Robert Huggins Cardiff School of Management, University of Wales Institute, Cardiff Presentation at the ‘Universities, Graduates and Innovation - The Regional Impact of Higher Education’ Conference Cardiff, 17 th June, 2008 The Regional Pertinence of University-Generated Knowledge

University-Generated Knowledge and Regional Development As knowledge becomes an increasingly important part of regional innovation and development processes, the role of universities has come to the fore of regional innovation and economic development policy. As knowledge becomes an increasingly important part of regional innovation and development processes, the role of universities has come to the fore of regional innovation and economic development policy. Universities and other higher education institutions (HEIs) have come to be regarded as key sources of knowledge utilisable in the pursuit of economic growth, with knowledge and technology transfer attaining a more important role within universities. Universities and other higher education institutions (HEIs) have come to be regarded as key sources of knowledge utilisable in the pursuit of economic growth, with knowledge and technology transfer attaining a more important role within universities. However, it is often difficult to ascribe improved regional competitiveness to developments in knowledge-based infrastructure. However, it is often difficult to ascribe improved regional competitiveness to developments in knowledge-based infrastructure.

The Transfer and Commercialisation of University- Generated Knowledge The transfer and commercialisation of university-generated knowledge is also taking a stronger role within government policies at a number of levels (e.g. Lambert Review). The transfer and commercialisation of university-generated knowledge is also taking a stronger role within government policies at a number of levels (e.g. Lambert Review). Many governments and their agencies are turning their attention to the role of HEI knowledge commercialisation in developing innovative, sustainable and prosperous regional (and national economies). Many governments and their agencies are turning their attention to the role of HEI knowledge commercialisation in developing innovative, sustainable and prosperous regional (and national economies). However, regional contexts, and the universities located in them differ, suggesting that the relevance of these processes in both economic and policy terms will differ across regions and institutions. However, regional contexts, and the universities located in them differ, suggesting that the relevance of these processes in both economic and policy terms will differ across regions and institutions. In economic terms, regions may differ in their ‘dependence’ on the higher education sector as a generator of both income and innovation. In economic terms, regions may differ in their ‘dependence’ on the higher education sector as a generator of both income and innovation. In policy terms, there is an underlying assumption that the knowledge generated by universities can be best made use of by networking it regionally (or locally), when increasing evidence suggests that the best use of knowledge is made by linking it globally (or least non-regionally/locally). In policy terms, there is an underlying assumption that the knowledge generated by universities can be best made use of by networking it regionally (or locally), when increasing evidence suggests that the best use of knowledge is made by linking it globally (or least non-regionally/locally).

This Presentation The objective of this presentation is to provide an initial (quantitative) exploration of some of these issues in the context of the 12 UK regions, covering regional differences in the: The objective of this presentation is to provide an initial (quantitative) exploration of some of these issues in the context of the 12 UK regions, covering regional differences in the: Wealth-generating capacity of the higher education sector. Wealth-generating capacity of the higher education sector. Knowledge-generating capacity of the higher education sector. Knowledge-generating capacity of the higher education sector. Knowledge networks within which universities participate. Knowledge networks within which universities participate.

Value Added and Productivity In a corporate context, Value Added is the wealth created by a company. In a corporate context, Value Added is the wealth created by a company. Value Added = Sales less Costs of bought-in goods and services. Value Added = Sales less Costs of bought-in goods and services. Company Value Added can be calculated from a company’s accounts by adding together operating profit, employee costs, depreciation and amortisation/impairment charges. Company Value Added can be calculated from a company’s accounts by adding together operating profit, employee costs, depreciation and amortisation/impairment charges. Calculating Value Added for the Higher Education: adding together surplus, employee costs, and depreciation. Calculating Value Added for the Higher Education: adding together surplus, employee costs, and depreciation. The combined Value Added of firms and other organisations can be aggregated as the Gross Value Added of a region or nation (similar to Gross Domestic Product). The combined Value Added of firms and other organisations can be aggregated as the Gross Value Added of a region or nation (similar to Gross Domestic Product). Productivity, or more correctly in this case ‘labour productivity’, refers to the Value Added generated per employee. Productivity, or more correctly in this case ‘labour productivity’, refers to the Value Added generated per employee.

Rank Higher Education Institution Value Added per FTE (£) 1 London Business School 70,332 2 St George's Hospital Medical School 60,352 3 University of Cambridge 60,125 4 King's College London 57,312 5 University College London 54,443 6 Imperial College London 54,230 7 Royal College of Music 54,057 8 City University, London 51,587 9 London School of Economics and Political Science 51, Royal Veterinary College 50, Kingston University 49, University of London 49, Birmingham College of Food, Tourism and Creative Studies 48, School of Pharmacy 48, Royal Academy of Music 48, University of Surrey 48, London School of Hygiene & Tropical Medicine 48, London South Bank University 47, Institute of Cancer Research 46, Royal Holloway, University of London 45,967 University Productivity – Value Added per Full-Time Equivalent Employee

Rank Higher Education Institution Value Added per FTE (£) 139 Lancaster University 34, University of Abertay Dundee 33, Glasgow School of Art 33, Liverpool Hope University 33, Sheffield Hallam University 33, College of St Mark & St John 33, Bath Spa University 33, Buckinghamshire Chilterns University College 33, University of Winchester 32, Writtle College 32, University of Plymouth 32, University of Sunderland 31, Cumbria Institute of the Arts 30, Leeds College of Music 30, University of Wales, Aberystwyth 29, Royal Agricultural College 29, Trinity College Carmarthen 29, Central School of Speech and Drama 28, University of Chester 28, Conservatoire for Dance and Drama 770 University Productivity – Value Added per Full-Time Equivalent Employee

Rank Higher Education Institution Value Added per FTE (£) 29 Cardiff University 43, North East Wales Institute of Higher Education 40, University of Wales Swansea 39, University of Wales, Lampeter 38, University of Wales, Bangor 38, Swansea Institute of Higher Education 38, Royal Welsh College of Music and Drama 37, University of Wales Institute, Cardiff 36, University of Glamorgan 36, University of Wales, Newport 36, University of Wales, Aberystwyth 29, Trinity College Carmarthen 29,376 University Productivity in Wales – Value Added per Full-Time Equivalent Employee

University Value Added and Productivity University value added and productivity appears to be related to geography – place seems to play a role. University value added and productivity appears to be related to geography – place seems to play a role. The ‘performance’ of universities is related to both internal capabilities and external forces. The ‘performance’ of universities is related to both internal capabilities and external forces. Are these differences relevant at the regional level? Are these differences relevant at the regional level?

Region Number of HEIs per Region Population per HEI (000s) Value Added per FTE(£) Total HE Value Added (£000s) Contribution to Regional GVA (%) North East ,624511, North West ,1811,174, Yorkshire and the Humber ,9911,004, East Midlands ,409736, West Midlands ,183899, Eastern England ,016913, London ,3712,558, South East ,9821,595, South West ,056712, Scotland ,539969, Wales ,577578, Northern Ireland ,488269, UK160 40, University Contribution to Regional Gross Value Added

University Contribution to Regional Gross Value Added and Regional Gross Value Added per Capita

Higher Education R&D Expenditure and Regional Gross Value Added per Capita

Region Cumulative portfolio of HE active patents as a proportion of regional patent applications HE Spin-offs per New VAT registered company 2006 (000s) North East North West Yorkshire and the Humber East Midlands West Midlands Eastern England London South East South West Scotland Wales Northern Ireland UK Average Higher Education Contributions to Regional Patenting and New Firm Formation Activities (2005/06)

Universities and Regions Regional economic and innovation performance is inversely related to university dependence. Regional economic and innovation performance is inversely related to university dependence. Universities in less competitive regions also produce less wealth. Universities in less competitive regions also produce less wealth. This implies a potential problem – weaker universities with a responsibility for developing weaker regions. This implies a potential problem – weaker universities with a responsibility for developing weaker regions. But do they commercialise less knowledge? But do they commercialise less knowledge? Are problems related to knowledge supply or demand? Are problems related to knowledge supply or demand?

Region Contract Research per FTE Employee Consultancy Contracts per FTE Employee IP Income per FTE Employee North East 2,0801,63637 North West 1, Yorkshire and the Humber 2, East Midlands 1, West Midlands 2, Eastern England 2, London3, South East 1, South West 1,8011, Scotland2,6171, Wales1, Northern Ireland 1, UK Average 2, Higher Education Knowledge Commercialisation Activity (2005/06)

Region Internationally Co-authored articles per FTE Employee (annual average ) Collaborative research involving both public funding and funding from business per FTE employee % of Commercialisation Income Generated from each HEI's Region % of Commercialisation Income Generated from each HEI's Region North East 0.133, % North West 0.182, % Yorkshire and the Humber 0.131, % East Midlands 0.122, % West Midlands 0.131, % Eastern England 0.332, % London0.251, % South East 0.261, % South West % Scotland0.273, % Wales0.124,3488.4% Northern Ireland 0.141, % Higher Education Research Activity and Commercialisation Income(2005/06)

University Productivity and Income from Collaborative Research and Commercialisation

University Productivity and % of Knowledge Commercialisation Activity Undertaken Within The Region

University Productivity and Institution Size

University Productivity and Commercialisation University productivity is positively related to knowledge commercialisation capabilities. University productivity is positively related to knowledge commercialisation capabilities. University productivity is not related to knowledge commercialisation undertaken within a respective university’s region. University productivity is not related to knowledge commercialisation undertaken within a respective university’s region. Larger universities tend to have higher productivity rates. Larger universities tend to have higher productivity rates. Demand for university knowledge is predominantly non- regional (suggesting demand side limitations in some cases). Demand for university knowledge is predominantly non- regional (suggesting demand side limitations in some cases). Who are the key partners and clients within university knowledge networks? Who are the key partners and clients within university knowledge networks?

Knowledge Networks - Strongest Relationships with Partners/Clients During the Last 3 Years for Collaborative Research, Contract Research and Consultancy

Knowledge Networks - Strongest Relationships with Partners/Clients Within and Outside the Region

The Knowledge Networks of HEIs in Wales - Strongest Relationships with Partners/Clients Within and Outside the Region

Final Remarks (1) There is significant variation in the wealth and knowledge generation capabilities of universities across UK regions. There is significant variation in the wealth and knowledge generation capabilities of universities across UK regions. Weaker regions are more dependent on their universities for income and innovation, but often these universities under-perform in comparison to counterpart institutions in more competitive regions. Weaker regions are more dependent on their universities for income and innovation, but often these universities under-perform in comparison to counterpart institutions in more competitive regions. Knowledge commercialisation activity is a source of productivity advantages for universities, but many of these advantages are accrued via networks beyond the region of location. Knowledge commercialisation activity is a source of productivity advantages for universities, but many of these advantages are accrued via networks beyond the region of location. Markets (or networks) for knowledge in under-competitive regions appear to possess demand-side weaknesses. Markets (or networks) for knowledge in under-competitive regions appear to possess demand-side weaknesses.

Final Remarks (2) The capability of universities to stimulate regional demand for knowledge is probably limited. The capability of universities to stimulate regional demand for knowledge is probably limited. Universities have their own bottom-lines to consider. Universities have their own bottom-lines to consider. Universities alone cannot shoulder the burden for transforming the innovation capabilities and knowledge economies of their regions. Universities alone cannot shoulder the burden for transforming the innovation capabilities and knowledge economies of their regions. If universities are to continue to play a regional economic development role it is vital that knowledge transfer and networks initiatives are fully supported to ensure sustainability. If universities are to continue to play a regional economic development role it is vital that knowledge transfer and networks initiatives are fully supported to ensure sustainability. The onus being placed on universities to become the bases of commercialisable knowledge in many regions is probably too heavy. The onus being placed on universities to become the bases of commercialisable knowledge in many regions is probably too heavy.