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International innovation benchmarking and the determinants of business success

The promotion of innovation and venture capital is high on the policy agenda in Europe as attempts are made to close the perceived gap in productivity performance with the USA, says the CBR. In the UK a wide range of policy initiatives have been undertaken to promote the commercialisation of scientific and technical knowledge.

CBR research has shed new light on the role of universities in the UK innovation process. The findings from a new study comparing the innovative behaviour of small and medium-sized companies in the US and the UK show that the number of UK companies that have relationships with universities is greater than has previously been thought, and more than in the US.

The International Innovation Benchmarking research, being conducted by the CBR's Prof. Alan Hughes and Dr Andy Cosh in collaboration with Prof. Richard Lester of the Massachusetts Institute of Technology, is a study that will ultimately quiz four thousand companies of all sizes in the US and the UK to create the first comparison of their innovative efforts and activities, and their resulting performance.

The study is being funded by the Cambridge-MIT Institute, and found that two-thirds of UK companies are using universities and higher education institutions as sources of knowledge, compared to one-third in the US; and almost one in four UK companies (23 per cent) are running research collaborations with them, compared to around one in seven (14 per cent) in the US.

But crucially the research also goes on to show that while fewer American companies tap into the expertise of US universities, those that do have a more intense relationship with them, and value their collaboration more highly. In the study, thirty per cent of US companies rated universities as a "highly important" source of knowledge, compared with just thirteen per cent in the UK.

This may be because American companies place a greater premium on education generally. The study finds that more American company chiefs have a degree than their UK counterparts (eight out of ten CEOs and managing directors in the US, compared with five out of ten in the UK); and that they are twice as likely to have an MBA as their UK peers. The US also boasts a more highly qualified workforce, with one in five workers in the US having a first degree, compared with one in six here.

The findings, taken from a sample of 800 small and medium-sized companies who responded to the survey, raise some interesting issues for innovation policy makers. The final report from the 2003 Lambert Review of Business-University Collaboration suggested that the main challenge for the UK was "not about how to increase the supply of commercial ideas from the universities into business. Instead, the question is about how to raise the overall level of demand by business for research from all sources." But this new research suggests that stimulating demand for university research by industry may be difficult in a country where university expertise is not valued as highly as it is in the US.

The findings show a number of other revealing differences between smaller businesses in the UK and the US. Though the companies were matched by size and sector, American businesses spent significantly more on innovation activities such as in-house research and development (R&D); acquiring patents and licenses (US companies spent 40 per cent more on this than their UK counterparts); innovation-related market analysis; and purchasing specialised services, such as patenting advice.

The findings also show that though fewer US companies collaborate with universities, they are more likely than their UK counterparts to collaborate with early-stage technology based companies.

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The Centre for Business Research (CBR) is an independent research institution within the University of Cambridge. For more details visit http://www.cbr.cam.ac.uk/research