University Industry Relation(in open innovation era)

Kazuyuki Motohashi

Professor, Department of Technology Management for Innovation, The University

of Tokyo

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Outline of Lecture

• What is “Open Innovation”? And why is it relevant to technology transfer (from university) management?

• Survey of open innovation trends: a case of Japan (RIETI Survey on R&D collaboration)

• Understanding firm’s motivation for R&D collaboration• Technology management strategy in open innovation era:

industry variation

Open Innovation

“Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology” (Henry Chesbrough, UC Berkley)

Related Concept R&D collaboration, Joint venture, Licensing Technology market (via intellectual property right) Technology sourcing (via open market)

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What drives the trend from internal R&D to open innovation?

• Globalization and intense innovation competition: Catching up and growing importance of emerging economies (such as BRICs)

• Necessity of innovation speed in order to appropriate rents from R&D

• Importance of scientific knowledge for industrial innovation: particularly the case for bio-pharmaceuticals

• Institutional changes in science sector: PRIs and national university reforms (such as US in 1980’s, Europe and Japan in 1990’s)

Implications for Technology Licensing Management in University

• Very welcome!• But it is important to understand the firm’s

incentives for acquiring external technology (management of “boundary of firm”)– Changing firm’s needs for university technology

– Technology management strategy depends on to what extent your counterpart well manages open innovation

– The style of open innovation movement is quite heterogeneous and substantially different across technology fields

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High concentration of R&D activities

ToyotaHonda

Panasonic

Sony

Nissan

Takeda

Hitachi

Toshiba

Cannon

NEC

DensoNTT

FujitsuSharpFuji film

Daiichi Sankyo

AstellasEisai

Mitsubishi Elec.

Mitsubishi Chem.

Others

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Japan’s national innovation system

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RIETI’s Survey on R&D Collaboration

• Firm level survey on external R&D collaboration: business to business networks and university and industry linkages

• Data for 2003, 556 samples

• Survey items– Recent trend of external R&D collaboration and IPR licensing

– Factors behind R&D collaboration decision

– Managing the boundary of firm in R&D, internal R&D vs outsourcing

• Detail results are found as the following site http://www.rieti.go.jp/jp/projects/innovation-system/H15.html

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Japanese system is changing? From RIETI survey

Collaboration with Large firms

12.2

13.0

24.4

38.8

46.0

68.1

11.6

5.6

6.1

2.3

12.8

4.3

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 or under

21- 100

101- 300

301- 1000

1001- 2000

2001 or over

5 years agoPresent ( i ncreased)

Collaboration with small firms

14.9

11.0

16.5

25.2

22.0

51.4

4.2

5.7

4.1

10.3

13.3

5.2

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 or under

21- 100

101- 300

301- 1000

1001- 2000

2001 or over

5 years agoPresent ( i ncreased)

Collaboratio with universities

23.0

21.0

27.6

46.6

54.0

81.9

10.4

15.3

14.4

9.5

20.5

1.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

20 or under

21- 100

101- 300

301- 1000

1001- 2000

2001 or over

5 years agoPresent ( i ncreased)

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Understanding UIC activities

Fig. 2 Style of collaboration with university

0% 10% 20% 30% 40% 50% 60% 70% 80%

Use of patent

R&D service(eg. Testing)

Technology transfer

Training

Technology consulting

Research Grant

Contract research

Joint R&D

100 or less

101-300

300-1000

1000 or over

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Factors behind R&D outsourcingReasons why increasing R&D collaboration

67.9

38.1

41.8

14.9

2.2

29.9

8.2

3.0

59.6

27.2

55.1

21.3

16.9

2.91.5

48.5

60.3

41.2

29.9

5.9

51.448.6

36.7

5.5

9.76.7

2.9

11.0

3.7

24.5

8.35.9

4.4

2.0

24.8

10.1

6.46.4 5.5

29.4

0%

10%

20%

30%

40%

50%

60%

70%

Respond to intense R

&D

competition

Upgrade ow

n basictechnologycapability

Cost reduction of R

&D

Needs to access tobasic science

Policy push for

industry-science linkage

Shortage of R

&D

fund by own

Upgrading technology level

of counterparts

Success in past

collaboration projects

Important for technology

standard

Easy to access

counterpart information

Large firms

Small firms

Universities

PRIs

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Management of firm’s boundary in R&D

72.0

5.9

31.3

7.9

64.1

13.5

5.9

47.6

16.9

6.7 7.1

18.7

37.7

47.0

4.9

16.2

20.5

5.9

51.2 52.8

10.6

30.3

3.3

32.4

29.332.9

2.2

20.2

5.5

9.3

32.2

28.4

2.2

8.3

46.5

2.3

0%

10%

20%

30%

40%

50%

60%

70%

80%

Product D

evelopment

project

New

R&

D subject

R&

D related to

core technology

R&

D needing speed

Technology

frontier project

Core technology

Basic science

Cost reduction

project

Learning technology

Own R&DWith large firmsWith small firmsWith university

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Motivation and underlining hypotheses for econometric analysis

• Factors behing external R&D collaboration – Intense innovation competition?– Increasing complexity of innovation and the role of

scientific knowledge– Selection and concentration of R&D projects, but it

needs wider technological scope

• UIC’s impacts on research and production productivity: greater impact for small firms– Less Not-Invented-Here Syndrome– Focusing on more concrete project (short term benefit)

and greater pressure for commercialization

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Business Environment Change Related to R&D Strategy

4.5

11.5

11.9

16.7

22.3

29.5

37.9

59.2

66.9

0% 10% 20% 30% 40% 50% 60% 70%

Meet market needs

Shoten lead time

Explore new R&D theme

Focus R&D themes

Cost reduction

Commercialize own tech seeds

Shift to applied R&D

Upgrade basic R&D skills

Staff reduction

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Collaboration and R&D strategy

large firms SME and startups UniversitiesSME LF SME LF SME LF

Shorter development lead time ++ ++

Focusing R&D theme -- ++Reduce R&D cost +Reduce R&D staffs

Explore new technology seeds +++ ++more R&D for application and

development project++ ++

Improving basic technology capability --Market needs for R&D

Commercialization of tech seeds ++ ++ +

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UIC contents by firm size

Smaller firms collaborate with universities for development stage project, while larger firms prefer more fundamental oriented research projects

商品化時期（大学と連携した場合、従業員規模別）

19.4

13.5

5.4

3.0

10.3

61.3

56.8

51.8

43.9

28.2

37.5

12.9

16.2

32.1

34.8

43.6

43.8

9.1

10.3

9.4

5.4

7.1

9.1

7.7

9.4

8.1

3.2

3.6

3.2

0% 20% 40% 60% 80% 100%

20人以下

21 100～ 人

101 300～ 人

301 1000～ 人

1001 2000～ 人

2001人以上

1年以内 ２～３年程度先 ５年程度先 10年程度先 商品化は念頭においていない

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all all -1950 1951-70 1971-(1) (2) (4) (5) (6)

lrd 0.276 0.260 0.434 0.183 0.109(7.81)** (7.19)** (5.61)** (3.05)** (2.29)*

lemp 0.250 0.246 0.397 0.315 0.131(6.08)** (5.41)** (3.72)** (3.30)** (2.84)**

cord -0.030 -0.056 -0.131 0.146 -0.169(0.23) (0.45) (0.53) (0.67) (1.06)

univ1 0.377 0.355 0.203 -0.077 0.348(3.21)** (3.05)** (0.95) (0.33) (2.09)*

lage -2.402(4.81)**

lage2 0.360(4.86)**

Constant -1.683 2.302 -4.257 -1.188 0.439(7.10)** (2.57)* (8.51)** (2.83)** (1.30)

Industry Dummies yes yes yes yes yesObservations 450 438 168 134 136R-squared 0.62 0.64 0.77 0.55 0.49Absolute value of t statistics in parentheses* significant at 5%; ** significant at 1%

Research Productivity by Firm Age

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Scientific knowledge and fundamental science at universities and PRIs

Commercialization of new product

Research Lab.

Business development

SMEs Start-ups

Large firm

Commercialization of new product

Difference between large firms and SMEs

in university industry collaboration activities

Close to the

market

Scope of UICScope of UIC

Role of UIC in economic development : a case of PRC

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IT infrastructure(internet etc.) IPR PolicyLabor market institutions

Product marketcompetition

Financial marketcondition

Firm’s innovativecapability and networks

Universities Public research inst.

Spin-out firms

Innovations

Patent application by type

20Motohashi, 2008

Share of UIC patents by technology

21Motohashi, 2008

Regional Cluster PolicyA Case of Hsinchu Science Industrial Park (HSIP) in Taiwan

ITRI Universities

HSIP Internal Technology

Externality

Silicon Valley

Regional Proximity

International Human capital mobility

(Yang, Motohashi and Chen (2008)

Conclusion

• Growing trend of open innovation leads to increasing importance of UIC activities and university’s IP management.

• UIC activities spur SME innovation and network style innovation system.

• The role of university in NIS is important for developing countries, where technology level at private sector is relatively low.

• Technology development strategy at PRIs (public research institutions) is also important in technological catching up

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