The purpose of this chapter is to analyze the public research system and policies that the United Kingdom has implemented to support university–industry knowledge transfer in order to leverage public research for innovation and economic growth. The chapter discusses the evolution of universities and public research institutes in the United Kingdom and both the supply-side and demand-side policies implemented in support of university–industry knowledge transfer. The chapter examines the various knowledge transfer activities, with particular focus on research commercialization activities, in universities and public research institutes and compares their performance in terms of commercialization success. It also discusses the private sector’s demand for university knowledge and the practices that universities have set up for management of their knowledge transfer activities. The chapter concludes with lessons that can be drawn from the UK case study of its policies and practices in knowledge transfer.

This chapter shows that implementing similar policies supporting the transfer of knowledge from public research to industry in countries with different innovation systems requires different sets of complementary policies. Drawing on six case studies, which range from high- (UK, Germany, Republic of Korea) to middle-income countries (China, Brazil, South Africa), this chapter describes the process of policy convergence and why countries might differ substantially in their approach. In high-income countries with mature national innovation systems, the adoption of Bayh-Dole-inspired legislation meant that research expected to produce patents was incentivized and preferred over other types of commercialization. The policy challenge here is to ensure all channels of knowledge transfer are appropriately nurtured. In middle-income economies, where knowledge ecosystems were less mature, the Bayh-Dole legislation resulted in a process of institutional reform, such as incentives to researchers, changing the legal structure of the university incomes and the use of public research institutes. Thus, for knowledge transfer policies to be successful, it is crucial to identify the appropriate complementary measures.

Public research and development plays a crucial role in technological advances and development and indirectly contributes to economic growth. Business sectors depend on public research to produce innovations of commercial significance, and many countries have, since the late 1970s, changed their legislation to regulate or facilitate IP ownership and promote increased commercialization of the results of public research. These “third mission” policies were intended to increase the economic effect of public investments in research and development. Maximization of the economic impact of academic research will happen only when the private sector uses and builds on research done in the public sector and when industrial research complements and also guides basic research. The chapter explores cross-country trends in public research and development and outlines the challenges faced by high, middle- and low-income countries in increasing their research and development and knowledge transfer capabilities.

Approaches to explaining the internationalisation of emerging market MNEs and the relevance of value chains

What motivates emerging market firms to venture abroad? A leading approach, the ownership location internalisation (OLI) theory (Dunning, 1988), explains the internationalisation activity of multinational corporations (MNCs) as their attempts to extend their ownership advantages (e.g. proprietary access to a superior production technology or a valuable brand) to overseas markets by exploiting location advantages (locating abroad to access low cost inputs or better serve local markets) and internalising the efficiency gains from economies of scale and scope by integrating the firm’s activities across borders. In short, FDI enables firms to exploit their existing firm-specific assets.

This explanation has limited traction when analysing the internationalisation activity of MNEs from emerging markets (EMs). As latecomers, multinational enterprises from EMs are often more competitive in terms of cost of labour and natural resources compared to mature MNEs from developed markets (Ramamurthi and Singh, 2009a). However, many of these companies lack global experience and so have weak technological and innovation capabilities, have inexperienced managerial and professional expertise and show poor governance and accountability by international standards (Luo and Tung, 2007). Furthermore, to the extent that the cost advantages are generic to all suppliers from other EMs, we can expect such advantages to dissipate over time as the global market shares to EM firms expand and bid up wages in these economies. Thus, Rugman and Li (2007) have questioned the long-term sustainability of such internationalisation based on cost advantages for Chinese firms in the absence of clear ownership advantages.

THE CAMBRIDGE PHENOMENON: IS IT SILICON FEN?

The “Cambridge Phenomenon” was a term coined by the firm of Segal, Quince and Wicksteed (SQW) in 1986 to describe the mushrooming of more than 300 high-technology firms in the Cambridge area, after the Cambridge Science Park received its first occupant in 1976. This number has increased steadily through the 1990s and more than tripled in 1999. By the end of 1999, the number of high-tech establishments had grown to 959 in all, employing more than 31,000 people. In terms of its economic impact on the region, the Cambridge area accounted for 60% of all high-tech establishments and more than 70% of all high-tech employment in Cambridgeshire County.

Cambridge has also developed an array of institutions, university-industry links, and local technology venture capital that has favored and sought to nurture entrepreneurship in science-based industries. In these institutional developments, Cambridge is unique of all the other information technology (IT) clusters that followed in the wake of Silicon Valley's success. No other European region has shown the same scale of entrepreneurial activity in science-based sectors as Cambridge or can boast the emergence of similar institutions without any state intervention. Furthermore, the University of Cambridge has been a key player in these institutional developments. These qualitative features of the growth of Cambridge have prompted several comparisons with Silicon Valley.