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Does university research benefit a firm’s R&D?
Pharmaceutical and biotech firms rely on knowledge that exists outside the boundaries of the firm in their own research and development efforts. To better understand this knowledge exchange, Kira R. Fabrizio, an assistant professor of organization and management at Goizueta Business School, set out to do an empirical evaluation that explores which firm activities help facilitate that transfer of knowledge from outside the firm boundaries, in this case from universities, into the firms for use in research.
Fabrizio constructed a data set of eighty-three firms in the biotech and pharmaceutical sectors during the period of 1976-1995. Through this cross-firm analysis, Fabrizio was able to determine the relationship between firm research activities and the citation of published scientific research in a firm’s inventions, as well as the speed with which a firm is able to exploit existing knowledge in new, patented inventions.
The result is her paper, “Absorptive Capacity and Innovation: Evidence from Pharmaceutical and Biotechnology Firms,” in which she discusses the benefits accruing to firms tapping into university science. “I theorize that it facilitates their search process for innovation,” explains Fabrizio. “They’re able to access new knowledge otherwise unavailable to them, and potentially access it more quickly. I show that for at least this subset of firms, the firms absorbing more knowledge from universities, and innovating more quickly on existing knowledge, have higher adjusted market values. They are reaping measurable benefits,” adds Fabrizio.
Fabrizio’s study shows that scientific research at universities doesn’t automatically spill over into firms. Firms should therefore make purposeful investments that will allow them to take advantage of university science. “By building up the collaboration networks with university scientists or by building up their internal knowledge and abilities for research, they are able to take advantage of scientific knowledge generated at universities,” notes Fabrizio.
For those seeking to limit the interaction between industry and university, Fabrizio warns, “The results here suggest such action could either slow down industry innovation or prevent some of the innovation currently going on.”
For the full story, see Knowledge@Emory at http://knowledge.emory.edu and go to the Innovations and Entrepreneurship category. Non-registered users should click on “sign up” on the homepage for free registration.
—Diana Drake