capital of 30 million yen or more) that are involved in R&D projects. About 40% of these companies said that they currently have partnerships of some sort with universities, though the actual form of cooperation varies greatly from joint research, to technical consultations, or exchanges of researchers. Joint research projects, carried out by 27.7% of the sample, are on average budgeted about 60 million yen annually for 4.5 projects per company (14 million yen per project on average). From these results, we can estimate that the surveyed companies have in total budgets of about 200 billion yen for collaboration with academics in joint and commissioned research. This figure constitutes only 2.2% of the sample's total R&D budget of about 8.6 trillion yen, suggesting that industries may not consider partnerships with universities particularly important to their research strategies in terms of budget (note 1). A single consumer-electronics giant alone can spend several hundred billion yen on its own R&D, which is more than the combined amount spent on joint and commissioned research by all of the surveyed companies put together.

Industry looks to developing the potential of long-term research

A closer look at the private sector's expected goals, as regards alliances with universities, finds that monetary investment is not of primary importance. Comparison between business-academia collaboration and inter-business collaboration shows that companies are primarily interested in acquiring new expertise and technology than in deriving short-term profits from new products developed in cooperation with universities. In fact, only 17.6% of those surveyed noted that collaboration with universities is producing positive economic effects, with increased sales and profits greater than the sum invested in the research. Meanwhile, 42.3% of the surveyed companies intend to reinforce partnerships with academia from now on, which shows that they are not seeking short-term economic effects. The ultimate goal of private enterprises is, of course, to make profits, and all of their efforts should contribute to that goal in the end. However, those companies wishing to strengthen partnerships with the academic world are more focused on acquiring new technology and improving their R&D potential by carrying out joint research with universities. Consequently, universities should seriously consider working on long-term, basic R&D that private companies cannot usually afford. Though discussions on university reforms always emphasize the importance of business-academia collaborations, it is more important to work on designing a new system that takes into account the role of universities within the nation's overall process of innovation.

Measures to revitalize business-academia collaboration

It is not surprising that the budget for joint research is relatively small when the objective of the collaborative research projects is limited to improving the company's general R&D ability and potential. Therefore, in order to revitalize business-academia collaboration, we should find a way to expand its base of participants and involve more SMEs, rather than investigating ways to simply increase its monetary scale. The RIETI survey asked what stood in the way of partnerships with universities, and many companies replied that they are "not yet accustomed to collaborating with universities," indicating that, in order to promote joint projects effectively, companies need to be equipped with a certain degree of R&D ability that allows them to absorb the technology developed by universities (absorptive capacity). Interestingly, a considerable number of companies with high R&D spending to sales ratios are not involved in projects with universities because of a lack of the aforementioned absorptive capacity. Such a discrepancy indicates that there may be a large number of SMEs with excellent potential which simply feel awkward approaching universities about partnerships. In order to encourage these companies to collaborate with universities in projects, it is important that more and more information which introduces past joint project cases and university-developed technologies be made available. Policies encouraging innovation among SMEs, to enhance the absorptive capacity of as many businesses as possible, will also play an important role in spreading the word on the benefits of collaborative efforts throughout the economy. Promoting new high-tech start-ups, in particular, is of great economic significance because these enterprises can provide the economic spark required to effect a radical change in Japan's innovation system, a system that otherwise tends to favor homegrown projects and inflexible implementation.

July 8, 2003

According to the "The Survey of Research and Development" conducted in fiscal 2002 by the Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT), the total amount of R&D expenditures by "companies" is 11.4 trillion yen, which means the sample of the REITI Survey covers a considerable amount of all R&D spending by the Japanese business community. Using 11.4 trillion yen as a base, this ratio of 2.2% represents about 250 billion yen that would be available for joint and commissioned research.

July 8, 2003