Creating Wealth from Knowledge
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Creating Wealth from Knowledge

Meeting the Innovation Challenge

Edited by John Bessant and Tim Venables

This book illustrates that, although innovation has always mattered in economic development, simply increasing expenditure in creating knowledge may not be the answer: we need to look at the whole system through which such knowledge translates to value creation.
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Chapter 12: How Firms Source Knowledge from Universities: Partnering versus Contracting

Markus Perkmann and Kathryn Walsh


12. How firms source knowledge from universities: partnering versus contracting Markus Perkmann and Kathryn Walsh INTRODUCTION There is an expanding literature stressing the importance of external knowledge sources for firms. Research alliances and technological collaboration (Freeman 1991; Hagedoorn et al. 2000), open innovation (Chesbrough 2003), networked and distributed innovation (Coombs et al. 2003; Powell et al. 1996) are concepts used for describing and theorizing this phenomenon. Empirically speaking, several trends indicate that external sources of innovation are becoming more important in the overall innovation strategies of firms (Fey and Birkinshaw 2005): knowledge required for innovating is more dispersed within the economy, particularly in rapidly changing areas such as biotechnology (Chesbrough 2006; Powell et al. 1996); products include a broader range of different technologies (Iansiti 1997); some industries are moving towards open standards and modular innovation (Baldwin and Clark 1997), and outsourcing strategies have expanded to include innovation-intensive components and systems (Harabi 1998); and finally, the type of parties involved in innovation processes appear to become more disparate, as for instance in the case of user-driven innovation (von Hippel 1987). Links between firms and universities can be seen as part of this general scenario. The generic economic and social benefits of universities,1 such as educating cohorts of graduates, generating scientific knowledge and instrumentation,2 have long been recognized as an important source of industrial innovation (Pavitt 1991; Salter and Martin 2001). Yet recently, universities have made efforts to engage more directly in industrial innovation processes. Various...

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