DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS (THE KNOWLEDGE TRANSFER FROM UNIVERSITY)

UNIVERSITY OF ECONOMICS IN BRATISLAVA FACULTY OF NATIONAL ECONOMY DEPARTMENT OF PUBLIC ADMINISTRATION AND REGIONAL DEVELOPMENT BACHELOR THESIS DEVELOPMENT OF THE KNOWLEDGE ECONOM

UNIVERSITY OF ECONOMICS IN BRATISLAVA

FACULTY OF NATIONAL ECONOMY

BACHELOR THESIS

2008 Peter Chovaňák

UNIVERSITY OF ECONOMICS IN BRATISLAVA

FACULTY OF NATIONAL

ECONOMY

DEPARTMENT OF PUBLIC ADMINISTRATION AND REGIONAL DEVELOPMENT

BACHELOR THESIS

DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS

(THE KNOWLEDGE TRANSFER FROM UNIVERSITY)

Bratislava

2008

Bachelor thesis consultant:

Ing Štefan Rehák, PhD.

DECLARATION

I, hereby declare that I have written this thesis alone and that I enclosed in reference all

relevant resources I have used while working on this thesis

In Bratislava, 30.4 2008

ACKNOWLEDGEMENTS

I would like to thank my consultant Ing Štefan Rehák, PhD., for assisting me in writing this

bachelor thesis I am grateful to his thoughtful comments and valuable suggestions which

were of great help in preparing the final version of the text

In Bratislava, 30.4 2008

Abstract

Name: Peter Chovaňák

Title: Development of the knowledge economy in regions (The Knowledge Transfer from

University)

Bachelor work

University of Economics in Bratislava

Faculty of National Economy

Department of public administration and regional development

Bachelor work consultant: Ing Štefan Rehák, PhD

Bratislava, 30.4.2008

Number of pages: 58

The Knowledge Economy is involved in many theoretical and practical approaches to the functioning of economy in regions Introducing such approaches and looking at their using and functioning in reality is offered as a starting point for later application of thoughts from them that should go towards regional development and that can in many ways lead to the economic growth and development We introduce the knowledge economy in general and then explain its regional dimension Our impact is on the university and its role in regional development We emphasize the importance of creating knowledge and its transfer from university to industries and we describe several tools of such transfers In the last part of the work we give The University of Oxford as an example of successful using of knowledge transfer that support development of the knowledge economy in its region Our aim is not giving new solutions that should support development of the knowledge economy in regions but we want to identify those existing that can become very useful for further research and development in regions or at university and that can people benefit from

Key words: regional development, knowledge, knowledge transfer, university, The University

of Oxford

Table of Content

INTRODUCTION 7

1 CONCEPT OF THE KNOWLEDGE ECONOMY 9

1.1 KNOWLEDGE AGE 9

1.2 KNOWLEDGE ECONOMY AS NEW ECONOMY 10

1.2.1 Learning organisations, networks and global competition 11

1.2.2 Flexible organisations 12

1.2.3 Policies to support knowledge 12

1.3 REGIONS AND KNOWLEDGE DEVELOPMENT 13

1.3.1 The new regional comparative/competitive advantages 13

1.3.2 New Models of Regional Development 15

1.3.3 Globalisation versus Regions 22

2 REGIONAL DEVELOPMENT AND UNIVERSITY 23

2.1 KNOWLEDGE TRANSFER AND UNIVERSITY 25

2.1.1 From Technology Transfer to Knowledge Transfer 26

2.2 TYPOLOGY OF INDUSTRY-SCIENCE RELATIONS 29

3 TRANSFER OF KNOWLEDGE AT THE UNIVERSITY OF OXFORD 38

3.1 REGION OF OXFORD – OXFORDSHIRE 38

3.2 FACTS ABOUT THE UNIVERSITY OF OXFORD 39

3.2.1 University of Oxford in county of Oxfordshire 41

3.3 WAYS OF THE KNOWLEDGE TRANSFER FROM THE UNIVERSITY OF OXFORD……… .42

3.3.1 ISIS Innovation Ltd 42

3.3.2 Other ways of knowledge transfer from the University of Oxford 45

CONCLUSION 49

REFERENCES 51

INTRODUCTION

The knowledge economy is becoming well known to many people But sometimes the way how it works is not understood sufficiently If it is so, it is something like riding horse Somebody will seat us on the horse, we can ride and everything is right Suddenly, there is a problem We want to stop or change the direction but we do not know how It is almost impossible without knowing how to do it And when we imagine what we have to do, if we would like to be professional riders Development of the knowledge economy in regions is based on the principles of the knowledge economy in general but it has got also some specifics - spatial, infrastructural, geographical, and economic There are also regional players which have their own role We are thinking primarily of university and its ability to become the “catalyser” of development in region trough creating and transferring the knowledge

The aim of our work is to explain theoretical and practical functioning of the knowledge economy in regions We would like to introduce the role of university in the regional knowledge development We look at the university as a place where the knowledge originate from and as a place where knowledge can flow from and then can be utilize further Transfer of knowledge is central for this thesis View of main principles and tools of the knowledge transfer we consider important because it can help (economists, scientists, firms, government etc.) to make decisions and concrete steps towards the regions’ development The development will take place in regions that will be built on the knowledge economy bases There will be flow of the knowledge and industry science relations will help to develop the regions (meaning quantity and quality of the development as well)

The way how the thesis is compiled is based on working with many resources that offer various views on the issue Some authors of these resources already have done certain kind of summarizing of thoughts that have proved good We do not want to make up new thoughts or theories We try to explain those who are already in the world We try to offer them to reader as a challenge to study and act more according to them and to put them into practice in his own region, university or firm

To understand the regional dimension of the knowledge economy we introduce the knowledge economy in general and then we try to apply its fundamentals on regions The first chapter speaks about the knowledge economy as new economy and there are introduced possibilities of regional development in the context of the knowledge economy We offer

several theories of such development for better understanding and knowing the problems that they think out

The second chapter is about university as an important player of the region and its impacts on regional development We describe different kind of industry science relations that help to transfer knowledge from university

There is showed how such industry science relations function at The University of Oxford and how does they help to the development of the university and its region in the third chapter

1 CONCEPT OF THE KNOWLEDGE ECONOMY

1.1 KNOWLEDGE AGE

“We are living through a period of profound change and transformation of the shape of society and its economic bases The nature of production, trade, employment and work in the coming decades will be very different from what it is today.” (FORFAS in HOUGHTON and SHEEHAN, 2000, p.1)

“In an agricultural economy land is the key resource In industrial economy natural resources, such as coal and iron ore and labour are the main resources A knowledge economy is one in which knowledge is the key resource One in which the generating and using of knowledge have started to play the predominant part in the creation of wealth It is not just about pushing back the frontiers of knowledge; it is also about the more effective use of all types of knowledge in all manner of economic activity It is not a new idea that knowledge plays an important role in the economy, nor is it a new fact All economies, however simple are based on knowledge, need to know how, for example, to farm, to mine and to build; and this use of knowledge have been increasing since the Industrial Revolution But the degree of incorporation of knowledge and information into economic activity is now

so great that it is inducing quite profound structural and qualitative changes in the operation of the economy and transforming the basis of competitive advantage The rising knowledge intensity of the world economy and our increasing ability to distribute that knowledge has increased its value to all participants in the economic system.”(HOUGHTON and SHEEHAN, 2000, p.1)

COATES and WARWICK (1999, p.11-14) identify four important influences which are acting to increase the pace of change in economies throughout the world towards the more knowledge based:

1 revolutionary changes in information and communications technology

2 more rapid scientific and technological advance

3 competition becoming more global

4 changes in income, tastes and lifestyle ( rising incomes tastes have led to greater emphasis on quality and design, on convenience services and on

cultural and recreational activities, and a shift in attitudes to sustainable development)

1.2 KNOWLEDGE ECONOMY AS NEW ECONOMY

Knowledge economy has some significant features, different from the industrial economy we have known for most of the last 200 years.“Knowledge has fundamentally different characteristics from ordinary commodities and these differences have crucial implications for the way a knowledge economy must be organised” (STIGLITZ in VAITILINGAM, 1997, p.5) Front costs associated with the production of traditional goods such as a car or house may not necessarily be high, each item is still costly to produce On the other hand, front development costs (in the case of innovation, ideas and information) can be high, but the reproduction and transmission costs are low

“When traditional inputs are added to the stock of economic resources, the

economy grows according to traditional production function “recipes”

For example, more labour can increase GDP by an amount that depends on

current labour productivity, or more steel can increase production of autos,

housing or tools by predictable amounts according to the current state of the

arts While new knowledge will generally increase the economy's potential

output, the quantity and quality of its impact are not known in advance

There is no production function, no input-output “recipe” that tells, even

approximately, the effect of a “unit” of knowledge on economic

In spite of this fact information (information and communication technologies) lays the foundations of the knowledge economy Of course, we have to consider other elements of

the knowledge economy as well Especially: science-based innovations, collaboration among users (of information and users who are responsible for innovation), flexible and learning organisations, global competition and production We consider them to be the most important elements for us because they will help us to understand better the approach to the knowledge development we would like to introduce in this work That is the reason for explaining them more along with the policies that support the knowledge economy

1.2.1 Learning organisations, networks and global competition

Scientific knowledge contributes to creating new or improving existing products, services, processes and organisations The knowledge economy increasingly relies on the diffusion and use of knowledge, as well as its creation (OECD, 2004, p.43) Hence the success of enterprises, and of national economies as a whole, will become more reliant upon their effectiveness in gathering, absorbing and utilising knowledge, as well as in its creation Firms must become learning organisations that continuously adapt management, organisation and skills to accommodate new technologies and catch new opportunities Learning involves both education and learning-by-doing, learning-by-using and learning-by-interacting

Organisations will be increasingly joined in networks, where interactive learning is offered to creators, producers and users and exchange of information drives innovation It is important to interchange information, ideas, knowledge among industry, government and academia if they want to see the development of science and technology (HOUGHTON and SHEEHAN, 2000, p.11) Firms find it increasingly necessary to work with other firms and institutions in technology-based alliances, because of the rising cost (for developing products etc.), increasing complexity and widening scope of technology Many firms are becoming multi-technology corporations Despite improved capability for global communication, firms increasingly co-locate because it is the only effective way to share

‘tacit’ knowledge (CANTWELL in VAITILINGAM, 1997, p 7)

A consequence of deregulation and advances in communication technologies has been strengthening world competition, and the emergence of a new form of global competition Most firms with a dominant position no longer belong to just one leading country To compete with their rivals successfully, firms must compete head-to-head

in all markets (including their home market) now In this new environment,

of competitiveness, success depends increasingly on the coordination of various and

specialised industrial, financial, technological, commercial, administrative and cultural skills HOUGHTON and SHEEHAN, 2000, p.12)

1.2.2 Flexible organisations

Knowledge economy calls for flexible organisations, that reduce waste and increase the productivity of both labour and capital by integrating ‘thinking’ and ‘doing’ at all levels of their operations Flexible organisations define job responsibilities, call for multi-skilled workers and use teamwork and job rotation (OMAN, 1996, p.19) Information and communication technology investments are complementary with investment in human resources and skills (SOETE in HOUGHTON and SHEEHAN, 2000, p.11) The skills that are required from people are complementary with information and communication technology

There are possibilities for enhancing efficiency through inter-departmental operation in firms, the organisation of the work and co-operation across trades In order to utilise the company’s resources to the full, there needs to be optimum correlation between the company’s ambitions, its managerial framework, the management, employee development, reward structure, systems and business routines

co-1.2.3 Policies to support knowledge

There is irreplaceable role of government, which can provide the conditions and enabling infrastructures for changes in the economy towards the knowledge economy through appropriate financial, competition, information and other policies Policies need to be focused

on the development of human capital, the development and nurturing of an entrepreneurial climate, and the promotion of broad access to skills and learning There are many demands especially on education system What organisations need most from education systems is not

so much investment in the production of skilled but narrowly defined specialists, or a lot

of investment in vocational training; but much more investment in the production of people with broad-based problem solving skills and with the social and inter-personal communication skills required for teamwork, along with the skills and attitudes required for flexibility (OMAN, 1996, p.37)

1.3 REGIONS AND KNOWLEDGE DEVELOPMENT

There are a lot of thoughts to think about when we look at the knowledge economy from the regional perspective as well We can see many challenges that are coming with its development But firstly we should get know the principles of this economy Of course the principles that we have already mentioned above are also relevant for the knowledge economy

in general as well as for the regional knowledge economy We are going to look closer just at regional aspects of the knowledge economy

In the knowledge economy the value of classic local advantages (nature resources) has diminished and because of the changes in economy and society, the comparative advantage relies on ability to mobilize and use the knowledge (REHÁK, 2006, p.58) It has significant impact on the economic development itself We speak about the new phase, where knowledge

is the essential resource and the most important process is learning Regions have to become

“learning regions” (FLORIDA in REHÁK, 2006, p.59) Then it seems the final goal is to support the access to knowledge in regions but it is not so The final goal is to achieve the economic growth and welfare From the regional perspective the aim is the balanced region’s development

1.3.1 The new regional comparative/competitive advantages

There were the primary factors of location like the need for physical accessibility to raw materials and other production inputs (large pools of labour, large markets) in the past Now the importance of these has diminished A recent feature of economic development has seen the move towards globalisation of the production process, which strengthens the importance of locality Increased mobility of commodities, production factors and information has undermined traditional comparative advantages (MILLARD, 2002, p.4) We consider these comparative advantages to be competitive as well

In the context of regions in the knowledge economy, the new comparative advantages MILLARD see in:

• the quality and cost of labour, including skills, stability, flexibility and adaptability

• infrastructure, including transport, telecoms, the relative price and quality of land, property and services, etc

• the organisational and entrepreneurial capacity of firms (e.g local business markets)

• standard of living and incomes (e.g local consumer markets)

• out of region trading capacities and networks (e.g wider business and consumer markets)

• the institutional capacity of the public and voluntary sector

• (local/regional) regulations, legislation, taxes, incentives and grants

• both natural and man-made environment and amenities

• quality of life (cultural life, and lack of stress, congestion, crime, etc.)

• high quality of personal services

• physical location in the global economy in terms of time zone related to other regions and steps in the value chain process

The establishment and nurture of creative environments, knowledge-rich and entrepreneurial milieu, learning regions, etc., can be decisive for successful regional development According to MILLARD such creative environments are those with the greatest number of combinatorial possibilities, and these are to be found in:

• interaction between competent actors in a locality

• networks in the locality (ICT and others)

• strong links to other networks elsewhere

• knowledge-rich environments

• informational variety

• a degree of instability and preparedness, and acceptance of risk taking

• quality of human capital

• opportunities for knowledge spill-over

• entrepreneurial vitality

1.3.2 New Models of Regional Development

From the beginning of the new economy there have developed several approaches and theories that explain regional development in this economy Models of regional innovation are

in general called “Territorial innovation models” We would like to show you some of the main features of the most known territorial innovation models

Firstly it is useful to understand what the innovation and innovation process is The first definition brought Schumpeter in 1934

ƒ Innovation is a“qualitative change” (not “any change“) that is linked with creation of something new (not just the adoption of somebody else’s novelties)

ƒ The innovation process includes invention, and successful implementation or market launch (commercialization) (CHRISTENSEN, 2007, p.3)

There are two main innovation concepts that have developed in the regional economy

1 Linear conception of the innovation process

Figure 1: Linear conception of the innovation process

Source: CHRISTENSEN, Jens Innovation – concepts, processes and strategies [online] Hillerød : Copenhagen Business School, 2007 [2008-04-20] p.10, Microsoft PowerPoint Presentation Available on: <http://fi.dk/portal/pls/pr05/docs/1/2808014.PPT>

In this model innovation is stimulated mainly through research and development (MAIER and TÖDTLING, 1998, p.155) ROSENBERG (1994, p.139) thinks that “Everyone knows that linear model of innovation is dead”

2 Chain-link model of innovation

Basic

research

Applied research

Invention Development/

prototype

Produc- tion

Marketing/

sales

Figure 2: Chain-link model of innovation

Source: KLINE and ROSENBERG in CHRISTENSEN, Jens Innovation – concepts, processes and strategies [online] Hillerød : Copenhagen Business School, 2007 [2008-04-20] p.11, Microsfot PowerPoint Presentation Available on: <http://fi.dk/portal/pls/pr05/docs/1/2808014.PPT>

Innovation has not very often base in science or research Innovation often comes from customers, technology users, suppliers or co-operative partners There is a lot of “feed-back“links: important information flow from later phases to earlier phases and there exist strong correlations in the whole process Intensive relations with suppliers, contacts with customers or co-operation can represent the right path to the technology news (MAIER and TÖDTLING, 1998, p.154) All these features are important for “Chain-link model of innovation“and just in such features we can see differences between the “Linear” and the

“Chain link model of innovation”

Innovative milieu

The milieu concept was developed by French and Italian regional economists, who formed the “Groupe de Recherche Européen sur les Milieux Innovateurs” (GREMI) in the 1980s for empirical research and case studies (RÖHL, 2000, p.2)

In this theory the firm is not an isolated innovative agent, but part of a milieu with an innovative capacity The relationships between firms and their environment are essential

There are 3 important spaces for the firm - production; the market; and the support space Probably the most significant is the support space It should create strategic relations between the firm, its partners, suppliers and clients Creating of such relations requires trust and reciprocity links to reach cooperative atmosphere

Theory of “Innovative milieu” stresses the concept of apprenticeship, which means that the innovative capacity of the different members of the milieu depends on the capacity of learning Learning enables them to perceive changes in their environment and to help them to adapt their behaviour accordingly (MOULAERT and SEKIA, 2003, p.291)

Industrial districts

The theory of the industrial district started to develop Bagnasco in 1977

“The districts are geographically defined productive systems, characterized by a large number of firms that are involved at various stages, and in various ways, in the production of

a homogeneous product A significant feature of industrial districts is that a very high proportion of firms within them are small A characteristic of the industrial district is that it should be conceived as a social and economic whole In industrial districts, social institutions are as important as economic“(DANSON and WHITTAM, 2005) This kind of organization is hybrid because of combining competition and cooperation, formal and informal institutional relations

We can use “production flow” to understand these Industrial districts more:

“Every firm is responsible for one or more steps of the production flow, and is in turn dependent on the performance of the other firms in the region A firm that weaves textiles, for example, relies on a “down-stream” firm to provide the fiber needed for weaving, and on an

“up-stream” firm to buy the textiles for further manufacturing into clothes or other end/intermediary goods In addition, this firm is interested to have firms on the horizontal (even potential competitors) perform well, because these firms ensure the healthiness of the vertical chain (the “down-stream” suppliers and the “up-stream” buyers) and often complements its activities

From this, it is easy to see why industrial districts are a viable alternative for developing regions A self-sufficient economic and social entity is dependent on the existence

of a set of firms and institutions, and on the linkages that are formed between those

Obviously, it is easier, and more efficient, to create an industrial district rather than a vertically integrated mega-plant within an underdeveloped region The resources of the people and entrepreneurs living in the area are more easily directed toward a set of SMEs (small and medium sized enterprises), than toward a big company“(IONESCU, 2006)

New industrial spaces

It was the year 1988 when Storper and Scott launched the notion of new industrial spaces This approach takes the ideas from industrial districts, flexible production system, social regulation and local community dynamics The flexible production system is probably the most significant from them Production is characterized by a well developed ability both

to shift promptly from one process and/or product configuration to another, and to adjust quantities of output rapidly up or down the short run without any strongly deleterious effects

on levels of efficiency

The dynamics of entrepreneurial activity is linked just with social regulation of processes inside the firm Local labour markets and social reproduction of workers are important as well (MOULAERT and SEKIA, 2003, p.292)

Clusters produce knowledge; join institutions and customers who are involved in the production line that produces added value Concept of clustering is about cooperation of firm networks because it relates to many spreading and exchanging of knowledge

Regional innovation system

This theory stresses collective learning that is linked with deep cooperative relationships between members of the system Innovation is not only a technological but also

a creative and an organizational process (MOULAERT and SEKIA, 2003, p.293)

The concept is usually understood as a set of interacting private and public interests, formal institutions and other organizations that function according to organizational and institutional arrangements and relationships conducive to the generation, use and dissemination of knowledge (DOLOREUX and PARTO, p.3) This set of actors produce pervasive and systemic effects that encourage firms within the region to develop specific forms of capital that is derived from social relations, norms, values and interaction within the community in order to reinforce regional innovative capability and competitiveness (GERTLER in DOLOREUX and PARTO, p.3)

The learning region

Especially Cooke, Morgan, Asheim are people, who stood at the start of this approach

Here ‘knowledge is the most important resource and learning the most important process‘(MORGAN cites LUNDVALL, 1994 in MOULAERT and SEKIA, 2003, p.293) There is view of the region as a system of ‘learning by interacting and by steering regulation Learning within agglomerations is based on traded (input–output relations) and untraded inter- dependencies (labour markets, regional conventions, norms and values, public or semi-public institutions) Learning regions have the strong ability of learning to learn

(MOULAERT and SEKIA, 2003, p.294).

MORGAN in HASSINK (1997, p.525) calls learning regions the new generation of regional policy, which, compared to traditional regional policy, focuses on infostructure instead of infrastructure, on opening minds instead of opening roads and branch plants and which devises policies with small and medium sized enterprises (SMEs) instead of just policies for SMEs Other characteristics of this concept are: bottom-up concept, transparent, face-to-face relations, integrated solving of problems (crossing of policy fields) and permanent organizational learning with feedback effects This network is open to learning, both to intraregionally and interregionally, and willing to unlearn These characteristics of a learning region, however, only describe the method of working and the attitude of regional

economic policy-makers The concrete contents of the innovation policy need to vary according to the economic profile and demand in individual regions

The learning region can thus be defined as a regional innovation strategy in which a broad set of innovation-related regional actors (politicians, policy-makers, chambers of commerce, trade unions, higher education institutes, public research establishments and companies) are strongly, but flexibly connected with each other, and who stick to a certain set

of ‘policy principles’ (OECD, 2001) The following ‘policy principles’, which are general in scope, leaving regional policy-makers to adapt them to specific con- texts and demand for innovation policies in the various regions, are a crucial part of a learning region strategy (OECD, 2001; FURST, 2001):

• carefully coordinating supply of and demand for skilled individuals

• developing a framework for improving organizational learning, which is not only focused on high-tech sectors, but on all sectors that have the potential to develop high levels of innovative capacity

• carefully identifying resources in the region that could impede economic development (lock-ins)

• positively responding to changes from outside, particularly where this involves unlearning

• developing mechanisms for coordinating both across departmental and governance(regional, national, supranational) responsibilities

• developing strategies to foster appropriate forms of social capital and tacit knowledge that are positive to learning and innovation

• continuously evaluating relationships between participation in individual learning, innovation and labour market changes

• developing an educational and research infrastructure for knowledge society

• encouraging openness to impulses from outside

• fostering redundancy and variety

• ensuring the participation of large groups of society in devising and implementing strategies

From all of the above, we can see that features that are definitely significant in the development of new regions are networks and governance

At this point of our work we can have a look at main differences between the structure

of regions in the past (there was mass production in course) and now in the time of the knowledge economy:

Table 1: From mass production to learning regions

• physical labour as source

of value

• separation of innovation and production

Knowledge-based production

• continuous creation

• knowledge as source of value

• synthesis of innovation and production

Manufacturing infrastructure Arm’s length supplier

relations

Supplier systems as a source

of innovation Human infrastructure • low skill low cost labour

• Taylorist work force

• Taylorist education and training

Globally oriented physical and communication infrastructure Industrial governance system • adversarial relationships

• top-down control

• mutually dependent relationships

• network organization Policy system Specific retail policies Systems/infrastructure

orientation

Source: FLORIDA, R Regional systems of innovation: experiences from USA Pittsburgh, 1996 p 51

1.3.3 Globalisation versus Regions

Processes of economic restructuring have impacts that are sharply differentiated between different places Economic geographers, economists and other social scientist are confident that neither all assets of knowledge economies nor knowledge itself are as mobile as its codified expressions in publications and patents Indeed, the more implicit “tacit” forms of knowledge have a geographic dimension which can be positively influenced by policies and framework conditions (REICHERT, 2006, p.8) There is an evidence of trends towards the globalisation of economic processes (in terms of investment flows, the circulation of goods and services and so forth), but the importance of place dimension in the knowledge economy

is rising The development of region depends on its economic structure, political and social relations, cultural manners etc We can see that some places are more adaptable to the new economic milieu than others (OECD, 2001, p.7)

It is worthy to remind that already Alfred Marshall observed, in his famous analysis of agglomeration economies, that knowledge spill-over effects cause people to locate closely to each other

2 REGIONAL DEVELOPMENT AND UNIVERSITY

According to CROWELL (p.218) “recent years have seen a rapid increase in number

of start-up companies resulting from university research Interestingly, 75% of them locate near the university Data show that their ability to sustain themselves is affected by the distance from the lab where the science was done; the closer they locate to the university, the higher the chance of success Again, this speaks to economic development potential “

It is clear for the knowledge economy that it is not only about getting some knowledge and skills but also about putting them into practice That can happen through innovation system, where university should act as:

1 educational component

2 research component

3 “implement“ of technology and knowledge transfer

The place, region where university operates, becomes the place where, thank to university, the expenditures (consumption and demand for goods and services) increase It is the place where knowledge can flow from University has impact on households, local firms and local government It has effect on human capital, education and nurture There is not always positive impact of the university There can be higher costs associated with protecting the environment, building infrastructure etc.” (REHÁK, 2006, p.72)

There are knowledge impacts such as changes in human capital, changes in the scope

of knowledge and attraction of locality for firms and households These impacts can be significant only if university is able to transfer knowledge to the milieu That can happen by (REHÁK, 2006, p 72-73):

- creating of local networks between university and industry workers

(collaboration in research, student trainee-ship, conferences…)

- creating of business relations (licences, spin-off…)

- university facilities (laboratories, library…)

It is a fact that knowledge transfers between universities and other economic actors are highly personalized, and as a result, often highly localized, which underscores the significance

of geographical proximity for the process of knowledge transfer Proximity to the source of the research is important in influencing the success with which knowledge generated in the research laboratory is transferred to firms for commercial exploitation, or process innovations are adopted and diffused across researchers and users The proximity effect of knowledge transfer provides a strong clue as to why universities are increasingly seen as an essential element in the process of local and regional economic development, especially in knowledge-intensive industries, such as information and communications technology or biotechnology (BRAMWELL and WOLFE, 2005, p.9) However, what is not yet clear is the actual process

by which, and degree to which, the proximity effect of university research on innovativeness contributes to the process of regional economic growth and industrial cluster formation (Wolfe 2005a in BRAMWELL and WOLFE, 2005, p.9)

In summary, “the role of universities in local economic development goes far beyond the linear transfer of basic research into commercialisable products Instead, universities emerge as multi-faceted economic actors that are embedded in regions, and not only produce codified and commodified knowledge and human capital, but also actively participate as important institutional actors in both building and sustaining local networks and flows of knowledge, and in linking them with global ones“(BRAMWELL and WOLFE, 2005, p 9-10) “A large base of research and development is required but not sufficient The university must also address the business, workforce, and community issues The university must be aligned with regional interests and industry clusters across a broad spectrum, not just in terms

of technical knowledge“(PAYTAS 2004 in BRAMWELL and WOLFE, 2005, p.10 )

Talking about university we emphasize its function in research We have to know what university can and what cannot bring to the region and what are the conditions to support regional development by university research Useful review of such conditions has prepared REHAK (2004, p.290):

Table 2: Myth and reality of university research impacts on regional economic development that is based on knowledge

University research has impact on innovation

activity of firms in region

Universities have impact on firm’s localization YES and NO

• the biggest impact is on firms that have separated research from ordinary operations Universities are prominent partners for

innovation activities of firms

Some of the strong research universities do not

contribute in significant way to the innovation

development of region

YES

• universities can be in knowledge advance of firms

• there can be low ability of firms to adopt

Supporting of existing university, establishment

or shift of the university to the un-advanced

region is good way for developing the region

NOT CLEAR Results

• there are examples when university has not bring any contributions

• there should be orientation on the support of the whole system (transfer centers,

capital…)

• it is especially the case of new types of universities ( especially business universities

not old research universities)

Source: REHÁK, Štefan Univerzita ako katalyzátor poznatkov v regiónoch In Úloha regiónov v poznatkovo založenej ekonomike 2004 p.290

2.1 KNOWLEDGE TRANSFER AND UNIVERSITY

The dissemination of knowledge acquired through research is one of main functions of any research university In recent years advanced economies have placed great emphasis on transfer of new technologies and knowledge to the industrial sector The main goals of these

activities are increased competitiveness, regional development, and the general prosperity: quality research universities are an important link in the chain

“Education→ science, research and development → investment → transfer to industry → product”

Transfer of technologies and knowledge is one of the major sources for financing science and research outside the grant system of the state budget

2.1.1 From Technology Transfer to Knowledge Transfer

We describe the process “from technology transfer to knowledge transfer” especially

by taking ideas from LI-HUA’s paper on this issue that was presented at IAMOT

(International Association for Management of Technology) conference, Nancy, France in

2003 We think that in this paper is a sufficient explanation for understanding this process HUA uses ideas from more people and it supports his own contribution

LI-Technology transfers:

Technology transfer is a crucial and dynamic factor in social and economic development Technology has been transferred intentionally or unintentionally Sometimes, a generator of technology has acquired a competitive advantage by undertaking the dissemination of products, processes and maintenance systems (BRADBURY in LI-HUA,

2003, p.1) Sometimes, a recipient (or transferee) has done much better than the original innovator For example, it was the Chinese who invented gunpowder, but the Europeans who used it and developed it for world conquest Sometimes the technology has taken a new form

at each transfer, absorbing local traditions of design or local market preferences and there is value added during the process of technology transfer

The two words “technology transfer” seem to convey different meanings to different people and different organisations Technology transfer is defined in the Work Regulations of the United Nations, as the transfer of systematic knowledge for the manufacture of a product

or provision of service (YU in LI-HUA, 2003, p.2) It has been defined in many other ways According to Abbott (in LI-HUA, 2003, p.2), it is the movement of science and technology from one group to another, such movement involving their use Traditionally, technology transfer was conceptualized as the transfer of hardware objects, but today also

often involves information (e.g., a computer software program or a new idea) that may be

completely devoid of any hardware aspects

From Technology Transfer to Knowledge Transfer

“Research into technology transfer has matured from the early period of emphasis on

the technology itself, through general management objectives to the current state of

development where interest has arisen in the appropriateness and effectiveness of the

technology transfer It has been identified that without knowledge transfer, technology

transfer does not take place as knowledge is the key to control technology as a whole”

(LI-HUA, 2003, p.2) Knowledge transfer is crucial in the process of technology transfer

Knowledge transfers

Knowledge transfer is about connection not collection, and that connection ultimately

depends on choice made by individuals (DOUGHERTY in LI-HUA, 2003, p2)

“It is worth noting that this form of transfer in particular may well be a ‘two-way

process’ between the transferor and the transferee Knowledge transfer is also an increasingly

popular term in the literature as writers attempt to highlight the human aspect of knowledge

management This natural transfer, or unstructured exchanges and informal exchanges, are

vital to a firm's success It is of great significance for an organisation to be able to capture and

use the knowledge inside managers' heads” (LI-HUA, 2003, p.2) MAITLAND (in LI-HUA,

2003, p.2) argues that the crucial factor in determining a company's competitive advantage is

its ability to convert tacit knowledge into explicit knowledge through organisational learning

Knowledge transfer is the two-way flow and uptake of ideas between the university

and the broader community This transfer should accept three principles:

1 creates intellectual capital in ways that mutually benefit the university and its external partners

2 linkages to the university’s teaching and research activities

3 responds to global, social, economic, environmental and cultural issues

Knowledge transfer covers myriad dealings between university and its external

partners, and creates benefits that flow in both directions as the community gains from the

expertise of the university’s staff and students, and the university becomes better informed by ideas and experiences from beyond its boundaries

Activities defined as knowledge transfer range from appearances in the media and at public forums to participation in bilateral projects, the commercial development of research, the application of expertise through partnerships and internships, and the inclusion of broader community influences in the curriculum to enhance the attributes of graduates We will discuss some more examples later

Whether the issue being addressed impacts at a local community or global level, the university’s contribution should be marked by its reputation for excellence and highest quality endeavours