Howells Et Al 1998 - Industry Academic Links in UK

Higher Education Funding Council for England
Policy Research in Engineering, Science & Technology

Scottish Higher Education Funding Council
Higher Education Funding Council for Wales
Industry-Academic Links in the UK
December 1998
HEFCE ref 98/70
Jeremy Howells, Maria Nedeva and Luke Georghiou

With assistance from Janet Evans and Susan Hinder
PREST
University of Manchester
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Study Steering Committee
Mr Paul Hubbard, HEFCE (Chair)

Mr Derek Barker, OST
Ms Gill Davenport, HEFCE (Secretary)
Mr Adrian Hill, University of Bristol
Mr Robin Jackson, CVCP
Mr Geraint Jones, University of Wales, Cardiff
Mr Iwan Jones, HEFCW
Ms Breda McMillan, Scottish Enterprise
Dr Michael McPartlin, SHEFC
Dr Shekhar Nandy, HEFCE
Mr Brian Ramsden, HESA
Dr Philip Wright, CBI
Acknowledgements
The authors would like to acknowledge with gratitude the great efforts made by the
survey respondents and interviewees to answer questions which often went well
beyond the scope of the data they normally keep. The help and advice of the Steering
Committee throughout the study is also acknowledged.
ISBN 1 902369 033
2
Contents
List of Figures 8
Key Findings 11
1. Introduction 13
1.1 Aims and objectives 13
1.2 Industry-academic links: historical context 14
1.3 Policy initiatives to stimulate HEI-industry linkages 15
1.4 Report structure 16
2. Methodology 17
2.1 Study elements 17
2.2 Scope of the study 17
2.3 Response rates 18
3. Research and Consultancy Links 19
3.1 Overview 19
3.2 HEI-Industry links: main trends 19

3.2.1 Type of collaboration 21
3.3 Motivations and barriers to industry-academic collaboration 21
3.4 Country and regional perspectives 25
3.5 Industry-academic links and type of institution 28
3.6 Problems and success factors in managing research and consultancy links with
industry 29
3.7 Trends and issues: adequate recompense, incentives, and influence on intellectual
directions 30
4. Commercialisation of Results 32
4.1 Introduction 32
4.2 Intellectual property 32
4.3 Spin-outs and exploitation companies 35
4.4 Science parks and incubator units 36
4.5 Company laboratories on campus 37
3
4.6 Managing commercialisation 38
5. Links in the Process of Teaching and Training 39
5.1 Introduction 39
5.2 Postgraduate teaching 39

5.2.1 Policy initiatives 39
5.2.2 Trends in postgraduate teaching: close industry involvement 41
5.3Undergraduate teaching 43
5.4 Short courses and distance learning targeted to industry 44
5.5Initiation of links in education and training 46
5.6 Success factors and barriers in providing CET for industry 47
5.7 Trends and issues: flexibility, competition, collaboration and shifting boundaries 48
6. Staff Support and Funding 51
6.1 Overview of funding support 51
6.2 Industry sponsorship and work experience 52
7. Structures and Policies to Support Linkages with Industry 54
7.1 Introduction 54
7.2 Frameworks and procedures for IPR and technology management 54
7.3 Frameworks and procedures for spin-out companies 56
7.4 Mission statements 57
7.5 Level at which links are initiated and managed 57
7.6 Links with intermediaries and consortia: one-to-one to complex relationships 61
61
8. Conclusions and Key Issues 62
8.1 Introduction 62
8.2 Overall conclusions 62
References and Bibliography 67
Annex 1: Policy Initiatives Associated with Developing HEI-Industry

Linkages 74
4
LINK 74
Foresight 74
Joint Research Equipment Initiative 75
HEFCE incentives 75
Faraday Partnerships 76
University Challenge Fund 76
The University for Industry and company universities 76
Other Research Council schemes 78
National and regional initiatives 79
Annex 2: Research Instruments and Procedures 80
Response rates 81
Questionnaires 82
Annex 3: HEIs and the issue of Intellectual Property Rights 83
Background 83
IPR and some associated problems 83
Annex 4: Teaching and training policy initiatives 85
Teaching Company Scheme 85
Co-operative Awards in Science and Engineering 86
Other postgraduate schemes 86
Annex 5: HEI Frameworks for Industry Collaboration and Linkage 88
Introduction 88
Research and liaison offices 88
Continuing education offices and ‘lifelong learning’ 89
Changing organisational and management structures 89
Mission statements and HEI strategy toward local and regional economic
development 90
Initiation and management of industry links by HEIs 92
Research clubs 97
5
HEI intermediary and consortia links 98
Annex 6: Regional Classifications 100
Annex 7: Abbreviations and Acronyms 101
Annex 8: ILO and CEO Questionnaires 104
List of Tables
Table 1: UK higher education institutions by country and type of

institution 18
Table 2: Distribution of responses by country and type of questionnaire

18
Table 3: Research grant and contract income of UK HEIs by year and

source 19
Table 4: UK institutions accounting for 33% of the total university

research grant and contract income from industry 20
Table 5: Factors motivating links with industry in terms of research

contracts and income ranked by mean value (all UK HEIs) 22
Table 6: Factors motivating consultancy links with industry ranked by

mean value (all UK HEIs) 22
Table 7: Factors in motivating consultancy links with industry ranked

according to mean value by country (all HEIs) 23
Table 8: Barriers to establishing research links with industry ranked by

mean value (all UK HEIs) 23
Table 9: Barriers to establishing research links with industry ranked

Table 10: Barriers to establishing consultancy links with industry ranked

according to mean value (all UK HEIs) 24

6
Table 12: Research grant and contract income by source and country (all
UK HEIs, 1996-97) 26
Table 13: Research grant and contract income by source and English
region* (1996-97) 26
Table 14: Proportion of research income by type of firm and country 27
Table 15: Proportion of research income by type of firm and region 27
Table 16: Proportion of HEIs receiving research and contracts income

from local firms by type of firm 28
Table 17: Proportion of research income by type of firm and type of

institution 28
Table 18: Problems in maintaining existing relationships with industry 29
Table 19: Factors associated with successful relationships with industry

30
Table 20: Patent, licence and option activity in UK HEIs 33
Table 21: Patent, licence and option activity in UK by year and country 33
Table 22: IPR income generated by UK HEIs 34
Table 23: Total spent by UK HEIs on filing and maintaining patents 34
Table 24: Areas of expertise of HEI-owned companies 36
Table 25: Problems associated with commercialisation of research

results 38
Table 26: New CASE studentships in 1995-96 and 1996-97 40
Table 27: Distribution of CASE studentships across subject areas 40
Table 28: Institutions having established mechanisms for industrial

sponsorship of undergraduate, masters and doctoral students 42
Table 29: Proportion of externally supported courses designed jointly

with industry by source of support 42
Table 30: Postgraduate and undergraduate courses designed jointly with
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industry by academic area 43
Table 31: Percentage of revenue from continuing education and training

for industry by firm size and country 45
Table 32: Percentage of revenue from continuing education and training

for industry by firm size and type of institution 45
Table 33: Factors for initiation of new education, continuing education

and training projects with industry ranked according to mean rating 46
Table 34: Success factors in providing continuing education and training

for industry by UK HEIs 47
Table 35: Barriers to providing continuing education and training for

industry by UK HEIs 48
Table 36: Expenditure of research grant and contract income on staff by

source (1995-96 and 1996-97) 51

source and type of institution (1996-97) 51

source and country (1996-97), percentages 52
Table 39: Academic staff by primary source of income (1996-97),

percentages 52
Table 40: Management and co-ordination of intellectual property and

spin-out companies 54
Table 41: Usefulness of main HEI channels for forming new research and
consultancy links 59
Table 42: Proportion of value of equipment-related and consultancy

services managed at each level 60
Table 43: Proportion of value of equipment-related and consultancy

services managed at each level by country 61
List of Figures
Figure 1: Distribution of research grant and contract income from UK

industry (all HEIs, 1996-97, £k) 20
8
Figure 2: Distribution of research grants and contract income by type of
industrial collaboration (1996-97) 21
9
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Key Findings
There has been a spectacular growth in recent years across the United Kingdom in the
scale, number and variety of linkages between higher education (HE) and industry.
These linkages are manifested in research collaboration, provision of consultancy
services, market transactions in the commercialisation of research, and industry’s
growing involvement as an interactive user of all types of teaching and training.
Through surveys of industrial liaison officers and continuing education officers,
interviews with senior staff, and compilation of available statistics, this report
describes the status and trends of these relationships.
• Research funding by industry has grown by 30% over the past three years and by
11% in the past year. However, the level of income in 1996-97 of £183 million is
highly concentrated, with seven universities accounting for one-third of the total
and half of universities for 8%. Higher education colleges account for only £5
million of research funding from industry.
• Access to research funding is seen as the prime motivating factor by higher

education institutions (HEIs), but only as a means to pursue goals which fulfil the
aims of both academic and industrial partners. Mutual trust and a professional,
business-like approach by the academic partners are seen as the keys to success.
Keeping the linkages over time is dependent upon good personal relationships and
avoiding a divergence of objectives during projects. Motivating individual
academics to work more with industry requires an incentive structure of similar
weight to that of the Research Assessment Exercise.
• HEIs are recognising the need for closer involvement with their local and regional
economies and in particular the small and medium-sized enterprises (SME) sector.
Local linkages with industry (within 50 miles) are principally with small firms,
while linkages with large firms are less frequently locally based. Hence, 72% of
respondents reported that over half their links with large firms (over 500
employees) were non-local; conversely, 75% reported that over half their links
with micro-firms (fewer than 50 employees) were with local companies. Size of
firms was also a source of differences around the UK: Welsh HEIs were more
dependent upon research income from large UK firms than other UK HEIs,
whereas Scottish HEIs estimated that SMEs provided one-third of their industrial
income.
• Income from intellectual property rights appears to be growing, with £11.1 million
reported by 31 institutions in 1996-97. This represents an increase of 58% over
two years. The significant investment being made in securing intellectual property
rights suggests that larger income streams are anticipated in the future.
Commercialisation is also manifested by the growth in the number of spin-out
companies wholly or partly owned by HEIs. Half of the responding HEIs had such
companies to exploit their research, with 223 firms identified in total. Spin-out
companies in which the institution had no holding were identified by 44% of
respondents. Lack of seedcorn capital is the principal constraint upon
commercialisation.
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• HEIs are making increased efforts to meet industry’s needs for training. At
postgraduate level, 86% of respondents had work and project placements for their
students; half had industrial sponsorship arrangements for their masters (58%) and
PhD (54%) students; and 53% of responding institutions had masters courses
specifically designed to meet the needs of a firm or group of firms. Industrial
placements for undergraduates are offered by 92% of respondents, and 73% offer
sandwich courses (though such placements are becoming harder to arrange).
• Provision of continuing education and training (CET) is highly competitive, with

competition coming both from within and beyond the HE sector. Flexible delivery,
close relationships with clients and niche strategies for specialised courses are
generally seen as the keys to success. Universities receive half of their CET
income from large firms, while HE colleges receive 92% from SMEs.
• HEIs are forming consortia to identify, co-ordinate and deliver research and
training services to industry. These consortia are predominantly regional or local
and generally provide an enhanced profile for participants. In general, institutions
that are similar to each other are more likely to collaborate. HEI-industry
partnerships are also developing more widely and evolving from one-off contracts
to long-term strategic relationships, deeply embedded.
• There is increased competition among HEIs for industrial resources, driven partly
by the matching-funds requirements of many public initiatives. In teaching, new
technology has helped the competitive arena to move beyond regional boundaries.
HEIs also have a more competitive relationship with industry through the desire to
raise revenue from the knowledge they generate. But it will take some time before
there is universal acceptance of a market for a previously free commodity.
However, both HEI consortia and HEI-industry partnerships offer a rich and
promising route for closer and more innovative industry-academic relations.
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1. Introduction
1.1 Aims and objectives
Universities and other higher education institutions (HEIs) across the developed
economies of the world have been facing major changes during the last decade,
particularly in relation to their roles and responsibilities in national systems of
innovation. During this period, key studies have drawn attention to the emergence of
new types of relationship in the process of knowledge production (Gibbons et al,
1994). They have charted the developing relationship between HEIs, industry and
government in terms of a ‘triple helix’ which takes into account the expanding role of
the knowledge sector in relation to the political and economic infrastructure of society
(Leydesdorff and Etzkowitz, 1996).
This report seeks to assess these changes in detail, particularly within the United
Kingdom (UK) context, and to highlight some of the major issues and trends that
HEIs in the UK are facing at the end of this century and the beginning of the next in
terms of their relationship with industry.
The focus of the report is on the role of HEIs in technology transfer and the
innovation process, and from this their wider contribution to national and regional
economic development. Three main dimensions of the relationship with industry are
examined: collaboration through research and consultancy; HEIs’ commercialisation
of their research; and linkages made in the context of teaching and training. Cutting
across all three of these dimensions are two horizontal themes: the effect of public
policies designed to support the higher education (HE) system, particularly policies
directed at stimulation of the relationship with industry; and changes in the broader
operating environment for HEIs which have impacted upon academic-industrial
linkages. The findings are based on a survey of the UK HEIs’ links with industry,
sponsored by the Higher Education Funding Council for England (HEFCE), the
Higher Education Funding Council for Wales (HEFCW) and the Scottish Higher
Education Funding Council (SHEFC), and carried out by PREST during 1997-98.
The principal objectives of the study are to provide:
i) a comprehensive picture of direct and indirect interactions between all UK

HEIs and industry;
ii) information enabling the HEIs to benchmark their individual activities in this
area.
The report builds upon two previous surveys undertaken by Tartan Technology on
behalf of the Innovation Unit of the Department of Trade and Industry (DTI).
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1.2 Industry-academic links: historical context
Within Europe at least, the UK higher education system, has been at the leading edge
of several developments in terms of the relationship with industry. As this report will
demonstrate, however, this advance has not followed a single or direct pathway, but is
the summation of a wide variety of initiatives at every level. As Halsey (1995, p 302)
put it:
‘British higher education has undergone a more profound reorientation than

any other system in the industrialised world.’
In some senses, academic-industrial links are a long-standing feature of the system.

This is exemplified by the establishment of the ‘redbrick’ universities in the industrial
heartlands of Britain in the mid and late nineteenth century (Manchester being a
leading example). These universities were founded on the principle of industry and
academia working together not only for scientific and technical advancement in an
academic sense, but also for the benefit of the local industry and economy. The origin
and core task of British civic universities was to provide a technically educated
workforce (Driver, 1971, p 42). Later on, such thinking led to the creation of the
polytechnic system within the UK, geared to the skill and technical requirements of
British industry.
Industry-academic links thus go back a long way, to the late nineteenth century, and
indeed represented the main mechanism by which industry funded research
(Sanderson, 1972; Meyer-Thurow, 1982; Liebenau, 1984; Swann, 1989; Barnett, C,
1986). But it has only been since the 1970s that the industrial and policy significance
has become fully recognised. Much of this renewed interest came from the United
States (USA) (see, for example, the review by Peters, 1989) where a number of
universities had developed close links with industry.
These linkages resulted arguably from four main mechanisms and sources. Firstly,
through informal contacts and spin-outs from university departments; secondly, from
contract and collaborative research performed by universities on behalf of industry;
thirdly, as a result of property-led initiatives in the form of science parks; and fourthly,
via the commercial exploitation of university research through the management and
licensing of intellectual property rights (IPR). Europe in general, and the UK in
particular, saw the United States as being at the forefront of the growth and
development of industry-academic linkages. New developments and mechanisms
furthering university-industry links in the USA were closely monitored and often
adopted in the UK. The 1980s was a particularly significant decade during which, in
1985, the right to exploit research results through intellectual property was transferred
from the British Technology Group to academic institutions (see Section 4.2). Partly
to manage this process and partly to gain a share of the increasing market for research
funding, institutional mechanisms began to appear in the academic system. A survey
by PREST in 1989 found that 60 industrial liaison offices had been founded in UK
universities within the preceding five years.
Today it is taken for granted that universities and other higher and further education
(FE) institutions have a role in supporting innovation and technology transfer in their
local and national economies. But the existence of this relationship has also
14
introduced tensions and challenges which have to be overcome. The first group of
tensions again go as far back as the nineteenth century, when some academics were
concerned that research collaboration with industry was against the central ethos of
universities: undertaking fundamental research and the education of students. They
feared that links with industry could detract from this overarching mission of
universities and individuals working within them, and moreover could have undesired
side-effects. These centred on restrictions and distortions in the free flow of
information and materials among the academic community. When individuals or
departments within institutions enter research collaborations with firms, they usually
have placed upon them arrangements constraining the type, amount and destination of
information disseminated. This problem is also seen from the other perspective, that
potentially valuable intellectual property may be damaged by premature disclosure of
scientific discoveries.
A second major group of tensions arise from the possibility that staff may be
distracted from their academic functions by too much industry-directed work
(Organisation for Economic Co-operation and Development (OECD), 1970, p120). In
the increasingly busy life of the academic in the late 1990s, competing demands upon
time are a major constraint on the ability to develop and maintain external linkages.
As this study will demonstrate, the strongest and most productive relationships with
industry are founded upon HEIs doing what they are best equipped to do, that is
pursuing excellence in research and teaching, rather than attempting to duplicate the
functions of industry. The necessary cultural shift comes in terms of being able to
understand the needs of industry and provide an interface which allows the swift and
effective flow of knowledge and people to their most productive use.
1.3 Policy initiatives to stimulate HEI-industry linkages
Policies to promote HEI-industry linkages can be seen as a cumulative process in

which new models have developed over the past three decades without necessarily
displacing those which went before. Thus an initial situation of informal linkages and
occasional bilateral contracts was supplemented by specific policy measures from the
1970s onwards. These measures included the concept of ring-fencing areas of
research deemed to be of particular relevance to industry, and promoting them with
additional resources and management support. An early manifestation was the
Directed Programme. Also dating from that period are two schemes designed to
support industrially relevant training: Co-operative Awards in Science and
Engineering (CASE) studentships and the Teaching Company Scheme (described in
detail in Annex 4). During the 1980s, beginning with the Alvey Programme and Joint
Opto-electronic Research Scheme, the mechanism of collaborative research between
universities and industry was introduced, and continues to the present day in the form
of LINK programmes (Annex 1) and through participation by UK HEIs and industry
in the European Union’s (EU) Framework Programmes. The 1990s have seen a
broader effort to marshall academic research towards support for competitiveness and
quality of life through the Foresight Programme and redefined missions for the
Research Councils. Most recently the exploitation interface has been directly
addressed by the announcement of the University Challenge Fund. Current schemes
are outlined in more detail in Annex 1.
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1.4 Report structure
After a review of the methodology used to collect the information presented in this
report, Section 3 presents the main findings about research and consultancy links,
covering industry funding of HEIs and motivations for and barriers to collaboration.
Data are analysed by country, region and type of institution. The section concludes
with a discussion of the problems and success factors which are revealed. Section 4
moves on to present findings on commercialisation of HEIs' research results, covering
intellectual property, spin-out companies and HEI-owned exploitation companies,
science parks and incubator units, and company laboratories on campus. In Section 5,
attention switches to the linkages with industry in the context of teaching and training.
A brief review of policy initiatives designed to support the development of such links
is followed by a review of postgraduate and undergraduate teaching and short courses
and distance learning. The section concludes with a consideration of success factors
and problems encountered, and a discussion of emerging trends and issues. Section 6
briefly presents findings on support for HEI staff from industry. Section 7 goes on to
examine HEI structures and policies to support linkages with industry, including the
role of research and liaison offices, continuing education offices, and changes in
management and organisation to accommodate and facilitate links. Also addressed are
frameworks and procedures for the management of intellectual property and spin-out
companies. The role and relevance of intermediary bodies are considered. Section 8
concludes the report with a discussion of key issues raised.
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2. Methodology
2.1 Study elements
To meet its objectives, the study of UK HEIs’ links with industry was designed to
include five main elements:
a) a comprehensive survey of industrial liaison officers (ILOs) (or equivalent) in UK

universities and higher education colleges;
b) a comprehensive survey of continuing education officers (CEOs) (or equivalent)

in UK universities and higher education colleges;
c) face-to-face semi-structured interviews with continuing education officers in a

selected sample of HEIs representing the different types of institutions;
d) face-to-face interviews with senior management (mainly vice-chancellors) in a

selected sample of HEIs representing the different types of institutions;
e) secondary analysis of data collected by the Higher Education Statistics Agency

(HESA) and other sources.
2.2 Scope of the study
All universities and higher education colleges in the UK (Table 1) were included in
the scope of the study. The HEFCE, HEFCW and SHEFC provided lists of
universities and HE colleges. During the initial stage of the study, all relevant
universities and HE colleges were contacted and institutional points of contact
identified. In most cases the institutional points of contact were the industrial liaison
officers (or equivalent) and the continuing education officer (or equivalent), who were
also the best positioned and most competent persons to answer the survey
questionnaires. Several respondents noted that the required information had to be
collated from multiple sources within the institution. In some cases, senior academic
staff assumed overall responsibility for the institutional response. Initially, all
universities and HE colleges agreed to take part in the study, but some later declined
to respond on the grounds of lack of activity in the respective areas of interest. It is
worth noting that this study is the first to include the higher education colleges in its
scope. The study collected information about the academic years 1995-96 and 1996-
97.
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Table 1: UK higher education institutions by country and type of institution1
Country University HE College Total
England 86 79% 50 78% 136 79%

Scotland 13 12% 9 14% 22 13%
Wales 8 7% 5 8% 13 8%
Northern Ireland 2 2% 0 0% 2 1%
Total 109 100% 64 100% 173 100%
Source: Funding Councils
2.3 Response rates
For the purposes of this report, 108 responses from ILOs (62% response rate) and 99
responses from CEOs (57% response rate) have been used. Expressed as institutional
coverage, the overall response rate is 72% whereby 49% of all HEIs replied to both
questionnaires, 14% replied only to the ILO questionnaire and 9% returned only the
CEO questionnaire. Universities responding to the ILO survey together account for
79% of income from UK industry, according to HESA statistics. On the other hand,
71% of the non-respondents account for under 5% of UK industry income. No attempt
is made in the report to extrapolate findings to the whole population of institutions but
it may safely be assumed that responses based upon the proportion expressing a view
are representative of those with experience of collaborating with industry in research
and consultancy. For responses which depend upon aggregate financial data, the
significance of missing institutions should be borne in mind. The distribution of
responses by country and type of questionnaire is presented in Table 2.
Table 2: Distribution of responses by country and type of questionnaire
Country ILO returns CEO returns

England 83 77% 74 75%
Scotland 15 14% 15 15%
Wales 9 8% 9 9%
Northern Ireland 1 - 1 1
Total 108 100% 99 100%
Response was variable to individual questions. In general, closed questions and those
requesting comments or opinions were answered by almost all respondents. Requests
for financial data posed much greater difficulty for respondents. A number reported
that they were unable to break down information in the ways requested because it was
not recorded in an appropriate format. Others had no centralised records and were
unable to retrieve information from their component departments.
CEOs in nine institutions and senior academic staff in eight (seven of whom were
vice-chancellors) were interviewed.
Annex 2 provides a more detailed description of the methodology and response rates,
and examples of the questionnaires and interview guides.
1
The number of HEIs in this and other surveys varies slightly from year to year, principally as a result
of mergers and changes in the status of institutions.
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3. Research and Consultancy Links
3.1 Overview
Research grants and contract income received by HEIs in the UK continued to grow
during the period 1995-96 to 1996-97 by 5.7% from £1.55 billion to £1.64 billion at
current prices, reflecting a slight increase in real terms (Table 3). Income from UK
industry amounted to some 11% of this total, at £188 million in 1996-97. It grew by
nearly 10.8% at current prices from 1995-96 to 1996-97, nearly double the overall
growth rate (although because its absolute share was small relative to the absolute
total its overall percentage share grew only from 10.87% to 11.45%). Data for the
year 1994-95 indicate that research and contract income from UK industry was £145
million, indicating a growth rate of 29.6% at current prices over three years. Income
from overseas, which includes a substantial amount of funding by foreign firms of
academic research in the UK (and covering sources from both the European Union
and elsewhere in the world: ‘EU other’ and ‘Other overseas’ categories), rose at an
even higher rate of 11.7% between 1995-96 and 1996-97 to some £91.4 million.
Table 3: Research grant and contract income of UK HEIs by year and source2
UK OST/ UK UK EU EU Other Other Total

Industry Research based Central Govern Other overseas source
Councils Charity Govern ment
ment
1995-96 169 532 338 269 128 20 59 38 1,554
(£M)
% 11% 34% 22% 17% 8% 1% 4% 2% 100%
1996-97 188 525 364 297 135 23 69 42 1,642
(£M)
% 11% 32% 22% 18% 8% 1% 4% 3% 100%
Total 357 1057 702 566 263 43 128 80 3,197
Source: HESA statistics
In relation to overall income sources, therefore, industrial funding from both UK and
overseas sources appears to be becoming, both absolutely and relatively, more
important over time3. Industry is now a key funder and market for the research being
generated by HEIs across the UK.
3.2 HEI-Industry links: main trends
There is, however, significant variation between institutions in terms of how much
research grant and contract income they receive from industry (Figure 1). Thus the top
seven institutions in terms of UK industry research income, led by Cranfield
University and Imperial College, accounted for a third of the total research grant and
2
In this, and all other tables totals are based on actual rather than rounded sums for columns or rows as
appropriate.
3
Obviously these data only cover a short time period (two to three years), but growth does appear to be
robust over this time frame.
19
contract income received from UK industry by the 111 universities in the UK in 1996-
97 (Table 4). In terms of this income, the top 15 institutions accounted for half of UK
industry income, while the lower half collectively accounted for only 8% of the total
income.
Figure 1: Distribution of research grant and contract income from UK industry

(all HEIs, 1996-97, £k)
£k industry income
14000
12000 Source: HESA statistics
10000
8000
6000
4000
2000
0
HEIs
Universities HE Colleges
Table 4: UK institutions accounting for 33% of the total university research

grant and contract income from industry
Position Institution
1 Cranfield University
2 Imperial College
3 University of Cambridge
4 University of Leeds
5 University of Nottingham
6 University of Oxford
7 University of Southampton
By contrast, research collaboration with industry by higher education colleges is on a

much smaller scale with only 22 out of 64 higher education colleges actually
receiving any industrial research grant and contract income at all. The most significant
collaborators in this group of HEIs were agricultural or veterinary colleges, such as
the Scottish Agricultural College, the Royal Veterinary College and Harper Adams
Agricultural College. One institution, the Scottish Agricultural College, accounted for
40% of the UK industry income to this sector, and a further four colleges for 41%.
20
3.2.1 Type of collaboration
Figure 2: Distribution of research grants and contract income by type of

industrial collaboration (1996-97)
Regional
research
collaboration
5%
European
research
collaboration
27%
Research
commissioned
by industry
59%
National
research
collaboration
9%
Source: PREST HEI-industry links survey
Industrial funding for HEIs may be contracted directly or occur within the context of a
public initiative. Of the funding reported in the ILO survey (which, unlike HESA
statistics, also includes income from government attached to collaborative research
with industry), just under 60% is commissioned directly by industry, and a quarter
(27%) is via European-supported research collaboration with industry (Figure 2). A
further 9% and 5% respectively is associated with UK collaborative research
programmes such as LINK, and with collaborative research undertaken in the context
of regional collaborative arrangements.
3.3 Motivations and barriers to industry-academic collaboration
In relation to motivations for establishing industry-academic links in research4, not

surprisingly HEIs rated access to industrial funding as the main motivating factor
(Table 5). The next most important factor was that collaboration with industry was
seen as a strategic institutional policy objective. Also significant was that
collaboration with industry provided an exploitation outlet for research capabilities in
the ‘real world’ and, related to this, it provided an outlet for research results. Lower
down in terms of rating was that industrial links allowed access to complementary
expertise and to equipment. Political pressures to establish industry-research links,
4
For the purposes of this study the Frascati Manual definition of research and development (R&D) is
used ‘… creative work undertaken on a systematic basis in order to increase the stock of knowledge,
including knowledge of man, culture and society and the use of this stock of knowledge to devise new
applications. R&D is a term covering three activities: basic research, applied research and experimental
development.’
21
and the role of industry-research collaboration as a way of contributing to the local
and UK economy were rated the least significant motivation factors for research links.
Table 5: Factors motivating links with industry in terms of research contracts

and income ranked by mean value5 (all UK HEIs)
Rank Motive Mean
1 To access industrial funding 4.2
2 Collaboration with industry is a strategic institutional policy 2.6
3 To find an exploitation outlet for research capabilities 1.9
4 To access complementary expertise 1.6
5 To provide an outlet for research results 1.5
6 To access state-of-the-art equipment & facilities 0.9
7 To contribute to local economy 0.7
8 Government policy and/or political pressure 0.5
9 To contribute to UK economy 0.4
Country differences in answers to this question were not large, with the exception of
Welsh respondents who rated making a contribution to the local economy in fourth
position, and Scottish respondents giving a higher ranking to the effects of
government policy. In both cases the efforts of national development agencies are the
likely explanation. There was little difference in the rank ordering by universities and
HE colleges.
In terms of motivations for establishing consultancy links, all the factors listed above
received similar rankings in terms of the top three motives, although with slightly
more evenly spread ratings (Table 6). Contributing to the local economy was ranked
fourth in this case, higher than for research.
Table 6: Factors motivating consultancy links with industry ranked by mean

value (all UK HEIs)
Rank Motive Mean
1 To access industrial funding 3.2
2 Collaboration with industry is a strategic institutional policy 2.5
3 To find an exploitation outlet for research capabilities 2.0
4 To contribute to local economy 1.5
5 To access complementary expertise 1.3
6 To provide an outlet for research results 1.2
7 To contribute to UK economy 0.7
8 To access state-of-the-art equipment & facilities 0.6
9 Government policy and/or political pressure 0.4
Country differences were more evident in this case, with Scottish respondents ranking
at the top the importance of their strategic institutional policy (Table 7). Welsh and
English respondents rated the local economy higher than did those in Scotland.
5
Respondents were asked to rank their top five factors of the nine shown in Table 5 in order of
importance. To calculate the means shown, a score of five was given to the most important factor, four
to the next important etc. Items outside the top five were given a score of zero. Respondents were also
given the opportunity to write in other motives, but few did so.
22
Table 7: Factors in motivating consultancy links with industry ranked
according to mean value by country (all HEIs)
Motive England Scotland Wales
Rank Rank Rank
To access industrial funding 1 2 1
Collaboration with industry is a strategic institutional policy 2 1 2
To find an exploitation outlet for research capabilities 3 3 8
To access complementary expertise 5 6 5
To provide an outlet for research results 6 4 4
To access state-of-the-art equipment & facilities 7 9 7
To contribute to local economy 4 5 3
Government policy and/or political pressure 9 8 9
To contribute to UK economy 8 7 6
Again, there was little difference between the responses of universities and HE
colleges, though the latter reversed the order of the two highest ranked motives.
In the context of barriers to establishing working relations with industry in research,

the most important factor noted by HEIs was differences in the research objectives
between industry and academia (Table 8). Next followed that the research was often
not interesting for academics to work on, and lack of information about getting in
touch with relevant industrial partners for the research involved. Rated fourth was that
working with industry on research projects had no influence on institutional base-line
funding, followed by concerns about insufficient equipment and facilities in HEIs to
support collaboration. Lastly came four other barriers: lack of influence on academic
promotions; delays in the publishing of results when undertaking industrial research;
IPR restrictions (see Section 8) and, finally, HEIs not being seen as reliable partners
for research by industry.
Universities and HE colleges differed significantly in their ranking of barriers to

establishing research. HE colleges ranked insufficient equipment and facilities top
followed by lack of influence on base-line funding. They also ranked highly industry
not seeing HEIs as reliable.
Table 8: Barriers to establishing research links with industry ranked by mean

value (all UK HEIs)
Rank Barrier Mean
1 Differences in objectives 2.59
2 Work needed by industry not interesting 1.84
3 Getting in touch with relevant industrial organisations 1.81
4 No influence on base-line funding 1.56
5 Insufficient equipment & facilities 1.36
6 No influence on academic promotions 1.21
7 Delay in publications 1.18
8 IPR issues 1.14
9 HEIs not seen as reliable 0.99
There were also strong country differences in the perceptions of barriers, with Welsh
respondents ranking perceived lack of reliability of academic partners as the most
23
important, and also giving a high ranking (third) to insufficient equipment and
facilities (Table 9). The fact that work needed by industry was not interesting for
academics was given the lowest ranking, and was also somewhat lower (sixth) in
Scotland. Scottish respondents ranked IPR restrictions highly (third).
Table 9: Barriers to establishing research links with industry ranked according

to mean value by country (all HEIs)
Barriers England Scotland Wales
Rank Rank Rank
Differences in objectives 1 1 2
Work needed by industry not interesting 2 6 9
Getting in touch with relevant industrial organisations 3 2 5
No influence on base-line funding 4 5 6
Insufficient equipment & facilities 5 4 3
No influence on academic promotions 7 7 4
Delay in publications 6 9 7
IPR issues 8 3 8
HEIs not seen as reliable 9 8 1
Barriers to establishing consultancy links were ranked somewhat differently from

those for research, reflecting the lack of incentives for academics to pursue this line of
activity (Table 10). Hence, the fact that work needed by industry was not interesting
was ranked top, and the lack of influence on academic promotions rose to third in
importance, behind difficulties of getting in touch with suitable industrial partners.
Differences in objectives drops from first position for research to fourth position,
reflecting the different expectations that HEIs have for consultancy, which are more
likely to reflect industry’s needs.

according to mean value (all UK HEIs)
Rank Barrier Mean
1 Work not interesting 2.1
2 Getting in touch with relevant industrial organisations 2.00
3 No influence on academic promotions 1.8
4 Differences in objectives 1.7
5 No influence on base-line funding 1.7
6 Insufficient equipment 1.4
7 HEIs not reliable 1.1
8 IPR issues 0.8
9 Delay in publications 0.6
Again there were substantial national differences (Table 11), with Scottish
respondents ranking lack of influence on academic promotions top. Welsh
respondents once again highlighted industrial perceptions of lack of HEI reliability as
their top-ranked barrier. On the other hand, getting in touch with relevant industrial
organisations appeared to be much more of a problem for English respondents.
24
according to mean value by country (all HEIs)
Barriers England Scotland Wales
Rank Rank Rank
Work not interesting 2 2 6
Getting in touch with relevant industrial organisations 1 7 8
No influence on academic promotions 5 1 2
Differences in objectives 3 4 4
No influence on base-line funding 4 3 5
Insufficient equipment 6 5 3
HEIs not reliable 7 9 1
IPR issues 8 6 7
Delay in publications 9 8 5
3.4 Country and regional perspectives
A further contrast in the funding patterns for industrial research can be seen in the
country6 breakdown of industrial funding within the UK (Table 12). There were,
however, remarkably few differences across countries in relation to UK industry
funding compared with the overall distribution of the total funding for research grant
and contract income. England accounted for some 83% of UK industry and ‘EU other’
funding. Wales received some 3% of the total in these categories. Scotland had a
slightly higher share of UK industry funding (12.7%) compared with its aggregate
share (12.2%). Northern Ireland had a lower share of UK industry funding (1.2%) and
a higher share of ‘EU other’ funding (2.2%) than its overall share (1.6%). Where
English HEIs performed much better than expected was in relation to foreign industry
funding from outside the EU (‘Other overseas’ category), where it gained 87.8% of
total monies under this category, and where Wales (2.2%), Northern Ireland (1.0%)
and especially Scotland (9%) received lower shares.
There were also regional7 differences (Table 13). In relation to UK versus foreign
funding, the wider ‘Region 1’ South East area accounted for over three-quarters (77%)
of all foreign ‘other overseas’ (which includes industry funding) income flowing into
England compared with its 56% share for UK industry-funded monies (and compared
with its overall share of 60% for all research funding sources). Not unexpectedly,
HEIs from the ‘Region 2’ and ‘Region 3’ groups were more dependent on UK
industry income in relation to total industry and income sources than for HEIs coming
from the Region 1 area. HEIs from Region 2, covering the South West, and the East
and West Midlands had higher contributions than average from ‘EU other’ sources,
but much lower for ‘Other overseas’ sources. HEIs from Region 3 had a higher share
of their total income coming from ‘Other overseas’ than the Region 2 HEIs.
6
Defined here as England, Scotland, Wales and Northern Ireland.
7
see Annex 6.
25
Table 12: Research grant and contract income by source and country (all UK
HEIs, 1996-97)
UK OST/ UK- UK EU EU Other Other Total
Industry Research based Central Govern other overseas source
ment
England £M 155 439 310 238 110 19 60 34 1366
Scotland 24 66 42 37 16 3 6 5 200
£M
Wales £M 6 15 8 13 5 0.7 2 2 51
Northern 2 5 4 8 4 0.5 0.7 1 26
Ireland £M
Note: the total number of institutions is 143 in England, 22 in Scotland, 14 in Wales
and 2 in Northern Ireland
Table 13: Research grant and contract income by source and English region*
(1996-97)
UK OST/ UK UK EU EU Other Other Total
Industry Research based Central Govern other overseas source
ment
Region 87 254 212 123 64 9 46 22 817
1 (£M)
% 56% 58% 68% 52% 58% 50% 77% 67% 60%
Region 31 86 41 50 20 5 5 4 244
2 (£M)
% 20% 20% 13% 21% 18% 28% 8% 12% 18%
Region 37 99 57 65 26 4 9 7 306
3 (£M)
% 24% 23% 18% 27% 24% 22% 15% 21% 22%
Total 155 439 310 238 110 19 60 34 1366
England
% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Note: Region 1: London, South East, Eastern; Region 2: South West, West Midlands,
East Midlands; Region 3: Yorkshire and Humberside, Merseyside, North West and
North East.
Country variations were also revealed by estimates in the ILO survey of the
importance of different types of firms contributing industry funding to HEIs (Table
14). In relation to shares of research monies coming from foreign-owned firms,
English HEIs gained an estimated 20% share of their industry and contract money
from this source, compared with 15% for Scotland and only 3% for Wales. Welsh
HEIs were more reliant on large UK firms (employing over 500 workers) than either
England or Scotland, reflecting, at least in this respect, that its economy includes a
significant number of branch plants. If the shares of contributions from large UK and
foreign-owned firms are added up, however, England and Wales come out with the
same proportion of large company contributions, at 70%. Scotland is more reliant on
SMEs (firms employing fewer than 500 workers), which contributed over a third
(34%) of all their estimated industry income stream, although Wales had the highest
proportion of micro-firm (fewer than 50 employees) involvement.
26
In relation to the English regions, Region 1 HEIs estimated that they were involved
with a higher proportion of SMEs than did Region 2 and Region 3 HEIs (Table 15),
although HEIs from Region 2 estimated that they had the highest share of micro-firm
research funding contact. In terms of funding from foreign-owned companies, HEIs
from Region 3 had the lowest proportionate levels of funding, and Region 2 HEIs had
a slightly higher level of estimated contact than HEIs from Region 1.8
Table 14: Proportion of research income by type of firm and country

Type of firm England Scotland Wales
% % %
UK-owned firms 500 or more employees 50 46 67
UK-owned firms 50-499 employees 21 30 19
UK-owned firms with <50 employees 7 4 9
Foreign-owned firms 20 15 3
Trade and commerce associations 2 6 2
Total (of reported income) 100 100 100
Table 15: Proportion of research income by type of firm and region

Type of firm Region 1 Region 2 Region 3
% % %
UK-owned firms 500 or more employees 40 50 54
UK-owned firms 50-499 employees 29 13 21
UK-owned firms with <50 employees 4 10 7
Foreign-owned firms 24 25 15
Trade and commerce associations 2 2 2
Total (of reported income) 100 100 100
The survey also explored the extent to which linkages with industry were with local
firms, defined as being no more than 50 miles away (or within the province for
Northern Ireland institutions). For those respondents able to estimate these
proportions, shows, not surprisingly, that links with large firms were often not locally
based. Nearly three-quarters (72%) of responding institutions indicated that local
firms accounted for under half of such linkages. The reverse was true for micro-firms,
for which 75% of institutions reported that over half of such links were local. Perhaps
more unexpectedly, links with medium-sized firms (50-499 employees) were
predominantly not local: 61% of institutions reported that under half of such links
were with local firms.
8
Care has to be taken in interpreting these figures as they are estimates rather than actual HESA
funding data.
27
Table 16: Proportion of HEIs receiving research and contracts income from
local firms by type of firm
Local UK-owned Local UK-owned Local UK-owned Local foreign-owned Local trade and
firms >500 firms 50-499 firms <50 firms commerce
associations
Institutions % Institutions % Institutions % Institutions % Institutions %
less than 18 36 11 23 6 15 25 68 14 45
10%
10-24% 12 24 12 25 3 7.5 5 14
25-49% 6 12 6 13 1 2.5 2 5
50-74% 7 14 9 19 11 27.5 3 8 4 13
75% and 7 14 10 21 19 47.5 2 5 13 42
over
3.5 Industry-academic links and type of institution
The universities have a dominant position in terms of HE research and contract

funding over higher education colleges, which have only just over 1% of the overall
total. Noteworthy, however, is that UK industry and other related industrial funding
plays a more important role in the overall research funding profile of higher education
colleges. Interestingly, from the estimates provided by the HEIs themselves, the
dominant proportion (53%) of research funding for higher education colleges was
from foreign-owned firms (Table 17). Trade and commerce associations were also an
important source (16%) of research funding, together with larger SMEs.
The significance of foreign-owned firms to HE college funding may relate to the

discussion in Section 3.2, concerning the importance of agricultural colleges in higher
education college performance. Foreign-owned firms, such as Rhône-Poulenc,
Monsanto and Agrevo, are all key global players in this market segment, but also have
significant research laboratories in Britain. There may be also a country/regional
dimension - for example, Welsh higher and further education colleges having good
links with foreign-based companies in the Principality (such as Bosch or Sony).
Table 17: Proportion of research income by type of firm and type of institution
Type of firm Universities HE colleges
% %
UK-owned firms 500 or more employees 51 7
UK-owned firms 50-499 employees 23 16
UK-owned firms with <50 employees 7 8
Foreign-owned firms 18 53
Trade and commerce associations 3 16
Total 100 100
28
3.6 Problems and success factors in managing research and consultancy links
with industry
To conclude this section, ILOs’ own views on the problems and success factors HEIs
have encountered in maintaining relationships with industry are shown in Table 18
and Table 19. These tables are compiled from open questions, where up to three
factors could be given. Examining first the problems, the most frequently cited (38
respondents) was divergence of objectives between the HEI and industry during the
project. Most often this was caused by changes in priorities on the industrial side,
sometimes driven by changes in management or ownership. Specific conflicts of
objectives that were mentioned were timescales for delivery, time horizons more
generally, and industry not communicating changes in research direction quickly
enough for academics to respond. Closely related was the third most frequent group of
problems cited, namely misunderstanding or lack of understanding of aims. As one
respondent put it, a key problem was a confusion over what was promised and what
was being produced. Some respondents cited lack of understanding by one side or the
other, but most saw the problem as mutual.
A frequently cited problem was the HEI’s lack of a professional approach to the
collaboration. This was manifested in various ways, most commonly in terms of lack
of adherence to deadlines, but deficiencies in response time caused by HEI
procedures, reporting deficiencies and contracts were also mentioned. ‘Other priorities
for academics’, cited by 31 respondents, focused mainly on the competing demands
for staff time from other research and teaching activities. Turnover of personnel,
particularly in industry, but also in HEIs was a source of broken contacts. Lack of
resources to support the link was manifested in terms of infrastructure and facilities,
central and distributed management resources for liaison, and the general funding
position of HEIs. The final cluster of problems concerned the difficulty some HEIs
had in obtaining these resources from the market, principally because of a reluctance
by industry to pay economic rates, fully inclusive of overheads. Some respondents
mentioned cutbacks in industry as a factor.
Table 18: Problems in maintaining existing relationships with industry

Problem No. of times cited
1 Divergence of objectives between partners 38
2 Lack of professional approach by HEI 36
3 Misunderstanding/lack of understanding of aims 32
4 Other priorities for academics 31
5 Maintaining contacts as people leave 25
6 Resources to support link 19
7 Lack of industry funds/high costs 17
8 Other 32
Source: PREST HEI-Industry links survey
Turning to the positive side of collaboration experiences, at the top of the list of
factors cited by ILOs was mutual trust and its corollary, good personal relationships
between the collaborating parties. The benefit of a long-term relationship was
mentioned. Often arising from this was the second most frequently cited factor,
namely shared goals and mutual benefit from the work (the obverse of the principal
problems mentioned above). Goals did not have to be identical, so long as both sides
29
appreciated the other’s needs. The third success factor was the counterpart to another
principal problem, in this case the need for a professional, businesslike approach by
the HEI. Flexibility, rapid response and timely delivery were all mentioned, together
with project-management skills. Clear agreed objectives at the start could be seen as a
part of this, to ensure both that expectations of deliverables were clarified, and that an
appropriate contract was drawn up. Other cited factors included excellence in the
HEI’s research, facilities or staff, good communications and marketing, and meeting
customer needs. Price competitiveness was only cited five times.
Table 19: Factors associated with successful relationships with industry

1 Mutual trust and good personal relationships 54
2 Shared goals and mutual benefit from work 46
3 Professional businesslike approach by HEI 40
4 Clear agreed objectives at start 22
5 Excellence of research, facilities, staff 16
6 Good communications/marketing 14
7 Meeting customer needs 7
8 Low prices/value for money 5
9 Other 30
3.7 Trends and issues: adequate recompense, incentives, and influence on

intellectual directions
Interviews with senior academic managers indicated a general sense of progress and
achievement, particularly in the past two to three years, but a concern was expressed
that this was not a time for complacency. While recognising that research links with
industry were a part of their institutions’ historical legacies, the current situation was
seen as qualitatively different. As one manager put it, universities are now more
flexible and responsive institutions. From a strategic point of view, industrial funding
for research is seen as a rare example of a resource with significant growth potential.
However, to take advantage of this potential it is essential for research links to be run
on a business footing, in order to generate a surplus. To do this, costs need to be
properly understood and negotiations conducted by professionals. New institutional
mechanisms, discussed in Section 7, are being generated to meet these needs.
As indicated in the sections above, incentives for academics to work with industry are
a key issue. At stake are the rewards accruing to individuals in the course of their
academic career in terms of promotion and resources to pursue their objectives. The
Research Assessment Exercise (RAE) was the subject of conflicting views among
interviewees. Vice-chancellors of universities with large research incomes and
generally high RAE ratings considered that the RAE was neutral, in that it does not
aim to provide incentives for all aspects of academic activity. Thus industrial linkages
should be driven by other incentives from the Funding Councils. In one sense the
relationship was seen as positive, in that good output in RAE terms fed the intellectual
capital of the institution, allowing industry to interact with excellent research. It was
recognised that those sections of industry with a high knowledge content would be the
beneficiaries of such research.
30
On the other hand, a number of senior academics in institutions with lower levels of
research funding and generally lower RAE ratings felt that the RAE acted as a
disincentive to maintaining and strengthening industry-academic links. Even though
the RAE criteria ostensibly saw applied research linked to industry as being of equal
merit to basic research, this group of respondents felt that in actuality it was not. This
discrepancy was not so marked when there was research collaboration with a major
multinational corporation that was itself at the leading edge of research. Such
collaboration had relatively long time horizons and concentrated on basic research
issues. However, the discrepancy was most apparent when applied research was
undertaken for small and medium-sized firms. Contracts had much shorter time
periods and although the work was equally challenging, it comprised more direct
technical and applications activity. This was most apparent for links between SMEs
and the newer universities.9 Many new universities felt a strong responsibility toward
their local economy and helping to stimulate research and technical uptake by SMEs
(Section 7.4). But such links were seen as a direct threat towards the desire of such
institutions to improve their RAE ratings and hence publicly supported income
streams. A practical issue raised was the continued lack of suitable indicators, apart
from publications, which could cope adequately with capturing the academic merit of
activities10 closely linked with industry, but which had few outputs associated with
publications.
Senior managers did not consider that relations with industry had affected the core
mission or intellectual direction of their institution. But they did point to second-order
developments which were nonetheless important examples of change, notably the
establishment of on-campus incubators and industry-oriented laboratories. More
generally, they felt that although the majority of academic decisions were driven by
intellectual pursuits, at the margins maintaining links could be a factor in staff
appointments if there was a risk of losing a key capability.
9
Post-1992 universities, that is the former polytechnics. However, this issue was not exclusive to such
institutions; it was highlighted as the most significant barrier by a large pre-1992 university in the
North of England.
10
One such field was the area of design, but included other disciplines such as architecture and
surveying.
31
4. Commercialisation of Results
4.1 Introduction
The previous section described the mechanisms by which knowledge generated by

HEIs is transferred to industry through research collaboration and consultancy.
Knowledge may also be commercialised more directly by HEIs if they are able to
secure the intellectual property rights arising from their work and exploit them
(Rapport and Webster, 1997). This can be achieved either through licensing or through
taking knowledge into the market by means of exploitation companies which HEIs
own. This section explores activity in these areas, together with the related
phenomena of science parks, incubator units, spin-out companies owned (at least in
part) by individual academics, and company laboratories on campus.
4.2 Intellectual property
There are three basic models of IPR operation within HEIs. First, there is pure,
publicly funded research aimed at areas of fundamental science or research, which is
made available at little or no charge to the ‘public’ and is essentially unprotected apart
from copyright protection on publications derived from such research. In many areas
of this type of research, no IPR can be secured because basic scientific principles
cannot be patented. A second mode of operation is at the opposite extreme, namely
contract research paid for by a firm with full IPR assigned to the firm or shared with
the HEI. Between the two is a halfway stage most appropriately seen in the ‘shared
cost’ model whereby both HEI and industry enter a partnership to jointly share and
exploit the ideas originating from the HEI (for more information see Annex
3).(Charles and Howells (1992), pp 175-6)
The survey revealed growth on all indicators over the two academic years covered.
Thus in 1996-97, some 594 UK patent applications had been filed11 by the HEIs
responding to this section of the survey, up from 491 in 1995-96 (Table 20). New
patent applications filed12 numbered 371 in 1996-97, compared with 306 in 1995-96.
Similarly, in terms of granted UK patents, numbers rose from 45 in 1995-96 to 56 in
the 1996-97 period. The total number of active licences and options rose from 321 in
1995-96 to 395 in 1996-97. Lastly, in relation to computer software, the number of
sales and licences was 92 in 1995-96 and 80 in 1996-97. Patent, licence and other
option activity was almost exclusively reported by universities, with only two patent
applications and two licence options reported by HE colleges.
11
‘Total UK patent applications filed’ includes any filings made during the year requested, including: a)
new UK filings and re-filings for the same divisionals; b) Patents Co-operation Treaty (PCT) patent
applications in which the UK and the European Patent Office (EPO) are designated; and c) European
Patent applications and divisionals in which the UK is a designated state.
12
‘New UK patent applications filed’ is a subset of ‘Total UK patent applications filed’. It refers to
patent applications filed through any route (generally UK patent applications) for the first time and
covers the very first patent application filed in the UK, or designation of the UK for any new invention.
32
Table 20: Patent, licence and option activity in UK HEIs
Year Total UK New UK UK patents No of licences Total number No. of sales
patent patent granted and options of active and licences
applications applications executed licences and executed
filed filed options (software)
1995-96 491 306 45 139 321 92
1996-97 594 371 56 177 395 80
Total 1,085 677 101 308 716 172
Table 21: Patent, licence and option activity in UK by year and country
England Scotland Wales
1995-96 1996-97 1995-96 1996-97 1995-96 1996-97
Total UK 432 88% 530 90% 45 9% 50 8% 14 3% 12 2%

patent
applications
filed
New UK 273 89% 331 90% 28 9% 33 9% 5 2% 5 1%
patent
applications
filed
UK patents 38 84% 45 80% 5 11% 9 16% 2 4% 2 4%
granted
No. of 122 88% 147 83% 8 6% 18 10% 9 6% 12 7%
licences/
options
executed
Total no. 279 88% 347 89% 26 8% 29 7% 13 4% 16 4%
of active
licences/
options
No. of 88 96% 75 94% 4 4% 4 5% 0 0% 1 1%
sales/
licences
executed
(software)
Country differences across the categories of intellectual property activity are not
great (Table 21), with England accounting for 84-96%, Scotland 8-11% and Wales 2-
6%, all on relatively low numbers.
For the 17 institutions13 which had also reported IPR income for 1994-95 in the 1996
DTI survey, there was an increase in such income of 58% by 1996-97. Gross income
from IPR fell slightly over the two years covered by this survey (Table 22), both for
software and for other areas.14 The picture was uneven on a country basis: gross
income from licences/options (excluding software) grew in England and Scotland, but
fell substantially in Wales. Income from software sales and licences was almost
exclusively reported by English institutions. Among the regions of England, growth
was recorded in both categories by Region 3 and strongly in the non-software
13
The 17 institutions which reported income in both surveys accounted for 31% of 1994-95 income and
65% of 1996-97 income.
14
It should be noted that only 31 respondents registered some IPR income for 1996-97.
33
category by Region 2. Region 1 was static in non-software and suffered a drop of over
50% in income from software sales and licences.
Table 22: IPR income generated by UK HEIs

Gross income from Gross income from software Total IPR income
licences/options sales and licences
£M £M £M
1995-96 10.1 1.6 11.7
1996-97 9.9 1.2 11.1
Total 20.0 2.8 22.8
A number of other issues surrounding IPR also emerged from the survey evidence.
Not surprisingly given the growth in IPR activity, the cost of filing and protecting
patents grew at current prices from approximately £2.4 million in 1995-96 to £2.9
million in 1996-97 (Table 23). Indeed, the increasing cost of protecting IPR within
HEIs was seen as a growing concern of senior academic staff (see below). However,
over three times as many respondents presented a positive ratio of IRP income over
expenditure, as did those experiencing a negative ratio.
Table 23: Total spent by UK HEIs on filing and maintaining patents

Year Total amount spent on filing and maintaining patents
£ million
(current prices)
1995-96 2.4
1996-97 2.9
The problem of adequate monitoring and management of IPR is especially difficult

for the ‘new’ universities who felt they were not able to lever the full value out of the
intellectual property generated from their research. Such universities could not afford
to run an IPR office because it is simply too expensive. Therefore they could not
properly monitor and defend their intellectual property rights across the globe,
especially against large firms. Some HEIs had employed intermediaries to overcome
this problem, but without much success. These intermediaries, such as a research or
technology corporation, have often introduced technology audits whereby they trawl
departments for exploitable ideas. In these circumstances, the British Technology
Group (BTG) was not seen as a suitable route for many respondents. It was felt that
the BTG’s policy was now essentially to select ideas which may already be patented,
and which can then be fitted into its existing technology portfolio. Other institutions
have introduced formal mechanisms so that staff are now responsible for coming
forward with ideas they think are patentable prior to publication or conference
presentations.
Even once a UK patent, for example, has been taken out, the institution then probably
needs to take out further European and USA patents to defend it, and then seek an
industrial partner to use or further develop the invention. This can be extremely
expensive, in terms of both searching for partners and continuing to defend the patent
34
whilst a partner is being sought. Then there may be problems with industrial partners
once they have been found. Again, small institutions felt at a disadvantage against
large multinationals, who had large legal departments and considerable experience of
‘working the system’. Once a contract is signed, monitoring its use could also be
virtually impossible. Certainly the new universities although they had come a long
way in developing their IPR strategies, still felt highly constrained in what they could
do with the limited budgets they had available for IPR management. Against this,
there were also firms who operated wholly honourably and had established good,
long-term working relations with HEIs. High levels of rapport and trust between the
firm and the HEI had been established, leading to deeper collaborative relations, such
as a joint venture. One example of a joint venture is Bodycote-SHU, which arose
between Bodycote plc and Sheffield Hallam University to work on coatings
technology.
It is the case that HEIs are developing more sophisticated and formal arrangements for
handling IPR arrangements with industry, and this trend will undoubtedly continue.
Further details of such mechanisms and practices are outlined in Section 7 and Annex
3.
4.3 Spin-outs and exploitation companies
In relation to more direct commercial involvement, just over half of the HEIs
surveyed (52%) had wholly or partially owned company(ies) to exploit the research
they had generated. Four institutions also reported that companies which they had
owned had gone into liquidation between 1995 and 1997. Companies can basically be
divided into two types. Firstly, there are those firms often termed ‘umbrella’
organisations, which are essentially holding companies for exploiting the HEI’s IPR
portfolio and which remain under the direct, ongoing control of the HEI (36 of these
were reported by those institutions that owned companies). Secondly, there are ‘spin-
out’ companies from the HEI, which are established to exploit the commercialisation
of research results arising from a specific stream of research. The level of capital held
by the HEI in spin-outs varies considerably and is usually determined on an ad hoc,
case-by-case basis. However, even this appears to be changing, with eight HEIs
noting that they had formal frameworks for allocating equity in spin-out companies
(see Section 7.3).
In the ILO survey data, HEIs reported in detail about some 223 companies that they
wholly or partially owned for the commercial exploitation of their research results.
For those that ILO respondents were able to classify, the companies’ areas of expertise
are shown in Table 24. Biotechnology, life sciences and medicine together form the
largest grouping, followed by engineering. There has been a large increase in the
number of these companies being founded, though this now appears to have levelled
off. Only 12 of these companies were established before 1984, 18 between 1984 and
1986, 12 between 1987 and 1989, and 22 between 1990 and 1992. Seven started
operations during 1993, 17 in 1994, 23 during 1995, 28 during 1996, 26 during 1997
and 14 during the first part of 1998.
35
Table 24: Areas of expertise of HEI-owned companies
Areas of expertise %
Engineering 20
Biotechnology 19
Software 11
Chemical/physical 11
General consultancy 10
Life sciences 9
Medicine 5
Other 15
Total 100
Although there has been a considerable growth in the number of firms directly owned
by HEIs, there are also a wide range of companies that have spun-off from HEIs with
which the HEI has no ownership ties.15 Indeed, traditionally this has been a key aspect
of academic entrepreneurship. Thus probably the most significant element in industry-
academic links is through unrecorded, informal contacts, consultancy work and start-
ups or spin-outs of firms. In the survey, 44% of responding institutions indicated that
they knew of spin-out companies started by employees of the institution in which they
did not have a financial interest.
As Charles and Howells (1992, p6) noted more generally in relation to firm-HEI-
public research establishment (PRE) links ‘it is important to stress the significance of
informal mechanisms in technology transfer, although they are much harder to
quantify or evaluate’. A number of high-profile (but exceptional) areas, such as
Silicon Valley (Rogers and Larsen, 1984; Saxenian 1985; 1994), Route 128 (Cooper
1971; Saxenian 1985) and the Cambridge area (Segal, Quince and Partners, 1985),
have all depended for their success and development on a dense network of informal,
personal links and largely informal spin-out processes. Indeed, much of the growth
associated with the ‘Cambridge Phenomenon’ was associated with such informal spin-
outs (Segal, Quince and Partners 1985). Certainly part of the success of the
universities of Cambridge and Oxford in the UK in terms of spin-outs of firms has
been the decentralised nature of the university system, which has allowed a large
amount of personal research and consultancy work.
4.4 Science parks and incubator units
From the outset, HEIs have been closely linked with the emergence and development
of science parks16 in the UK. Policy initiatives that have been developed have largely
15
In certain literature those companies which have no formal links with their former HEIs are termed
‘spin-outs’, as distinct from the term ‘spin-offs’, which is seen as covering firms having formal ties
with HEIs. However, since such a distinction is not widely accepted, the term ‘spin-out’ firm is used
throughout this report to avoid possible confusion and to be consistent with previous Industry-
University Co-operation Surveys.
16
The term ‘science park’ is used throughout this report as a catch-all for all property-led initiatives for
research and high-technology activities, including research incubators, research parks and technology
parks. Indeed, technopoles incorporate many of the same aspects of these schemes except that their
scale is much larger.
36
centred on property-led schemes around science parks and related research and
technology parks.
Some science parks are established by HEIs to satisfy a multiplicity of goals. These
cover the following aims: to earn revenue; to capture more satisfactorily IPR leaking
out of the HEI; to attract companies who may then become customers for the HEI’s
research; and to fulfil a wider economic regeneration role within the local economy.
However, other science parks have few or no ties with HEIs, although HEIs may see a
science park as a locus of potential consumers for their services, as well as offering a
possible site for spin-out companies in which the HEI may or may not have a financial
stake.
Care should therefore be taken not to equate science parks as simply a mechanism for
solidifying industry-academic links in a locality. In their own context, most schemes
have been successful. Although there has been a drop in numbers of science parks
which are members of the United Kingdom Science Park Association (UKSPA) from
51 in 1996 to 48 in 1997, there are now 1,414 tenant companies in science parks
which are UKSPA members. This represents an increase of 47 companies from 1996.
These tenants employ 27,371 people (UKSPA, 1998), and some £656 million has
been invested in these science parks up to 1997. However, HEIs were the source of
only 15% of the finance going into science parks in 1997, and only 22% of tenant
companies have originated from an HEI. Just 3% of companies in UKSPA science
parks are HEI-owned firms. This confirms the Massey et al. (1992, p 134) survey of
183 establishments on science parks; only one in six (17%) were HEI start-ups.
Cambridge Science Park had one of the lowest percentage of academic start-up firms,
whilst Aston had one of the highest
On a smaller scale, but still significant developments in their own right, are other
property developments in the form of ‘incubator units’. These are usually located
within or adjacent to the boundaries of the HEI’s campus. The University of
Manchester, for example, has a bioscience incubator, the Manchester Bioscience
Incubator, set up in 1997. This represents an £18 million development which has
received £6 million in European funding and aims to create more than 900 jobs over
the next five years.
4.5 Company laboratories on campus
Another way that HEIs can secure closer relations with industry is to allow firms to
locate laboratories on the institution’s campus. This mechanism allows close liaison
between the funding firm and the HEI. It also creates a culture whereby HEI staff are
more directly confronted with the firm’s overall objectives in the targeted research
field (although this is generally basic, long-term research work). In turn, the
company’s research staff can be moved to the laboratory to gain a more academic feel
for their work and to refresh and renew their own competences. This pattern of co-
operation in the UK has followed that of the USA, whereby a whole stream of
companies have laboratories that are based on American campuses.
There are many examples of such schemes. They vary from significant financial
support of existing laboratories in return for research work, to dedicated company
laboratories. Most of these company laboratories have so far been situated on
37
campuses of the older and larger HEIs. In the former case, for example, Mitsubishi
Chemical announced in 1998 that it will spend several million pounds on financial
support for a new Genetics Therapies Centre and for the existing Process Systems
Research Centre at Imperial College. In the latter case, Eisai has set up its own
laboratory at University College London. Pfizer from the USA, which has its main
European R&D centre in Sandwich, has also announced it is establishing a laboratory
in the Department of Chemistry at the University of Kent at Canterbury where it will
employ some 20 staff who will be working on synthetic organic chemistry.
Interestingly, UK-owned firms, at least within the UK, have been more reluctant to
give direct funding to dedicated research laboratories on campus, instead preferring
specifically funded research projects. A recent exception has been the recent
announcement by Unilever to base a Unilever centre in the Department of Chemistry
at the University of Cambridge. The centre will cost £13 million and will research into
drugs that can tackle the so-called ‘superbugs’.
4.6 Managing commercialisation
Asked which were their three problems most commonly associated with
commercialisation of research results (Table 25), ILOs most frequently cited a lack of
capital or seedcorn development funds. Such funds would normally be for taking the
initial idea to proof of concept, at which point venture capital finance could be sought.
Closely related to problems of finance, but also encompassing marketing and
development capabilities was the second most frequent problem, finding the right
partner or licensee. This was not necessarily the same organisation as a research
partner, but rather a commercial champion. Almost equally cited was a collection of
issues around the problems of IPR, including the problem of prior disclosure of results
in publications preventing rights being established, and confidentiality requirements.
Fourth came the problem of securing a sufficient time commitment from academic
staff in the face of other priorities. Fifth was the lack of expertise in business or sound
advice on how to commercialise research, which was also presented as a lack of
entrepreneurship among academics. Slowness of action was one manifestation of this.
Other factors mentioned were an excess of risk or uncertainty in the face of
accountability requirements, the cost of IPR protection (discussed above), and
difficulty in undertaking sufficient market research to establish whether or not
commercialisation was a viable prospect.
Table 25: Problems associated with commercialisation of research results

1 Lack of capital/seedcorn development funds 42
2. Finding right partner/licensee 22
3 Ownership of IPR/prior disclosure/confidentiality 21
4 Time commitment of academics 19
5 Lack of expertise/advice/speed of reaction 12
6 Too much risk/uncertainty 8
7 Cost of IPR protection 7
8 Difficulty of doing market research on viability 6
9 Other 31
38
5. Links in the Process of Teaching and Training
5.1 Introduction
HEIs are not only important sources of research and technical information, they are
also responsible for educating and training an ever-increasing proportion of the UK’s
workforce. As the UK economy becomes ever more knowledge intensive, so does the
demand by industry for educated ‘knowledge’ workers. Not only has demand and
supply increased for higher education, but provision has also changed and diversified.
Historically, universities mainly provided education on a full-time basis to students
who had recently left secondary education. With the emergence and growth of
polytechnics and other types of HEI provision and their emphasis on more vocational
education and training, there has been a shift towards a much wider range of higher
education provision which has increasingly sought to cater for part-time and mature
students. In terms of direct funding of students (as distinct from indirect funding
through government schemes), industry makes a relatively low input to the higher
education system. But industrial involvement takes many other forms: 91% of
institutions in the CEO survey reported that they received teaching, lectures and
seminars from industrialists, and 85% had industrial feedback on their academic
curricula.
This section outlines the volume and range of industry involvement in postgraduate
and undergraduate education and training within the UK, as well as government
policy initiatives seeking to promote and extend such links.
5.2 Postgraduate teaching
5.2.1 Policy initiatives
In relation to postgraduate education, a number of policy mechanisms have been

instituted in the UK and supported by government funding to improve links and
collaboration with industry. The two most important initiatives in the UK in terms of
numbers, durability and perceived effectiveness have been the Teaching Company
Scheme (TCS) and the Co-operative Awards in Science and Engineering (CASE),
both of which are regarded as being highly successful.
Well over 2,000 TCS partnerships have been created since it was first established. In
March 1997, 606 companies were currently participating in the TCS, supporting some
1,000 postgraduates in almost every UK HEI. In 1997 alone 222 new TCS
programmes were started and 356 postgraduates were recruited during the year.
Industry committed £35 million to support these new TCS programmes, which
augmented the £17 million of grant allocated to them. The TCS has also recognised
the need to target SMEs and 19 TCS Centres for Small Firms have been established
within HEIs to focus academic help on the needs of SMEs, (defined here as
employing fewer than 250 staff) in their locality. Interviewees reported the TCS as a
whole is to be inhibited by the lack of incentives for academics to participate, and
39
even more so where SMEs are involved because of the low likelihood of any
contribution to RAE performance. Suggestions for improvements included greater
flexibility, with programmes of shorter duration and availability for students as well as
researchers. More interdisciplinarity and less bureaucracy were also mentioned as
being desirable. Despite these criticisms, among the HEIs interviewed for this study
the TCS was regarded in a positive light, with one interviewee calling it:
‘... the best of the schemes for promoting HEI links with industry’
Numbers of CASE studentships issued by each Research Council in 1995-96 and

1996-97 are shown in Table 26. The decline in the total for 1996-97 was caused
principally by the EPSRC (Engineering and Physical Sciences Research Council)
changing its rules; for the first time, PhD studentships could be awarded to
departments without specifying how many were to convert to CASE. The resulting
conversion rate was lower than expected.
Table 26: New CASE studentships in 1995-96 and 1996-97

1995-96 1996-97
CASE Industrial CASE Industrial
CASE CASE
BBSRC 113 94 165 68
EPSRC 699 117 424 122
ESRC 59 36 44 30
MRC 25 19 22 17
NERC 87 10 99 15
PPARC 10 - 10 -
Total 993 276 764 252
Source: Office of Science and Technology (OST)
Of the 2,349 CASE studentships reported as being current in the ILO survey, for both
CASE (44%) and Industrial CASE (41%), the chemical and physical sciences
represented the most important science and technology fields where studentships were
placed (Table 27). This was followed by engineering (24% and 32% respectively) and
health and life sciences (21% and 20%).
Table 27: Distribution of CASE studentships across subject areas

Engineering Chemical and Information Health and Business, Total
physical technology life management
sciences sciences and
accountancy
CASE 24% 44% 9% 21% 1% 100%
Industrial CASE 32% 41% 3% 20% 3% 100%
However, a number of more specific initiatives have also been run by Research
Councils, which are seeking to provide postgraduate education and training geared
towards industry’s needs. The background to TCS, CASE and a number of initiatives
40
started by the EPSRC are described in more detail in Annex 4, while more general
trends and analysis from HESA and survey sources are discussed below.
5.2.2 Trends in postgraduate teaching: close industry involvement
On the basis of the survey data, it can be argued that HEIs are becoming more attuned
to industry’s needs in relation to postgraduate education and training, and are seeking
to develop closer relations with industry. Of those HEIs responding to the relevant
question in the CEO survey, well over three-quarters (86%) had work and project
placements with industry for their postgraduate students. Moreover, over half of the
responding HEIs had established mechanisms for the industrial sponsorship17 of their
masters (58%) and PhD (54%) students (Table 28).
Interviewees indicated several means by which research students were engaged with
industry. Transferable skills and professional development courses are now generally
provided for doctoral students, in some cases with industrial presenters. There was
active engagement in the various public schemes described above. This was the one
area where direct sponsorship of students was at a reportable level, typically for
projects driven by ad hoc industry needs. Some sponsorship existed within the context
of long-term relationships between company and department. For example, there are
six to seven PhD students in the University of Birmingham’s Department of
Metallurgy sponsored by Rolls Royce. Such relationships are founded on personal
contacts and on movement of staff from HEI to industry or vice versa. A newer
element in research training is the increased profile of work-based degrees, where the
teaching element may be either at the HEI’s or employer’s premises, but the research
study would take place in the work environment under academic supervision.
Industry is also becoming more involved in supporting the design and implementation
of new courses. Taught masters degrees appear to be the area in which there is greatest
collaboration with industry, though it was pointed out by several respondents that
responsiveness to industry’s needs could come through various sources of marketing
intelligence as well as through direct collaboration. A majority (53%) of institutions
had masters courses specifically designed to meet the needs of a firm or group of
firms. Two-thirds of these were part-time and all were designed with industrial
participation.
Apart from having industrial membership on their course advisory boards, the main
trend among those offering masters courses aimed at industry has been towards
modularisation and part-time registration. This is a means of providing the flexibility
needed by company personnel and employers fearful that those attending a full-time
degree may leave after qualification. The same modules may be delivered several
times to specific company audiences, or be provided in short-course format for
professional institutions’ qualification requirements. Difficulties encountered
occasionally included obtaining a company’s commitment to the full duration of a
masters course rather than some relevant modules, on the grounds that the company
did not require a general qualification and the employee might leave on qualification.
A ‘promissory note’ may be requested to try to ensure that the employee remains with
the employer for a certain length of time, say three years, after completion.
17
For discussion about industrial sponsorship of staff, see Section 6.2.
41
A successful example of tailoring a course to the needs of more than one company is a
consortium MBA offered by Heriot-Watt University to employees of the Bank of
Scotland, Hewlett Packard, Scottish Power and the NHS. The MBA takes two to three
years part-time, offered in five-day modules with 20 people each year. It is considered
to work because all the companies are large and there is no competition between
them.
In relation to masters degrees, UK-owned firms supported 60% of courses where

external organisations were reported as taking part in their design and
implementation, and supported a further 12% foreign-owned companies (Table 29).
The rest were supported by trade and commerce associations, and central and local
government. In total, of the masters courses that received support in their design and
implementation, the largest share were in business, management and accountancy
fields, followed by engineering, and health and life science courses.
Table 28: Institutions having established mechanisms for industrial

sponsorship of undergraduate, masters and doctoral students
Undergraduates Masters PhD
Institutions % Institutions % Institutions %
Yes 41 43 57 58 54 56
No 46 48 34 35 33 34
Don't know 8 8 7 7 9 9
Total 95 99 98 100 96 99
Source: PREST HEI–industry links survey
Table 29: Proportion of externally supported courses designed jointly with

industry by source of support
Large UK-owned UK- Foreign Trade and National Local Total
UK- firms 50- owned owned commerce government govern courses
owned 499 firms <50 firms associations ment reported
firms
Under 24% 18% 12% 18% 16% 2% 10% 100%
graduate
courses
Masters 29% 19% 12% 12% 12% 6% 11% 100%
courses
42
5.3 Undergraduate teaching
Table 30: Postgraduate and undergraduate courses designed jointly with

industry by academic area
Engineering Chemical Information Health and Business, Total
and physical technology life sciences management
sciences and
accountancy
Masters 27% 9% 9% 20% 36% 100%
courses
Undergraduate 39% 3% 8% 8% 42% 100%
courses
Industrial links to undergraduate teaching take a wide variety of forms. At a general

level advisory committees to faculties with courses of vocational relevance typically
contain industrial representatives. Active involvement by industry in courses includes
provision of visiting speakers (and occasionally lecture series), validation of courses,
membership of examination boards, carrying out of student projects in collaboration
with firms, and sponsorship of student prizes. Also widespread is a trend towards
seeking to develop students’ transferable skills relevant to the industrial environment,
including for example computer literacy and teamworking skills. Training for
entrepreneurial skills is supported by the Enterprise in Higher Education initiative.
Undergraduate degree courses designed to meet the needs of a specific firm or group
of firms were offered by 33% of higher education institutions surveyed. Of these
courses, almost two-thirds were part-time. Nearly all of the institutions responding
positively to this question indicated that these courses were designed jointly with
industry. In terms of their distribution across subject areas, engineering had a much
higher representation (39%) than for postgraduate and CASE studentships. Business,
management and accountancy was the most important discipline at 42% of
Undergraduate teaching).
By contrast, the chemical and physical sciences, health and life sciences and
information technology had much lower representations. From interviews it was
apparent that these courses had a range of formats. At the traditional end of the scale,
professional institutions - notably in engineering - offer accreditation for selected
courses which provide exemption from further written examinations. More recent
developments are more specific, for example the University of Portsmouth operates a
Partnership Programme which is a three-way alliance between employer, employee
and university to obtain diplomas, bachelor or masters degrees by selecting course
units across the university and pursuing studies while in full-time employment.
Projects of relevance to the goals of the employer are undertaken. Over 100
companies have so far sponsored employees on the Partnership Programme.
About 92% of HEIs responding to the survey had some work and project placement
schemes with industry. Nearly three-quarters (73%) of HEIs in the survey had
established mechanisms for sandwich courses. Sandwich courses are very important
43
for some institutions. For example, the University of Ulster has some form of
sandwich-course arrangement for 50% of its full-time first-degree students, usually
for one year.
All of those interviewed who offer sandwich courses noted the increasing difficulty of
finding placements, as more organisations (even schools) seek them, and industry is
also tending to offer fewer places. London was identified as an area of particular
difficulty in this respect. There is a proposal to establish a database of companies and
students in the capital, supported by eight HEIs, in order to provide a matching
agency for placements.
Sandwich courses were seen as a good lead into a job for students, as a means of
forging links with industry for staff and as a selling point for courses. One institution
had suffered through employers being so impressed by its students that they had
tempted them to stay and not complete their course. By its nature this approach is less
suitable for students who already have jobs and for mature students with other
commitments. Other solutions include offering a voluntary accredited year in industry.
Short-term placements also exist  Cardiff University operates a scheme assisted by
the local Training and Enterprise Council (TEC) whereby small groups of third-year
engineering students are placed with a senior industrialist (who is paid for his/her
participation) for one day per week over a period of eight weeks.
In relation to sponsorship, 43% of HEIs indicated that they had an established

mechanism for sponsorship of undergraduate courses. Although this is lower than for
postgraduate courses (Table 28), it is still a high figure and is likely to continue to
grow. In terms of the sponsorship profile regarding the design and implementation of
courses (Table 29), the pattern is very similar to that for masters courses outlined in
5.2.2, although industry involvement in the latter is somewhat higher. Direct
sponsorship of students was generally considered to be quite rare, but there is renewed
interest in this activity as a result of the introduction of tuition fees. It was felt that
employers may be willing to pay these fees, particularly for final-year students in
relevant courses.
5.4 Short courses and distance learning targeted to industry
According to HESA statistics, income from continuing education and training (CET)
from UK industry was £82 million in 1995-96 and £62 million in 1996-97. CEO
survey returns indicated that two-thirds (66%) of reported CET revenue from industry
was received from SMEs (Table 31). There was substantial country variation, with
Welsh institutions reporting almost half of their industrial CET income as coming
from enterprises with fewer than 50 employees, as compared with 24% for England
and 17% for Scotland. There was a commensurately lower input from large firms in
Wales. Variation was also evident by type of institution (Table 32). Universities
received half of their industrial CET revenue from large firms, while for HE colleges
the figure was only 8%.
44
Table 31: Percentage of revenue from continuing education and training for
industry by firm size and country
England Scotland Wales All UK
% % % %
Small enterprises (<50) 24 17 49 24
Medium-size enterprises (50-499) 41 53 33 42
Large firms (500<) 35 31 18 34
Total 100 100 100 100
Table 32: Percentage of revenue from continuing education and training for
industry by firm size and type of institution
Universities HE Colleges
% %
Small enterprises (<50) 12 43
Medium-size enterprises (50-499) 38 49
Large firms (500<) 50 8
Total 100 100
A high level of short-course activity directed to industrial needs was revealed in the
interviews with CEOs. Notable examples included an industry-led specific training
programme provided by Cardiff University (in collaboration with the University of
Glamorgan, Swansea University, University of Wales College at Newport and Sussex
University) on semiconductors as part of the Korean firm, LG’s inward investment in
Wales. The programme lasts two months for 60 to 70 employees. In Scotland, Heriot-
Watt University has established niche areas through the support of large companies
(particularly in the petroleum industry). HEIs also recognised the need also to provide
for the requirements of SMEs  Bolton Institute of Higher Education, for example, is
aiming to develop standing links with SMEs rather than relying on ad hoc mailshots.
A general trend in this type of training is towards accreditation up to the point where
units are accumulated towards a higher qualification. Interviewees raised concerns
about compatibility and administration of assessment standards.
The other major problem area lay in the economics of developing courses. As one
interviewee put it, it is only in the process of putting together short courses that the
true cost of education becomes apparent, and it is expensive. In this respect several
interviewees acknowledged the critical role played by continuing vocational education
(CVE) funds in pump-priming and advertising courses. The benefits could be felt
beyond this immediate area, as examples were given of short courses that provided
the basis for future mainstream postgraduate provision.
Distance learning is widely available for MBAs, but also across a broad range of more
industry-specific subjects. For example, the University of Ulster provides a
postgraduate Certificate in Management for Shorts, the aircraft company. The course
consists of one and two-day workshops and half-day meetings over 12 to 18 months,
with work-based learning focused on company requirements, but also developing
some generic skills. This is a paper-based course with telephone support, and
company managers trained as mentors. Multimedia support is becoming more
45
common; for example, the Integrated Graduate Development Scheme (IGDS) is
funding a collaboration between the University of Northumbria and Bolton Institute
of Higher Education to provide a course in microelectronics based on the Internet.
Companies have contributed to the design of the course and it is supervised by
industrial advisory boards. On payment of the fees, the company receives an ISDN
line and a video link. Students can choose modules which are tailored to their
company’s requirements. Students meet occasionally as a group.
The high cost of preparing materials is a constraint on the expansion of this mode of
teaching. In part, distance learning was seen as a solution to the reluctance of
companies to give time off work. Paying the costs for distance learning undertaken in
the student’s own time was seen as a compromise solution.
5.5 Initiation of links in education and training
As noted above, in order to be able to provide suitable (and popular) education and
training courses for industry, HEIs must be willing to listen and respond to industries’
needs. Existing working relationships and personal contacts remain important (Table
33), but the survey indicated that industry itself was often an important initiator and
‘shaper’ of new course work. The factor was ranked third in terms of importance by
HEIs, behind existing relationships and personal contacts. Below these factors, came
contacts established by ILOs themselves, and the Teaching Company Scheme outlined
above. Other factors ranked below this by HEIs in terms of usefulness were the
contributions of industry training organisations, TECs and Local Enterprise Councils
(LECs), Business Link and Business Connect relationships and, lastly, advertisements.
Some minor country differences included a higher rating for LECs in Scotland and
TECs in Wales, and a lower rating for ILOs contacts in Scotland. HE colleges also
rated TECs/LECs more highly and the Teaching Company Scheme lower.
Table 33: Factors for initiation of new education, continuing education and
training projects with industry ranked according to mean rating
Factor Mean England Scotland Wales
rating UK* rank order rank order rank order
Existing working relationship 3.7 1 1 1
Staff's personal contacts 3.6 2 2 3
Initiative from industry 3.4 3 3 2
Industrial liaison office contacts 2.9 4 6 4
Teaching Company Scheme 2.8 6 4 5
Industry training organisations 2.7 5 7 7
TECs/LECs 2.7 7 5 6
Business Link/Business Connect 2.3 8 9 9
Advertisements 2.1 9 8 8
* Scale 1=not important, 2=minor importance, 3=important, 4=very important
Interviewees gave a mixed response when asked about the utility of intermediary
bodies. In general, the more research-oriented institutions were unenthusiastic about
TECs/LECs, with a feeling that they did not fully understand the provision of higher
education and are focused on lower tiers of skills provision. It was also felt that TEC
46
surveys of training needs of SMEs were misleading because they concentrate on the
need for low-level skills, leaving SMEs unaware of the high-level training that they
could use. However, there were instances where TECs were able to mobilise funding,
for example in provision of training for unemployed postgraduate students in Wales.
Several interviewees felt that there was unexploited potential in their relationship with
TECs. The most positive support for intermediaries was outside England, with
Scottish Enterprise and the Welsh Development Agency and several bodies in
Northern Ireland being praised. There were high expectations for regional
development agencies (RDAs) in England. The very local focus of TECs and LECs is
clearly an inhibiting factor for HEIs which naturally have a wider regional scope of
operation. Other intermediaries mentioned as being of some help were professional
bodies, Business Links and local authorities.
5.6 Success factors and barriers in providing CET for industry
Asked to identify the three top factors for success in providing continuing education
and training for industry, CEOs gave course content as the most important factor
(Table 34). Specific aspects cited included sufficient flexibility to meet the specific
needs of the audience while maintaining academic rigour, and flexibility in terms of
timing, mode of study and curriculum. Professionalism in all aspects of delivery and
‘after care’ was also mentioned. The second most highly cited success factor was the
development and maintenance of close links between the HEI and its industrial
clients. Several respondents stressed the need for the relationship to be based on
mutual benefit and to involve effective liaison and communication.
Table 34: Success factors in providing continuing education and training for
industry by UK HEIs
Success factor No. of
times cited
1 Course content designed for industry’s needs 34
2 Development of close & long-term links 28
3 High-quality staff and material 12
4 Good marketing 11
5 Commitment to CET for industry 9
6 Credibility and reputation of the HEI 5
7 Other 25
47
Table 35: Barriers to providing continuing education and training for industry
by UK HEIs
Barriers No. of times
cited
1 Lack of willingness/ability to pay economic rate 26
2 Insufficient priority within HEI 25
3 Industry not perceiving CET as relevant 23
4 Difficulty in getting marketing information 22
5 Need for cultural/structural change in HEI 20
6 Difficulty for SMEs to release staff 8
7 Other 9
Looking at the same issue from the perspective of identifying the most common
barriers, CEOs identified a larger and more evenly spread number of cited items
(Table 35). At the top of the list was a lack of willingness or ability on the part of
industry to pay an economic rate for provision. Some respondents mentioned the
difficulty of competing with private providers. Others mentioned an expectation that
such courses should be subsidised, and the relatively low value of public funding to
support this type of activity (including resources to develop activities). The particular
problems of SMEs in this context were mentioned several times. SMEs were also
mentioned in the sixth ranked barrier in terms of their inability to release staff for
training even for short periods.
The other most frequently cited barrier originated within the HEIs, and concerned a
lack of priority for this type of activity. The lack of career incentives for academic
staff to undertake CET rather than conventional teaching and research activities was
the most frequent driver of this problem (the RAE was also mentioned). A similar
weighting was given to the barrier of industry not perceiving CET as relevant to its
needs; as one respondent put it:
‘A perception amongst many managers and employers that universities are

ivory towers and are not capable of providing work-related training’
The problem extended to the general lack of commitment to training amongst SMEs
as well as a specific negative perception of universities, particularly by non-graduate
managers.
The fourth most commonly cited barrier was the practical difficulty of economically
accessing large numbers of SMEs, including undertaking market research in order to
understand their needs and then to sell the product. Fifth was the concern for the need
for both cultural and structural change within HEIs if they are to operate effectively in
this market. The capability to make a quick and flexible response to industrial needs
was the most frequently cited requirement in this area.
5.7 Trends and issues: flexibility, competition, collaboration and shifting

boundaries
At all levels of HE, education and training are seen as becoming more attuned and
responsive to industry needs and requirements. This trend ranges across the design,
48
implementation and delivery of undergraduate and postgraduate courses. However,
these two broad categories of course are not the only mechanisms by which HEIs
deliver education and training to people. Short-course work, sandwich courses and
distance learning are becoming recombined in some HEIs in a more seamless range of
both full and part-time courses which can be set within the wider agenda of lifelong
learning. Indeed, the interview surveys showed that a number of HEIs now felt that
the distinctions between full and part-time courses were becoming increasingly
meaningless. This also applied to the term ‘mature’ students. Students were no longer
seen as one-off components. Institutions, such as the University of Wolverhampton,
were increasingly seeing them in terms of intermittent but ongoing education ‘users’,
who may return several times to the HEI for further education, training and re-training
courses and facilities. Modes of delivery and assessment continue to multiply with the
use of multimedia, flexible times of provision and work-based learning. As one
respondent put it:
‘Like many institutions we keep stretching the boundaries of flexible provision.

This involves developing ICT [Information and communication technologies]
programmes for industrial groups and teaching mainstreamed programmes at
weekends. Specific pioneering work focuses on electronic delivery, assessment
of vocational qualifications, and video and computer conferencing delivery of
short unaccredited courses through postgraduate diplomas.’
Looking ahead, interviewees saw the most important trends being in the sphere of
lifelong learning, both in a policy sense and through a move away from company-
based training (partly because of the reluctance to provide time off as reported above,
and partly because of general financial pressures on firms) towards provision for
individuals in a vocational context. This process would be accelerated by employment
trends towards multiple careers and outsourcing of staff. A consequence would be
further growth in the demand for accreditation. All of these changes would increase
the importance of flexible delivery.
The market for provision of CET for industry was unanimously regarded as being
characterised by intense competition. This was particularly the case for generic and
low-level skills, where HEIs struggle to maintain even a relatively small market share
compared with private providers. One model envisaged as a growing trend was for
HEIs to provide the private sector with accreditation. Competition also comes from
other lower cost players, notably the further education sector. Market entry is also a
feature, with regional training organisations, subject associations, industrial research
and technology organisations, government laboratories, TECs, Chambers of
Commerce and employers’ bodies all offering training. Competition goes beyond
regions; examples were given of HEIs in the regions establishing offices in London
and of English HEIs operating in Northern Ireland.
Global competition was also cited as a factor, particularly in the context of providing
training for multinational companies. Multimedia and distance learning will lead to an
increase in such global competition. Most interviewees saw the response to this
market as being one of avoiding unprofitable activities, even if participant numbers
appeared large, and instead focusing on niche strategies in highly specialised areas,
capitalising on both local and global linkages.
49
Developing strategic links with firms spanning research and training was one way to
secure a market. Reaching SMEs remained a problem, though one interviewee saw
supply-chain activity with large firms  co-ordinating training for their SME
suppliers  as a way forward. Financing new developments will remain a problem,
though European funding is seen as increasingly important for the future. However, as
one interviewee warned, such niches and advantages needed to be maintained and
cultivated if they were to be sustainable.
Collaboration between HEIs in provision for industry is also an increasing feature of

the landscape. In part this is driven by policy initiatives, notably the IGDS, examples
of which are given above. Underpinning this collaboration is the enhanced ability to
assemble customised packages when selecting across the capabilities of more than one
institution. Post-1992 universities interviewed were increasing their collaboration
with the FE sector and examples were also given of joint programmes with
continental European universities. Outside the orbit of schemes such as IGDS it was
also reported that collaboration between neighbouring institutions could be inhibited
by perceived differences in status or focus.
The final trend identified by interviewees was that of eroding boundaries between
providers. Most commonly raised by post-1992 universities was the prospect of
improving the interface with the FE sector. One interviewed HEI had ‘acquired’ a
local FE college under threat of closure in order to secure its ‘feeder lines’ for
students. Another was sub-contracting modules to local FE colleges as a means of
reducing its costs. For these HEIs, seamless provision was attractive so long as it
stopped at the level of the first year of a degree course.
50
6. Staff Support and Funding
6.1 Overview of funding support
Another important mechanism for further cementing relationships between HEIs and
industry is the support for university and college staff from monies gained from
research grants and contract income. Table 36 uses HESA data to provide a
breakdown (by source) of expenditure of such grant and contract income on HEI staff
for the years 1995-96 and 1996-97. In both years, around a third of such monies
allocated came via the Office of Science and Technology and the Research Councils
whilst just over a quarter came from charities (in particular the Wellcome Trust, the
largest research charity in the world). UK central and local government together with
hospital and related trust expenditures accounted for just under 20% in both years,
whilst EU government funding came to 7%. UK industry was the source of 9% of all
research and contract monies spent on staff, a significant amount within the context of
other sources. Other EU and overseas sources made up a further 4% of expenditure,
and other sources 2%.
These broad patterns for HEIs over the two academic years conceal significant
differences between universities and higher education colleges (Table 37). Lower
proportionate funding levels for higher education colleges from OST and research
council sources in 1996-97 are made up by higher relative funding contributions from
other sources, most notably charities, government and related sources, and industry.
Industry’s share of research and contract monies spent on staff rose to 12% in the case
of higher education colleges’ allocation patterns in 1996-97.
Table 36: Expenditure of research grant and contract income on staff by source
(1995-96 and 1996-97)
OST/ UK- UK EU UK EU other Other Other Total
Research based Central Govern industry overseas source
ment
1995-96 34% 26% 18% 7% 9% 1% 3% 2% 100%
1996-97 32% 27% 19% 7% 9% 1% 3% 2% 100%
and type of institution (1996-97)
OST/ UK- UK EU UK EU Other Other Total
Research based Central Govern industry other overseas source
ment
University 32% 26% 19% 7% 9% 1% 3% 2% 100%
HE 19% 33% 22% 5% 12% 2% 4% 4% 100%
College
51
Variations in research and contract monies spent on staff can also be seen on a
national level within the UK. In relation to industry as a source, interestingly, the
highest shares are evident in HEIs in Scotland and Wales at 10% each, followed by
England with 9% and Northern Ireland with 7% (Table 38). Other variations are
evident through the different central government funding mechanisms, especially in
relation to Northern Ireland. Noteworthy also is the importance of EU funding for
staff support in Northern Ireland.
Moving more specifically to the primary source of income for academic staff, there
are once again significant variations between universities and higher education
colleges (Table 39). For higher education colleges, general institutional income
formed the dominant source in 1996-97, making up 92% of contributions, with
minimal input from other sources. For universities, Research Council funding made
up 12% of total contributions, followed by 7% from charities and 3% from UK
industry.
and country (1996-97), percentages
OST/ UK- UK UK EU EU Other Other Total
Research based Central industry Govern other overseas source
ment
England 32 27 18 9 7 1 3 2 100
Scotland 33 25 20 10 7 1 2 3 100
Wales 29 20 27 10 7 1 2 3 100
Northern 20 18 30 7 16 2 2 4 100
Ireland
Table 39: Academic staff by primary source of income (1996-97), percentages

General OST/ UK industry UK- based EU Other Total
institutional Research charity Government
income Councils
University 75 12 3 7 2 0 100
HE 92 3 1 3 0 0 100
College
6.2 Industry sponsorship and work experience
Section 6.1 highlighted some of the general patterns of industry funding of HEI
personnel through grant and income monies. However, industry is more directly
seeking to support HEI staff financially by funding personal professorial chairs and
university lectureships. This is an important but personal mechanism whereby firms
can cement their relations with a particular institution. It can lead to, or be associated
with, a wider tranche of money for research and teaching from that particular
company. Often such sponsorship confers some limited duties on the part of the
academic for the sponsoring company. For some institutions this has been a long-
established phenomenon; industry across the whole UK and from overseas has funded
professorships and other staff appointments.
52
The University of Hertfordshire has personal professorial chairs supported by Glaxo
Wellcome and SmithKline Beecham, which are two important local employers. Such
sponsorship can also be important in particular academic fields; one recent such area
is business schools, where an increasing number of staff are being funded by large
corporate sponsors.
In the context of work experience, half of all HEIs responding to the survey question
had institutional arrangements providing formal schemes for work experience in
industry for academic staff. This indicates a positive attitude, as well as demonstrating
the importance now attached to HE staff having close work experience with industry.
53
7. Structures and Policies to Support Linkages with Industry
7.1 Introduction
Over the last 10 years, HEIs have sought to coordinate and develop their links with
industry more effectively. In particular, HEIs have been concerned to protect and
exploit their knowledge bases more fully. This section charts the growth and
development of this commercialisation process, and the mechanisms and funds that
have been deployed to defend and manage such exploitation routes. More detailed
strategic and administrative issues behind such developments are outlined in Annex 5.
7.2 Frameworks and procedures for IPR and technology management
The survey data revealed that, at least in terms of licence income, almost three-
quarters (71%) of those HEIs that responded had instituted frameworks for revenue-
sharing agreements (Table 40). Universities and higher education colleges have
therefore begun to institute more formal intellectual property incentives and
mechanisms for industrial collaboration. HEIs are moving away from ad hoc, one-off
decisions to more consistent (but still flexible) polices for intellectual property
exploitation and transfer. The University of Newcastle upon Tyne is one such HEI; it
has established an incentive and exploitation policy for intellectual property which
covers both research and inventive activity, and possible spin-out companies (Section
7.3) created by such work (Box 7.1).
Table 40: Management and co-ordination of intellectual property and spin-out

companies
Type of Arrangement: Yes No
% %
Revenue-sharing agreements for licence income 71 29

Policy for allocating equity in spin-out companies 21 80
54
Box 7.1
University of Newcastle upon Tyne’s Intellectual Property

Exploitation Policy
Exploitation by licensing or assignment:
• revenue shared between university and inventor(s)
• after legal costs, first £5,000 of intellectual property (IP) income goes to the
inventor(s)
• the next £200,000 of IP income is split the following way: 50% to the inventor(s);
25% to the department(s) of the inventor(s); and 25% to the university.
Exploitation via start-up company:
• inventor(s) can take equity in the company
• inventor(s) involvement subject to the university’s company directorship policy.
7.3 Frameworks and procedures for spin-out companies
By contrast, the situation was almost reversed when it came to implementation of

policies for allocating equity in spin-out companies. In this case, many senior staff
and executives had simply not got round to instituting such a policy because it was
still a rare occurrence or because they felt it could be best handled on a ‘case by case’
basis because circumstances varied so much. However, it was evident that many HEIs
were beginning to feel that at least there should be overarching frameworks in place,
so that the overall position of the institution would be clear at the outset of any
discussions (see Box 7.1 for an example). A number of HEIs felt that they had lost out
from the any financial benefits of a number of spin-outs, even though the companies
established had relied on HEI support. How much a spin-out company owed to the
individual geniuses of staff working at home on their own, and how much was a result
of paid work within HEI was often difficult to discern (and more particularly dispute).
Nonetheless, an increasing number of HEIs feel a responsibility for attempting to

‘capture’ at least some financial rewards for the institution, whilst still allowing
incentives for staff to set up such companies. Mechanisms are being put in place to
institutionalise these arrangements in a more formal framework for both staff and
industrial clients and sponsors.
55
7.4 Mission statements
Most HEIs make some kind of formal acknowledgement to the importance of

industrial links in their strategic intent. Thus, in the context of the survey data, three-
quarters (75.3%) of HEIs which responded to the question of whether their institution
had a policy to support industry in terms of meeting industry’s education and training
needs as a formal part of their mission statement replied ‘yes’. A further 12.4% had
some other kind of formal written policy incorporating such an aim.
By contrast, only 12.4% of HEIs which responded had no formal acknowledgement of

their institution’s role towards industry in terms of teaching and education
commitment.
7.5 Level at which links are initiated and managed
This section reviews the level at which industrial links are initiated and established by
HEIs in the UK. This is done using the categorisation set out in Box 7.2. The
development process shifts from simple, one-off, one-to-one relations by individual
staff within HEI departments to complex, long-term consortia involving a wide range
of institutions and covering a broad spectrum of research and teaching arrangements.
There are six broad means by which HEIs establish and co-ordinate links with
industry (Box 7.2; see Annex 5 for further details).
56
Box 7.2
Typology of Channels through which Industrial Links are

Established and Co-ordinated
1) Links with industry initiated and delivered by individual, or small group of,
academics within HEI departments, ranging from consultancy through to research
and teaching work, via both a) informal, private contacts and b) formal, open bids.
2) Links established at departmental, school or faculty level, often through dedicated

applied research and/or training units, and ranging from one-off links through to
longer term research arrangements and teaching delivery with industry.
3) Collaborations established and co-ordinated centrally by the HEI through a single

administrative unit.
4) Links co-ordinated centrally by a university or higher education college, but

devolved directly to the HEI’s exploitation company.
5) Collaborations initiated and channelled through multi-HEI local or regional

consortia, often including additional institutions and agencies.
6) Policy-initiated collaborations stimulated by government schemes administered by

a central agency, such as LINK or the Teaching Company Scheme.
The survey evidence more specifically provided current guidance on what HEIs see as
the main conduits for helping to initiate new research and consultancy links with
industry. Not surprisingly, staff’s personal contacts came out as the most significant
channel for forming new research and consultancy links, and were rated as very
important (Table 41). Rated as important were initiatives outside the UK, particularly
the EU’s Framework Programme or other European programmes, such as EUREKA.
This highlights the continued growth in the scale and importance of such schemes to
UK universities and colleges. UK government-funded schemes, such as the LINK
programme and Realising Our Potential Award (ROPA), received a similar rating.
57
Table 41: Usefulness of main HEI channels for forming new research and
consultancy links
Channel type Rank Mean

score
Staff personal contacts 1 3.9
Initiatives outside the UK 2 3.1
UK government initiatives 3 3.0
World Wide Web 4 2.7
Institution’s directory of expertise 5 2.4
National & regional development agencies 6 2.3
TECs & LECs 7 2.2
Commercial databases 8 2.2
Business Links 9 2.1
Chambers of Commerce 10 1.9
Business innovation centres 11 1.9
1=not important, 2=minor importance, 3=important, 4= very important
After these three channels came a set of mainly electronic media, such as the World
Wide Web and institutional directory sources. Commercial databases, national and
regional development agencies and local agencies were all rated as being of minor
importance for HEIs in terms of helping to establish new research and consultancy
contacts. However, many HEIs did not view this to be the role of local agencies in any
case. A somewhat different perspective might have been gained by questioning firms
and asking them for their views about the key channels for making links with HEIs.
In relation to how such links are co-ordinated, there were frequently hybrid
arrangements in terms of the six forms outlined in Box 7.2 above. For example, the
University of Northumbria at Newcastle has 12 units (including the Electronics and
Physics Research Group, the Manufacturing Technology Group, the Centre for
Industrial Design and the Built Environment Studies Centre/European Building
Centre) housed within its five faculties (Type 2). All of these units are targeted at
undertaking dedicated research and teaching for industry. However, the units then
report to the university’s ‘umbrella’ company, UNNCEL, which manages, supports
and promotes their relations with industry (Type 4 above). Moreover, initiation and
co-ordination of industrial links do not necessarily equate with the management of
them. To take the case of University of Northumbria again, it can be said that the
establishment of links and their actual operation are undertaken on a Type 2 basis,
whilst their overall co-ordination and management are carried out on a Type 4 basis.
Yet even this is a simplification. Industrial research, and technical and consultancy
services may be co-ordinated on a personal (Type 1), departmental or faculty (Type 2)
level or via an exploitation company (Type 4), depending on the type of services being
undertaken.
This variation can be seen in relation to how collaborations with industry were
managed in terms of two types of activity, namely equipment-related services and
consultancy work. The main management locus for both universities and higher
education colleges was at departmental level (Table 42). However, management
practices varied significantly between equipment-related services and consultancy
activities, with the former more likely to be managed at departmental level.
58
Consultancy activity within universities was managed by a wide range of different
options. Interestingly, more universities centrally managed these activities centrally
than higher education colleges. There were also more universities that managed via
the HEI’s exploitation company; this is not surprising given that few higher education
colleges own exploitation companies.
Table 42: Proportion of value of equipment-related and consultancy services

managed at each level
Centrally Departmentally Managed Managed by Total

managed managed privately by an HEI
staff exploitation
company
Universities Equipment- 14% 64% 6% 16% 100%
related
services
Consultancy 15% 36% 20% 29% 100%
for industry
HE colleges Equipment- 4% 96% 0% 0% 100%
related
services
Consultancy 8% 67% 21% 3% 100%
for industry
The country in which the HEI was based added a further dimension to the way that
industrial links were managed. From the survey data, Scottish HEIs operated much
more centralised systems of management than either their English or Welsh
counterparts (Table 43). In the case of Welsh HEIs, much of the management
remained highly coordinated, but management was devolved to the HEI’s exploitation
company. By contrast, English HEIs have devolved more of their management to
departmental level, particularly for equipment-related activities (70% of all
responses). Although equipment-related and consultancy activity forms only a part of
the range of industrial research and technical collaboration, the survey indicated
potentially quite different strategies being adopted by HEIs across the UK; this merits
further study.
Lastly, a number of other specific mechanisms not covered by the typology in Box 7.2
or by the above analysis deserve some acknowledgement. These range from property-
led initiatives such as science parks (Section 4.4), through to the Knowledge House
(Annex 5) which acts as a central contact point for firms with HEIs in the North East
of England.
59
Table 43: Proportion of value of equipment-related and consultancy services
managed at each level by country
Centrally Departmentally Managed Managed by an Total
managed managed privately by HEI
staff exploitation
company
England Equipment- 8% 70% 7% 16% 100%
related
services
Consultancy 11% 38% 23% 29% 100%
for industry
Scotland Equipment- 84% 12% 4% 0% 100%
related
services
Consultancy 61% 29% 5% 5% 100%
for industry
Wales Equipment- 9% 23% 0% 69% 100%
related
services
Consultancy 1% 32% 0% 67% 100%
for industry
7.6 Links with intermediaries and consortia: one-to-one to complex

relationships
HEIs, as with other organisations, have had to deal with a burgeoning range of public
and public/private agencies at local, regional and national level over the last two
decades. Over the past few years, the institutional framework of government agencies
and quasi-public bodies has been bewildering both in its growth and also in its
frequent changes. One Vice-Chancellor recognised the need for engaging with these
organisations but was hampered by the ‘absolute mess’ that had emerged in his
university’s local and regional context.
In the past, life was much simpler for UK HEIs in relation to maintaining industry
contacts. HEIs largely dealt with companies on a one-to-one basis. But they are now
having to get used to dealing with firms through a welter of intermediaries and/or
consortia, either on their own or in partnership with other HEIs. Some of these
intermediaries only set up the initial contact (as with Business Link referrals made by
personal business advisers (PBAs)). Other intermediaries mediate the relationship
with the firm(s) not only through initial contact, but also throughout the course of the
link. This is often the case when an intermediary acts as a consortium leader, or when
an intermediary is part administering or funding the link, or both (funding may be
direct or indirect, for example through EU European Regional Development Fund
(ERDF) grants). Some intermediaries have a clear local or regional focus, such as
Business Links, TECs, LECs and RDAs. Others have a UK remit and are associated
with, for example, the LINK Programme or Research Council schemes.
60
8. Conclusions and Key Issues
8.1 Introduction
This study has explored the various means by which relationships develop between
HEIs and industry, and the current status of those relationships in the UK. While
building upon previous work, the survey has extended the scope of inquiry both in the
range of issues addressed, and by covering the entire higher education sector in the
UK. It was evident that a significant part of the information being sought was not
available from some institutions, for reasons of internal structure or resources with
which to respond. There are lessons for future surveys, notably the need to provide
long-term advance notice of future information requirements. Nonetheless, the high
response rate (particularly among institutions with significant industrial linkages), the
great efforts respondents made to provide information, and the convergence between
data from the surveys, interviews and published statistics all lend confidence to the
findings, subject to the cautions noted in particular instances.
8.2 Overall conclusions
Much has been made of the emergence of the ‘knowledge-based economy’ or

‘knowledge society’, where knowledge and technical acumen form the key
foundations of economic success and performance in the global industrial economy.
Within the knowledge-based economies, universities and other HEIs play a vital role
in the supply of both knowledge and trained people. A third role is emerging as an
initiator of entrepreneurial ventures which, after a suitable period of incubation, pass
into full industrial ownership in return for financial gain to the institution. The overall
finding of this study is that interactions of each type have continued to grow.
• Research grant and contract income is becoming absolutely and relatively more
important over time. Increasingly, industrial income is used in concert with public
resources across a range of schemes. However, major success in obtaining such
income is concentrated upon relatively few institutions. It is desirable that variety
and specialisation should exist among institutions, but the implication remains that
there is substantial growth potential if average practice moves closer to best
practice. The study has confirmed that successful collaboration is founded upon
mutual trust and shared goals with industrial partners, clearly expressed. Some
barriers to success, notably the changing priorities of industrial partners driven by
the market, cannot easily be legislated for, but others, such as increased
professionalism in the conduct of relationships, can be addressed at both
institutional and individual levels. The other important factors are time and
resources to support industry-academic links.
• Commercialisation of the results of academic research hinges upon securing

intellectual property rights. Again, there appeared to be growth according to all
61
indicators, in terms of patent, licence and option activity and income over the two
years covered by the study. But there was concern at the cost of exploiting and
protecting IPR. The number of HEI-owned companies is growing rapidly. In
addition, there are those spin-out firms in which the institution does not have a
holding. New institutional mechanisms, including on-campus incubators and
company laboratories, have added to the existing base of support activities, notably
science parks. The principal problem is financial: finding seedcorn capital to
develop ideas to the point where they may be marketed to more conventional
sources of finance. Finding the right partner or licensee and, once again, the
problem of time commitment of academics are the other principal barriers to
exploitation.
• In the context of teaching and training, relationships with industry are also
increasing at all levels. Postgraduate activity is dominated by policy-led initiatives,
notably the TCS and CASE. But industry is also becoming more involved in the
design and implementation of taught masters courses, often tailored to the needs of
a firm or group of firms. Modularisation and part-time registration characterise
such arrangements. Similar developments are underway in undergraduate teaching,
though traditional delivery mechanisms such as sandwich degrees are having
increasing difficulties in securing industrial placements. In short courses and
distance learning the HE sector is generally operating at the high-level, high-
quality end of the market, increasingly with the aid of new technology. Lower level
training is generally provided at lower cost by the FE and private sectors.
Accreditation represents a source of advantage for HEIs over agencies and other
suppliers who are unable to offer it. Success factors to be developed include
flexibility and the development of long-term relationships. Attracting the interest of
SMEs remains the greatest problem externally. Internally, the provision of career
and other incentives for HEI staff is necessary.
The following is a consideration in more detail of some key issues emerging from the
study.
1) Intellectual property and technology management
Despite the acknowledged importance of IPR in the administration and

commercialisation of research results, and IPR’s heightened profile in government
policy circles, many HEIs found effective management of their intellectual property a
problem. This was particularly acute for those newer and smaller universities and HE
colleges which only had small industrial liaison offices and could not afford to have
dedicated staff (or a unit in the form of a technology licensing office (TLO)) who
could properly manage and exploit the intellectual property and technology being
generated by their institution.
Many of the HEIs surveyed still felt that much of the research and technology they
generated was not being exploited at all, let alone being ‘fully’ exploited. This was to
the detriment of the HEIs, the higher education system and the local, regional and
national economies in which HEIs were situated. It is evident that some new
universities are working towards developing mechanisms that could be described as
‘best practice’, including collaborative arrangements between institutions. These
mechanisms need further consideration and support.
62
2) Local and regional embeddedness
All HEIs recognised that they needed closer involvement with their local and regional
economies. The survey findings made it clear that local linkages were very often with
the SME sector. At one level, institutions had clearly picked up on the need for action
from recent government documents, such as the Dearing Report (1997). However, for
most HEIs it was not just a ‘top-down’ exercise that they were required to undertake.
They had a genuine commitment to their local communities. HEIs and their staff
acknowledged that they had responsibilities to help support the development and
rejuvenation of their local areas. Most HEIs had begun a set of programmes that
would seek to develop these relationships further, although many senior academic
staff recognised that they still had much more to do.
In addition, although HEIs had begun their local and regional agendas on a largely ad
hoc basis, some felt they should have a clearer, if not more formal, role within their
economies. They felt the need for a more precise framework and guidance on where
they should engage with the local and regional economy. Much dialogue and focus
had been created by cross-directorships between HEIs and TECs/LECs, Chambers of
Commerce, Business Links and other local and regional agencies, as well as more
informal links with regional government offices in England, and government
departments in Scotland, Wales and Northern Ireland. In general such relationships
were functioning more effectively in Scotland, Wales and Northern Ireland. However,
many English HEIs also felt there was a plethora of institutional/agency relationships
which made achieving more effective HEI-originated and mediated regional
development difficult. In England the arrival of more formal regional development
agencies may do much to clarify this situation.
3) Incentives and barriers to industry-academic links
Barriers to industry-academic research links remain. Fundamentally, they still pertain

to the different objectives and aspirations of the two types of organisation and their
staff. More practical obstacles also exist and can be observed in relation to lack of
equipment or the lack of adequate incentive structures within the UK higher education
system. It should be recognised that incentives and barriers to industrial collaboration
occur at all levels of the system: in terms of the overarching institutional framework;
in relation to HEI organisations; at departmental level; and right down to the
individual level. More needs to be done to restructure, refine and develop these
incentive structures and to remove barriers to industrial collaboration. The study
revealed conflicting views about the RAE in relation to industrial linkages. It is clear
that its effects can be positive in the sense that leading-edge industry requires access
to excellent research, which the RAE seeks to reward. Its effects are negative in that
the RAE increases the pressure on academics to engage in publication-oriented
activities and hence crowds out the time to develop industrial links. The RAE is also
neutral in the sense that it does not aim to provide incentives for all aspects of
academic activity. If policy-makers wish to promote the full range of industrially
relevant activities, then additional targeted incentives of equivalent influence would
be necessary.
63
4) Competition and collaboration in industry-academic links
Two developments in industry-academic links that are emerging as important shaping

factors in HEI-industrial collaboration. They concern HEI-HEI collaboration in the
form of HEI consortia, and HEI-industry partnerships. Both of these dimensions raise
the question of competition.
i) HEI consortia: An increasing number of HEIs are forming consortia to

identify, co-ordinate and deliver research and training services to industry. Consortia
allow HEIs to tackle schemes associated with industrial collaboration which an
individual HEI could not afford or would not or be able to provide in terms of the
depth and range of services offered. Regional and local consortia are the most
prominent examples and were outlined in Section 7.5. They typically cover a broad
spectrum of activities, but may include more specific work, for example targeting
research and technical services towards SMEs, or offering Internet services. Such
regional groupings also allow HEIs to raise their political profile, and provide further
leverage for institutions when they become involved with TECs, LECs and national
and regional development agencies. HEI-HEI alliances have been highlighted, but the
importance of HEI-FE college alliances has also been stressed. Sectoral, technological
and task-specific groupings of HEIs also occur, although they usually retain a local or
regional focus. Despite the existence of prominent counter-examples, the main
impression given by interviewees in this study was that similar institutions were more
likely to collaborate than ones which differed in their mission, research-intensiveness
and so forth. Some saw this as a consequence of perceived status, while others felt
that similar institutions would simply have more in common.
ii) HEI-industry partnerships: HEIs and industry are also entering into a new and
wider set of research and training links, based on partnerships with deeper but less
formal relations. This can mean one-to-one collaborations associated with, for
example, company-funded laboratories on university campuses, through to more
complex sets of inter-firm (and inter-HEI) consortia (such as the Centres for Expertise
in Wales, See Annex 1). It is evident that many HEI-industry ties are no longer
restricted to short-term contacts centred on specific research or training topics, but are
moving towards longer term collaborations covering a wide range of issues and
agenda. A single company may now have a whole spectrum of links with a single
HEI. This in turn will be associated with a widening and deepening of formal and
informal links between staff at the two organisations at all levels, and not just centred
on a few research staff from both sides.
iii) Competition: The establishment of both consortia and partnerships has raised
some complex strategic issues, such as, when should HEIs operate on their own and
possibly in competition to their local HEI partners, and when should they collaborate.
HEI consortia may also start to act as regional cartels, for example, by informally
agreeing on the ‘going rate’ for specific research or training services. Each of these
relationships has its corollary in terms of competition. There was ample, if anecdotal,
evidence of increased competition among HEIs for industrial resources. This was
particularly intense in the training market, where new technology and entrepreneurial
attitudes were allowing HEIs to operate outside their home regions. In the research
field, the increasing requirement for industrial contributions to trigger public funding
has caused an ever wider range of academics to beat a path to industry’s door.
64
Competition for major investments from company universities or laboratories is even
more intense. The second dimension of competition comprises that between HEIs and
industry. The desire to raise revenue through commercialisation of intellectual
property inevitably positions HEIs in competition with other organisations developing
similar technologies. Within a collaborative relationship there is also some
competition for a share of the benefits. As with other previously ‘free’ goods, it will
take some time before there is universal acceptance of a market for knowledge.
Despite these possible reservations, both HEI consortia and HEI-industry partnerships
offer a rich and promising route for closer and more innovative industry-academic
collaborations.
65
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72
Annex 1: Policy Initiatives Associated with Developing HEI-
Industry Linkages
This Annex outlines some of the key policy initiatives associated with developing, or
which have a bearing on, industry-academic links in the UK.
LINK
The basic objective of the LINK initiative is to improve the competitiveness of UK

industry and to improve the welfare of people’s lives through the support of
programmes of pre-competitive science and technology. More specifically, LINK’s
mission is to ‘offer a well-established framework for collaboration between public and
private sectors in support of science and technology (S&T) in areas of strategic
importance to the national economy. LINK aims to enhance the competitiveness of
UK industry, and quality of life, through support for managed programmes of pre-
competitive S&T in market or technology sectors, and by encouraging industry to
invest in further work leading to commercially successful products, processes,
systems and services.’
Currently, 56 LINK programmes are sponsored by various government departments

and Research Councils (see below) in a wide range of technology sectors. Each
programme supports a number of collaborative research projects, which each last
between two and three years. The government funds up to 50% of eligible costs of a
LINK project, with the balance coming from industry. As LINK’s programmes focus
on a particular technology or market area, the initiative became a good ‘vehicle’ by
which the government could implement some of the recommendations coming out of
the Foresight initiative (see below). Since March 1995, the government has
announced 19 new LINK programmes which are responsive to priorities identified
under the Foresight initiative. These programmes will support projects costing up to
£169 million over the next few years.
Foresight
The Foresight Programme (originally Technology Foresight Programme) was

announced in the White Paper on Science, Engineering and Technology (1993)
‘Realising Our Potential’ and began in 1994 with the dual aims of forging a new
working partnership between science and industry, and informing decisions on the
balance and direction of publicly funded science and technology. Foresight is
managed by the Office of Science and Technology. At the core of the Programme are
16 panels (initially 15) with varying degrees of academic representation in their
membership, along with representatives from industry and government. The first
phase of the Programme culminated in the publication of sectoral reports by each
panel. These reports aimed to identify the likely social, economic and market trends
in each sector over the next 10 to 20 years, and the developments in science,
engineering, technology and infrastructure required to address these future needs. The
conclusions were based upon widespread consultation. Since the publication of the
reports, there has been extensive dissemination of the findings and numerous events
have been held. Most of those events have aimed to promote the development of
73
academic-industrial networks to support the exploitation of opportunities revealed by
the Programme. The most recent phase of Foresight has concentrated on stimulating
wider and deeper engagement of business, beyond the R&D function, towards
marketing, finance and business planning. Currently, consultation is in progress about
the format for a new cycle of Foresight, which is scheduled to report in November
2000.
Among the follow-up measures to Foresight was a dedicated scheme, the Foresight
Challenge competition. This was launched at the end of 1995 with the explicit aim of
increasing interaction between industry and academia. Consortia of business and the
science base were able to apply for matching funds for projects addressing Foresight
priorities. In the first round, following a large number of applications, awards were
made to 24 projects costing a total of £92 million, of which £62 million came from
industry and £30 million from the OST. The second round of the initiative, renamed
Foresight LINK Awards, has £10 million of government funding available. The
SHEFC and HEFCW also provided funding for research projects reflecting Foresight
priorities, awarding £7.5 million and £1 million respectively to support a total of 25
projects.
Joint Research Equipment Initiative
The Joint Research Equipment Initiative (JREI) supports the provision of equipment
in Foresight areas. The Funding Councils co-fund with external sponsors equipment
costing above £200,000, and the Research Councils amounts below that figure.
Additional funding has also been provided by the Department for Education and
Employment. One aim of this initiative is to promote partnership between higher
education institutions and external sponsors of research, including industry and
commerce. In 1997-98, the JREI is providing £80 million, £45 million of which is
from external sponsors. After two ad hoc competitions it is intended that the JREI
should become an annual feature.
HEFCE incentives
HEFCE introduced generic research (GR) funding in response to the theme of wealth
creation in the White Paper on Science, Engineering and Technology ‘Realising Our
Potential’. GR funding rewards collaborative research which does not have a single
beneficiary. It replaced a previous formula which rewarded all contract research (CR).
In 1995-96, GR funding amounted to £20 million. Allocations are made in proportion
to institutions’ GR qualifying income. Qualifying income is the total received from
users of research for collaborative projects where the institution retains the intellectual
property and publication rights to the related research. HEFCE is planning a ‘third
leg’ of support which will help institutions to boost their ‘professional capability’
through better links with the business world and local communities (Patel, 1998). This
will help institutions to develop long-term strategies for these activities and to
recognise them as a core activity alongside teaching and research.
74
Faraday Partnerships
The establishment of Faraday centres has had a long and difficult ‘birth’. The centres
were proposed as far back as 1992 by the Centre for the Exploitation of Science and
Technology (CEST) as a means of bridging academia and SMEs in the UK and were
inspired by Germany’s network of Fraunhofer Institutes. Under the previous
Conservative government, the DTI was to provide matching funding with the EPSRC,
but this did not happen and in the vacuum the EPSRC decided to go it alone. In
September 1997, it therefore announced the establishment of four pilot Faraday
Partnerships which will each receive £50,000 start-up funds and then up to £1 million
over four years from EPSRC. The main objectives of the Faraday Partnerships are to
encourage greater interaction between HEIs and industry, especially SMEs. The aim is
to expand information flows and links, thereby improving awareness in academia of
industry requirements and increasing exploitation of the research results (EPSRC
1997, 54).
Of the four Faraday centres, three involve partnerships between universities and
independent research and technology organisations. The centres are in the domains of
enhanced packaging technology, 3D multimedia applications and technology
integration, interdependent mechanical and electronic parts, and intelligent sensors for
control technologies.
University Challenge Fund
The government announced in its March 1998 budget the establishment of a £50
million seed-capital fund to encourage the exploitation of scientific discoveries in
universities. The government has agreed to contribute £20 million to this ‘University
Challenge Fund’. Additional funding will come from the Wellcome Trust, which is to
contribute up to £18 million, and the Gatsby Charitable Foundation (£2 million).
The aim is that universities will establish their own seed funds with the help of the
University Challenge money. The seed funds will enable academics to scope out the
commercial potential of research outcomes and take the first steps towards
commercialising the research. It is envisaged that a typical seed fund will have a size
of around £2-4 million and that universities will establish management boards with
substantial representation from the business and venture capital sectors to manage
their seed funds.
The University for Industry and company universities
In April 1998, the government outlined the new University for Industry (UfI) and
promised £15 million funding for its launch in 2000. Some 600,000 individuals are
expected to take part annually in its learning programmes by 2002 and 2.5 million to
use the university’s information services. In the long term, the UfI will be privately
funded, with the proportion of public sector support declining over time. Users will be
charged, mainly through individual learning accounts. A central aim of the university
will be to act as an education broker and deliverer, facilitating access to education and
75
training provision, whilst also stimulating new demand and developing innovative
products and services. The UfI will have four priorities:
1) Improvement of basic literacy and numeracy. The university has been set a
target of training an additional 200,000 people a year in basic skills to level
two of the national qualifications framework within five years.
2) Meeting the skills needs of SMEs. The university is being asked to deliver
services to 100,000 start-up businesses and 50,000 established companies
within five years.
3) Information and communication training for the workplace. The UfI will be
required to ensure that an additional 200,000 people enter into this kind of
training within five years.
4) Specialist training provision for automotive components; multimedia;

environmental technology and services; and distributive and retail trades.
The UfI has already attracted various criticisms, including whether it can even be
claimed to be called a ‘true’ university, or whether it should be called something else.
There is also discussion about how the UfI and the Scottish UfI (see below) might be
linked in with the new ‘community universities’ covering the University for the
Highlands and Islands, the Community University of the Valleys, and the Community
University of North Wales.
There are also a number of ‘company’ universities, such as the Unipart University,
which have emerged in the UK over the last few years and which have followed
successful American models, including Motorola University and Ford University.
These company universities have sought to provide in-house higher, further and
vocational training to their staff. The creation of such universities has allowed
companies to develop a more systematic approach to the education and training of
their staff. As with the UfI, their critics regard them as not being proper universities.
For company universities, the designation of the title ‘university’ has almost been an
internal marketing tool to emphasise the firm’s commitment to high-quality education.
It has also been used, however, to denote a trend away from company support of very
specific vocational training, often aimed at shopfloor workers, towards much wider
professional and business qualifications which upgrade the skills of employees who
are already graduates and postgraduates. This move indicates a shift in philosophy to
encompass the concept of lifelong learning and education to enable the workforce to
be more flexible and ‘rounded’.
A more ambitious development is the British Aerospace Virtual University. This is

being established with an annual budget of £200 million to provide the company, its
customers and suppliers with both a major education and training facility, and a focal
point for contact with universities for technology transfer. Its three faculties are for
engineering and manufacturing technology, ‘learning’ (covering a wide range from
lifetime education to masters and doctoral training), and an international business
school. The academic input will be provided by selected leading universities.
In this sense, both the UfI and company universities represent ‘virtual’ universities by
acting as intermediaries, brokers and conduits which place students with the relevant
76
teaching programmes in what might be termed ‘linked workplace learning’. Central to
the UfI concept is the inclusion of other universities and colleges in delivering directly
many of its courses. This brokerage and conduit role is also central to the success of
the UfI, acting as it does as ‘gatekeeper’ to the process of lifelong learning for many
people who have had little or no direct contact with traditional universities.
Other Research Council schemes
The Research Councils have all participated in schemes that have sought to encourage
industry-academic research links and exploitation activities. They have all been
closely associated with the LINK and Foresight initiatives (see above), and have
established packages which provide adjuncts to such schemes. Thus, the Medical
Research Council (MRC) runs an Open-LINK scheme which funds high-quality
collaborative projects that meet the LINK criteria, but which do not fit into any
particular LINK programme. The Natural Environment Research Council (NERC)
operates a pump-priming programme, Connect A, for short research projects,
workshops or seminars with industrial relevance. A larger scheme, Connect B, offers
grants of up to £200,000 for innovative partnerships with 50% funding from industry.
The EPSRC also runs several initiatives in which contributions from industry are
required as evidence of commitment and interest. Realising Our Potential Awards
(ROPAs) indirectly promote industrial collaboration by rewarding academics who
raise industrial funding with the opportunity to apply for funding for innovative
research.
Since the 1993 White Paper ‘Realising our Potential’, the participation of users
(including industry) has been a fundamental precept of Research Council activity. As
well as being manifested through specific initiatives, industrial influence (together
with that of other users of research) is felt through representation at virtually every
level: on the Council, through boards and committees, and through participation in
refereeing and consultative exercises. The Research Councils also sponsor efforts to
disseminate results to industrial audiences.
In terms of exploitation initiatives, in 1987 the MRC opened its MRC Collaborative
Centre in Mill Hill, London. Its role is to help establish pharmaceutical companies to
develop practical uses for MRC technology, and to be an incubator centre with
laboratory and office space for spin-out firms. The MRC also runs a seedcorn fund to
invest in MRC spin-out firms arising from MRC research. On a smaller scale, the
NERC co-ordinates NEST (Network for the Exploitation of Science and Technology),
a consortium involving all the Research Councils, some independent research
organisations and the University of Leeds. NEST provides a website to act as a
gateway for brokering partnerships between R&D users, providers and enablers of
exploitation.
77
National and regional initiatives
A number of prominent schemes have been initiated by national and regional

development agencies. One such scheme is the Centres for Expertise in Wales which
has been set up by the Technology Transfer Group of the Welsh Development Agency
(WDA). There are now 35 such centres based in HEIs across Wales. They comprise
specialist research groups which offer industry the opportunity to benefit from their
research expertise in specific scientific or technical fields. The aim of the scheme is to
help companies to access HEI resources, and to form collaborative links with
academics to develop relevant projects. The cost of carrying out research in these
centres can be supported through a programme of partnership schemes and shared
resources. The Centres of Expertise can particularly support SMEs who could not
undertake research projects on their own. The centres can also help with specific
areas of expertise in design, prototyping, automation and testing.
In Scotland there have equally been a whole range of schemes and initiatives
established in order to further industry-academic links. The most recent has been the
announcement of a Scottish University for Industry (Scottish UfI). For the English
regions, schemes have been more limited and specific, but nonetheless successful.
One such example is Higher Education Support for Industry in the North (HESIN)
outlined in Annex 5.
78
Annex 2: Research Instruments and Procedures
For the purposes of this study it has been assumed that three main types of
relationships between HEIs and industry can be distinguished.
Relationships in the context of research

These can be direct and mediated. Direct links include: sporadic contributions from
industry to the science base (donated research equipment or one-off financial
contributions); research commissioned to HEIs by industry; services offered and/or
required (measurements, standards, testing); movement of researchers between HEIs
and industry. Mediated links between HEIs and industry mostly concern co-operation
and collaboration in the process of research and are encouraged by a wide range of
government mechanisms (notably LINK).
Relationships in the process of teaching and training

In the context of these relationships, HEIs provide teaching and training aiming to
satisfy demands from industry. These relationships are initiated through mechanisms
such as: the Co-operative awards in Science and Engineering (CASE), Industrial
CASE, the Teaching Company Scheme and so both. The activities are at master’s or
PhD level, or through tailored short courses and schemes for continuous education
(including distance learning).
Commercialisation of research results

HEIs tend to exploit their research results through patents (and other means of
protection) and licences, and through forming companies (according to the findings of
previous studies two distinct types of companies are being formed: exploitation
companies which are wholly or partially owned by HEIs, and spin-out companies
which are set up to exploit results from university research, but have a separate
identity). Policies and mechanisms to encourage the commercialisation of research
results include science parks and incubator units.
These assumptions and the need to ensure continuity and comparability between this
study and previous studies shaped our decisions regarding the specific instruments for
data collection and their design. The following instruments for data collection were
used.
i) Industrial liaison officers’ questionnaire
This questionnaire was sent out to industrial liaison officers (or equivalent) in the
universities and HE colleges in the scope of the study and collected information about
the following issues:
• number and size of research contracts directly commissioned by industry; type of

research and services offered by institutions; number and size of sporadic
contributions from industry; movement of staff; number and size of
participation(s) in different initiatives and schemes aiming to increase
collaboration with industry; participation in local schemes and initiatives (if any);
• motivation for entering into collaborative relationships with industry; barriers to

forging new links with industry; problems most commonly associated with
79
maintaining existing links; the role and importance of intermediary organisations
and other factors for forming new research and consultancy links with industry;
• number of exploitation and spin-out companies and when set up; turnover of
exploitation and spin-out companies (by company and year if possible); contact
details for exploitation and spin-out companies; what R&D product/process do
they exploit and origin of initial funding (if possible); established mechanisms for
commercialisation of R&D results (incubators, participation in science parks);
number of patents and licences filed and granted.
ii) Continuing education officers’ questionnaire
This questionnaire was sent to continuing education officers (or equivalent) in the
HEIs and collected information regarding their teaching-related links with industry.
Issues covered by the questionnaire included:
• numbers of staff and students sponsored by industry (including sponsored

undergraduates and sandwich students); existence of masters courses (face-to-face
and distance learning) specially designed to address industrial needs; short courses
sponsored by industry; annual revenue arising from these courses;
• assessment of the usefulness of different factors for initiating of new education,

continuing education and training projects with industry.
iii) Semi-structured interviews
The study also used two semi-structured interview guides — one for interviews with
continuing education officers and one for interviews with senior academic staff
(mainly vice-chancellors). These interview guides had different emphases. The one
for CEOs aimed to collect more detailed information on issues already included in the
questionnaire, such as institutional policy to support the needs of industry, modes of
institutional involvement in collaboration with industry, and the importance of
intermediary agencies. The interview guide for senior academic staff aimed to collect
information regarding strategic views of present and future policies at institutional
level, and the way in which these are influenced by policies at national level.
iv) Direct inquiries
In addition, in the course of the study a number of direct inquiries were made to
bodies such as the UK Science Parks Association, the OST, the Research Councils and
the Association for University Research and Industry Links (AURIL).
Response rates
The following tables present information about response by country, type of
institution and type of returned questionnaire. The calculations are based on
institutions that have submitted at least one of the questionnaires.
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Table A2.1: Distribution of institutional response by country and type of
returned questionnaire
Country Only ILO Only CEO Both
England 21 88% 12 80% 62 74%
Scotland 2 8% 2 13% 13 15%
Wales 1 4% 1 7% 8 10%
Northern Ireland 1 1%
Total 24 100 15 100 84 100
Table A2.2: Distribution of institutional response by country and type of
responding institution
Country Universities HE Colleges
England 65 76% 30 79%
Scotland 11 13% 6 16%
Wales 8 9% 2 5%
Northern Ireland 1 1%
Total 85 100 38 100
Questionnaires
The ILO and CEO questionnaires are reproduced in Annex 8.
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Annex 3: HEIs and the issue of Intellectual Property Rights
Background
Up until the mid and late 1970s, HEIs gave very little consideration to IPR issues. As
far back as 1971, the Docksey Report (1971) proposed the abolition of monopoly
rights granted to the National Research and Development Corporation (NRDC) in the
exploitation of research results. The report recommended that HEIs should be granted
the freedom to choose the routes and mechanisms for the commercialisation of their
research results. However, it was only effectively in 1985 that the then Conservative
government formally ended the NRDC’s monopoly in the exploitation of publicly
funded research. The NRDC itself was restructured under the new name of the British
Technology Group. Even then, HEIs formally had to satisfy the BTG that they had
proper mechanisms in place for identifying, protecting and exploiting their intellectual
property (Gourlay et al. 1997).
Since the mid-1980s, many HEIs in the UK have developed much more sophisticated
strategies for protecting and making use of innovations coming out of academic
research. Many HEIs started to set up specialised intellectual property management
and administrative centres, commonly known as technology licensing offices. These
were set up within, or parallel to, existing industrial liaison offices. Up until this
period, most HEIs had little monitoring, let alone effective control, of the intellectual
property that was being generated by their staff. Many real commercial opportunities
were lost. Some were never exploited, others were taken up by private companies —
all too often it seemed from overseas.
This view was so strong that it led to the setting up in 1980 of Celltech Limited with
funding from the National Enterprise Board (NEB). By the early 1980s, with an
increasing degree of linkage between HEIs and industry, associated with the growing
concern over income generation for public sector research, IPR had become a major
policy and strategic issue. The tendency to view academic and public sector research
as a free public good sponsored by government had begun to be replaced by a more
complex model of public-private relations. This trend has been furthered by
government and other policy documents (Cabinet Office, 1992; 1993; National
Academics Policy Advisory Group, 1995) which have all highlighted the need to
tighten up intellectual property management and exploitation in the public sector, and
in HEIs more particularly.
IPR and some associated problems
Aside from the issue of IPR disputes acting as a barrier to industry-academic

relations, for certain HEIs and based on the interview survey of senior staff, the
question of IPR was seen as a significant overall problem. It was not so much seen as
a barrier hindering industry relations, but as a lost opportunity. This was in the sense
that HEIs felt that they did not have the adequate capacity, and more particularly
funds, to exploit commercially or defend their IPR. The management of IPR can be
seen as covering the whole spectrum of intellectual property activity, namely in the:
82
1) effective monitoring of research/inventive activity being generated by the
university or higher education college;
2) accurate identification and selection of research/inventions that are seen as

valuable and worth protecting in terms of generating future income;
3) take-up and negotiation of the selected research/inventions with the research

team for protecting and defending the research, including the establishment of
appropriate incentive and exploitation schemes;
4) selection and establishment of the appropriate legal IPR defence mechanisms

for the research/inventions;
5) decision on the length and extent of IPR protection for the research/inventions;
6) appropriate decision on the long-term IPR exploitation and development route

of the research/inventions.
It should be noted that many of these activities are not sequential and linear, but run in
parallel and involve close feedback loops. Nonetheless, the range of these IPR
activities provides a spectrum of what is entailed in the proper management and
functioning of the IPR system within HEIs.
83
Annex 4: Teaching and training policy initiatives
Some initiatives aiming to encourage the establishment of industry-academy links in
the context of teaching and training are described below.
Teaching Company Scheme
The Teaching Company Scheme was founded in 1975 and has been regarded as one of
the greatest successes of UK HEI-industry links. The TCS was initiated by the DTI
and aims to develop active partnerships between HEIs and industry. The scheme sets
up partnerships between firms and HEIs through the formation of teaching company
programmes. Firms take on graduates, known as TCS associates, to work full time on
specific projects jointly supervised by the HEI and the company.
Projects are intended to be closely linked to the interests of the firm and should be
aimed at achieving a substantial and comprehensive change in the firm, for example
in management and production techniques. Partnerships are exclusively between HEIs
and firms within the region as the associates must travel regularly between the two
organisations. The scheme has five formal objectives, namely to:
a) raise the level of industrial performance by effective use of academic

resources;
b) improve manufacturing and industrial methods by the effective use of

advanced technology;
c) train able graduates for careers in industry;
d) develop and retrain existing company and academic staff;
e) provide academic staff with broad and direct experience of industry, to benefit
research and enhance the relevance of teaching.
A typical programme lasts for two years. The graduates have a science and
engineering background and are recruited jointly by the partners. The associates spend
90% of their time working in the company on specific projects and are paid at
industrial rates. The remaining 10% of their time is spent within the HEI undergoing
training. Until 1981, the TCS was financed totally out of public funds, but since then
firms have provided up to one-third of the cost of new programmes and at least 50%
of the cost of renewed programmes. The programmes range in size from one associate
over two years to 14 associates in a three-year programme which is then renewed. A
quinquennial review during 1996 found that 70% of associates are offered
employment in participating companies at the completion of a TCS programme. Well
over 2,000 TCS partnerships have been created since it was first established.
One example of the new TCS centres is that of Cardiff University, the University of
Glamorgan and North East Wales Institute who are partners in the TCS centre in
Wales (one of 40 programmes in the Principality). An SME participating in the
scheme for the first time only needs to pay 30% of the direct costs (compared to a
84
larger firm, which normally pays 60% of costs). Although it is still too early to
provide an adequate assessment of TCS Centres, early evidence indicates that it has
been successful in making HEIs more aware of the education and teaching needs of
SMEs (Robson, 1996, 106).
Co-operative Awards in Science and Engineering
The Co-operative Awards in Science and Engineering scheme is used to fund research
students, who are jointly supervised by academics and external sponsors who may
come from industry or from public sector bodies. The CASE scheme is largely
financed by the Research Councils, with some industrial finance for the student and
the academic department. The awards aim to encourage industrially relevant research
projects by PhD students at HEIs. Standard awards are allocated to HEIs, typically by
a quota allocation to a department.
In 1994, the CASE programme was extended to cover Industrial CASE. This
extension was set up under a three-year trial period. Industrial CASE operates in
exactly the same way as CASE, except that the Research Councils allocate the awards
to industrial companies to support projects at HEIs which they select. Thus with
Industrial CASE, studentships are allocated directly to firms so that they can take the
initiative in defining the research project and selecting the academic partner. Under a
1996 review of the pilot scheme, the Industrial CASE programme received strong
support. Aside from the normal Industrial CASE mechanism, a small number of
awards under a continuing pilot scheme are made available to SMEs through regional
technology centres regional technology centres. This initiative also appears to have
worked well and has extended the reach of the scheme to firms who would not
normally have participated in CASE.
Other postgraduate schemes
The Research Councils also run a range of bespoke schemes often linked with wider
government programmes (other bodies run similar schemes, for example those run by
the Royal Society of Edinburgh). Schemes run by the EPSRC are presented here as
one example. The EPSRC manages a number of postgraduate schemes linked in with
the TCS and CASE. These are briefly outlined below.
1) Engineering doctorate: Most notable perhaps is the engineering doctorate, which

is a four-year award designed to develop innovative thinking, whilst tackling
industrial problems. It aims to develop not only engineering skills, but also a wider
repertoire of research, business and management expertise essential to successful
innovation in industry. Five centres based in HEIs operate the scheme and 75 new
awards are allocated each year. Some 200 companies are currently participating in
sponsoring research projects within the centres (EPSRC, 1997, p.53).
2) Postgraduate Training Partnerships: This scheme is jointly funded with the DTI
and offers the opportunity for doctoral students to undertake industrially relevant
postgraduate training in industrial research organisations, again in partnership with
selected HEIs. In 1996, three new partnerships were established and support for the
85
initial five centres was extended for a further three years. From 1997, 65 studentships
were to be available annually through the eight designated centres.
3) Research masters: In 1995, a four-year pilot scheme was established to provide

students with a range of skills of value to research careers within industry and
elsewhere. A total of 160 studentships have been made available each year since 1995
through 16 courses.
4) Total Technology: This scheme’s objective is to provide young engineers with a

thorough training in research, development, design, planning, production and
maintenance activities. It also seeks to broaden their skills base by making them more
effective ‘hands-on’ engineers. A total of 46 CASE studentships are channelled to four
designated centres each year through this scheme.
5) Integrated Graduate Development Scheme: The IGDS aims to promote and

develop industrially oriented postgraduate training for students employed in industry.
The scheme involves a series of short intensive modules designed to extend graduates’
technical and managerial abilities, especially in terms of attuning them to the needs of
their firm. For the individual, the scheme can lead to a part-time MSc. Funding is
provided on a pump-priming basis to establish the course, with the intention that the
programmes will become fully funded by industry. Up to the end of 1997, the EPSRC
has funded 45 IGDS programmes across the UK, involving more than 300 firms. The
EPSRC is currently seeking to extend the scheme through distance learning and
innovative teaching methods.
6) Fellowships: In 1997, the EPSRC instituted 25 new advanced fellowships, seven

new industrial fellowships and three new senior fellowships, and the funding for one
fellowship under the Daphne Jackson Trust (to support career-break returnees) each
year.
7) Graduate schools: Graduate schools are one-week courses set up by EPSRC to

broaden the skills training of postgraduate engineers and in particular to help prepare
them for employment. Around 1,000 students pass through these graduate schools
each year.
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Annex 5: HEI Frameworks for Industry Collaboration and
Linkage
Introduction
This annex describes the background to some of the key developments in industry-
academic links that HEIs have set out to institute over recent years. More specifically
it outlines a number of frameworks, strategies and procedures that HEIs have
developed in seeking to enhance their commercial and community effectiveness.
Research and liaison offices
As with other aspects of industry-academic links, there has been a clear trend towards
the professionalisation and training of technology transfer staff within HEIs and the
establishment of research and liaison offices. These offices or units have acquired a
much more central role within HEIs and their status has risen substantially. Many
industrial liaison and technology transfer staff work in specialist units established by
HEIs. In smaller or more decentralised HEIs, however, such staff often remain in the
main administrative functions of the organisation, or in some cases directly in the
research facilities themselves.
Industrial liaison officers form the main ‘actors’ in HEIs in relation to developing and
sustaining industry-academic links, although their status and relationship with the host
institution can vary considerably. There are ILOs who are permanent members of the
institution (senior administrative or academic staff). On the other hand, some ILOs are
kept at arm’s length and are employed in the HEI’s ‘umbrella’ holding company (and
are usually recruited from industry). However, although ILOs were the first
development within HEIs, they have been supplemented more recently by other
specialists within research contract offices or exploitation units. These newer
specialists and specialist units are more likely to have general business or legal skills,
and provide advice on contract law, business plans for spin-out companies and even
property management skills for HEI-owned science parks (Charles and Howells,
1992, pp108-9). The emergence of technology licensing offices (Section 8) as an
adjunct to industrial liaison offices within HEIs is just one example of this increased
specialisation over time.
As noted above, there has been a growing professionalisation of industrial liaison,

technology transfer and exploitation staff within HEIs. As far back as 1969, the
University Directors of Industrial Liaison group was established. This was
subsequently mirrored by the creation of the Association of Industrial Liaison
Officers, formed for liaison staff operating within UK polytechnics and higher
education colleges. With the creation of the new universities out of the former
polytechnics, these two organisations merged to form the Association for University
Research and Industry Links. AURIL (and its forerunners) has sought to extend the
professionalisation of industrial liaison work through two main elements of activity:
firstly, by promoting the growth of university-industry collaboration; and, secondly,
by exchanging information relating to the best practice technology transfer (see, for
example, AURIL/CBI, 1997). The staff involved in industrial liaison and technology
87
transfer are a mixed group both in their skills and roles within the institution and in
their backgrounds. Not unexpectedly, those taking up industrial liaison posts in HEIs
are unlikely to have the full range of necessary expertise to undertake the job and
there is considerable learning and job redefinition taking place at all levels (Barnes,
1988). Attempts to provide more formal training courses have been slow. They have
been based on retrospective examination of the kinds of tasks performed by industrial
liaison staff, and attempts to identify generic approaches to continuing professional
education (European Research Associates, 1987).
Research and liaison offices are also becoming more proactive. In the past they
largely administered and advised on research contracts and projects that were directed
towards them. Such units are now actively scanning the external environment for
industrial contacts and partners.
Continuing education offices and ‘lifelong learning’
There has been a long evolution towards what might be described as the aim of
‘seamless’ lifelong learning which provides higher education to a wide section of the
populace throughout their lives. In the past, the ‘old’ universities often had individual
and separate adult education and continuing education departments. These
departments were targeted at what were seen as very different ‘markets’ for the
services of higher education, namely adult liberal education and the provision of
applied and vocational education and training services for industry. By the early
1990s, many of these departments were merged, as in the example of Keele
University. In Scotland, however, there remains a differentiation. This is between
continuing personal education and continuing professional education. The latter is
targeted specifically at those already employed and is vocationally relevant.
Most CEO and related staff interviewed for the study envisaged that there would be
significant growth in courses delivered through concentrated modules (for example,
over the weekend or during holiday periods) and via distance-learning methods.
Further aspects of this discussion are presented in Section 5.
Changing organisational and management structures
In the past, most research and teaching contact with industry was carried out primarily
by individual academics working in departments that covered traditional disciplines in
science and engineering. Over time such relations have become more formalised and
have come more directly under the supervision of HEI administration. There has been
a growth in more specialised applied and interdisciplinary departments and units, and
new organisational structures which have sought to deal more adequately with
industry collaborations. These departments and units have typically been targeted at
particular markets or fields of industrial technology rather than following traditional
disciplines. HEIs have therefore taken a much more centralised and formalised
approach to industry relations over the last two decades. The existence of an industrial
liaison unit, in turn supported by a dedicated IPR office and an ‘umbrella’ HEI-owned
firm is now commonplace in many of the larger HEIs. Many of these developments
are linked, as with case of the University of Northumbria at Newcastle (see below).
88
At the same, time new organisational structures and improved reporting practices and
standardised procedures have been adopted by most, if not all, HEIs. The
dissemination of practices and procedures to staff and more particularly their
monitoring and implementation are, however, still lagging behind in many HEIs. One
example of new practices is in the Department of Chemical Engineering at Imperial
College, which introduced a type of matrix management with devolved budgets and
rigorous cost accounting (Charles and Howells, 1992, p132). The activities of the
department have been organised into a series of programmes which are cost centres
and which draw upon academic and research staff as necessary, according to the type
of project being undertaken. For each programme an annual budget and forecast of
earnings are prepared, against which programmes are assessed.
As the range and complexity of industrial links and the organisational responses to
them have increased, so have the dangers of remoteness and disengagement of
‘normal’ university and college life. Increasingly, specialists and specialist units have
been brought in to deal with issues that in the past were dealt with at departmental
level by academics and administrators. This shift has brought its benefits, but the
balance must be maintained so that many of these specialist staff and units do not
become remote from mainstream HEI activities and end up as ‘enclaves’.
Organisational frameworks and practices that seek to maintain structures and
mechanisms which are as decentralised as possible for dealing with industrial links,
whilst benefiting from more centralised advice and administrative support, are likely
to be more successful in the long term.
Mission statements and HEI strategy toward local and regional economic
development
Mission statements and HEI strategy toward economic development are

communicated to staff through a variety of mechanisms:
i) induction courses for new staff;
ii) certain types of training and retraining of existing staff;
iii) staff newsletters and electronic media;
iv) the proactive approaches of ILO staff making personal contact with
departments and individuals, and highlighting the obligations and policies of
the HEI regarding industrial links.
How effective these approaches are in emphasising and reminding staff about the
industrial mission of the HEI is difficult to assess, although the personal contact
undertaken by ILO staff is seen as probably the most effective.
The importance of industrial links can moreover be stressed in a variety of forms,

either in combination or on their own. Direct acknowledgement of the importance of
industrial links is made in straightforward terms in relation to their contribution to the
income stream of the HEI and the funding of crucial research. The value of such links
is also noted in relation to enabling applied research which HEIs might otherwise not
undertake without industrial support and technology knowledge sharing. The
89
industrial mission is additionally stressed in the context of teaching and the more
general shaping of the strategic direction of the HEI. Thus the University of
Portsmouth states in its strategic plan:
‘The University is particularly concerned to meet the needs of employers in

developing its academic programmes, building on its existing strengths in
preparing students for employment.’
and ...
‘The University will establish employer advisory boards for all departments.
This will enable the University to develop its understanding of and
responsiveness to the future requirements of the economy, industry and the
professions. The flexible, unitised course structure will enable the University
to respond more rapidly not only to changes in student demand but also those
of industry, commerce and the professions.’
The indirect value of an industrial strategy is also being increasingly stressed in

relation to allowing the HEI the ability to deliver on its wider contribution to the local
and regional economy, as in the example of the University of Portsmouth’s reference
to it in relation to student teaching. This is in terms of economic development and
social regeneration. Here HEIs see themselves as both partners with industry and
other local agencies (the importance of ‘partnership’ is increasingly being stressed),
but also as vital ‘animateurs’ within the local or national system, often as a major
employer in the local economy.
This last point should not be ignored. The higher education system has expanded
rapidly over the last decade at a time when many traditional industries have
undergone further restructuring and in some instances disappeared. New universities
in a number of localities are now the largest employers in the local economy, and
regardless of top-down policy statements have acknowledged their often pivotal
position in the future prospects of their area. In some instances this responsibility is
taken even more seriously than the direct contribution of industrial funding to the
HEI’s income base. This can be seen, for example, in Bolton Institute of Higher
Education’s strategic plan 1995-2000 where one of its ‘core values’ is:
‘establishing strong collaborative links with external local, national and

international communities and organisations, partly in order to emphasise the
Institute’s role in economic regeneration.’
and a key strategic goal is:
‘to be a major provider of easily accessible HE, including continuing

vocational education, within the South Lancashire/North Manchester sub-
region.’
and:
‘to be an integral part of the wealth creating and economic regeneration

activities in the North West, especially Bolton and Bury.’
90
Similarly, many other institutions have mission statement commitments to their region
which are firmly embedded in the consciousness and responsibility of the staff. A
number of HEIs have gone so far as to establish regional offices. In 1993, for
example, the University of Sheffield set up the Sheffield Regional Office to provide a
focal point for establishing partnerships with local private and public sector
organisations. The regional office is also looking at ways in which the university can
participate more fully in local economic regeneration and how it can establish local
fora and industrial clubs. The University of Newcastle upon Tyne has also established
a regional development office to co-ordinate and make more proactive its relations
with the Northern region.
Such commitments are reflected in the survey data, in which over two-thirds (68.6%)
of HEIs who responded to the question of whether their institution had a policy on
contributing to regional development as a formal part of their mission statement said
‘yes’. A further 15.1% had some other kind of formal written policy incorporating
such an aim. By contrast, only 16.3% of HEIs which responded had no formal
acknowledgement of their institution’s role in regional development.
Initiation and management of industry links by HEIs
Section 7.5 provided a short discussion of the level at which industrial links are
initiated and established by HEIs in the UK. It outlined six broad means by which
HEIs establish and co-ordinate links with industry (Box 7.2); each of these will now
be discussed in more detail.
1) Individual/small group links
Individual and small-group links remain a key element in industry-academic

collaboration and have been the longest established. In the past, many of these
relationships were informal and payment went directly to the academic with the HEI
having no knowledge of, or involvement in, the transaction. More recently, as HEI
funding pressures have become more acute, HEIs have sought to formalise and
control such exchanges and to gain the financial benefits of such collaboration (see 3
below). With the continuing real decline in academic salaries, HEIs have instituted
elaborate mechanisms to allow often substantial payments to academics in order to
retain them within the HEI and to act as an incentive to pulling in further industry-
related monies. Nonetheless, many of these transactions are still undertaken
informally and records of such collaborations remain poor.
91
2) Departmental or faculty links
The main growth in industrial links in recent years has been through more proactive,
targeted initiatives established at departmental or centre level, driven by the need to
obtain research and teaching funding to establish and maintain centres of excellence
in particular fields. These links may be at departmental level or school or faculty
level, depending on the size of the department or faculty. However, they may also be
channelled through applied units or centres which are either wholly or partly targeted
at industry’s research needs. This growth has been accompanied (or as many would
argue has been encouraged) by the growth in short-term, non-tenured staff contracts,
which has allowed greater flexibility in coping with changing research needs and
funding levels. Increasingly, administrators support these departmental or faculty-led
industry links, and provide financial and other contract-related advice.
3) Centrally co-ordinated links
A number of HEIs have sought to centralise the way in which industrial links are
established and co-ordinated. This is in part a reflection of HEIs seeking to ‘capture’
more industrial revenue and to monitor it more effectively. Centralisation has also
been associated with the increasing professionalisation of industrial liaison and
technology transfer staff, who feel they can offer better advice and support to
academic staff through a centralised mechanism. In turn, they can also offer a better
managed and higher quality service to industrial clients.
4) Co-ordination via exploitation companies
Some HEIs have adopted centralised co-ordination of industrial links, but have
devolved their day-to-day operation to wholly-owned exploitation companies. In this
arrangement, HEIs devolve much of their overall management of industrial liaison
issues to their exploitation companies, where the specialised personnel best placed to
co-ordinate such relations in the HEI are based. However, this arrangement still
allows the centralised monitoring, co-ordination and capturing of industrial links and
revenues.
5) Local, regional and national HEI consortia
HEIs are not only combining to act as pressure groups according to age, status and so
on, they are also increasingly combining to form regional interest groups. These often
have a strong industrial collaboration dimension, as can be seen in an increasing
number of local, regional and national groupings of HEIs. One of the longest running
is Higher Education Support for Industry in the North which was established in the
Northern Region of England to support wider frameworks for HEI-industry links in
the region (Box 5.A). More recently in 1996, HESIN set up the Knowledge House, an
initiative to provide local industry with a single point of contact to the universities.
The scheme is specifically targeted at SMEs who otherwise would not consider
contacting or searching for university-based expertise and it is partially funded by
ERDF money. In Yorkshire and Humberside, the Yorkshire and Humber Universities
Association was founded as a collaborative venture between the region’s nine
universities and seeks to encourage regional development. In particular the association
is seeking to develop a more co-ordinated and targeted business agenda for the region.
92
In a more local scheme in Sussex, the local HEIs (the University of Brighton, the
University of Sussex and Brighton College of Technology) have received funding
from local authorities and industry to establish the ‘Sussex Academic Corridor’ and
the Sussex Innovation Centre (Box 5.B) to lead a more entrepreneurial and property-
led scheme to support HEI spin-outs and high-technology companies in the local
economy. Another more specific example is the System Level Integration institute in
Livingston, supported by a coalition of HEIs and agencies in the local region (Box
5.C).
The government is driving HEIs to form more cohesive regional units and to become
more dominant forces within their respective regions. Thus Dr Howells, the former
Minister for Lifelong Learning, has stated that universities and colleges must be
prepared to act as regional powerhouses and to take a lead role in defining how the
UfI (Annex 1) and the new regional development agencies should operate. Dr
Howells noted ‘We are very keen that universities should view themselves more than
they do at present as very important resources for the region they serve’ 18.
18
see ‘Howells outlines UfI vision’, The Times Higher Education Supplement 24.04.98.
93
Box 5.A
Higher Education Support for Industry in the North (HESIN)
HESIN was formed in 1983 as a local industry-academic consortium. HESIN’s

constituent bodies were five HEIs in the Northern region: the University of
Newcastle upon Tyne, the University of Durham, the former polytechnics of
Newcastle, Sunderland and Teesside together with the Northern regional office of
The Open University. HESIN has set up several training schemes in collaboration
with industry. The two most notable are a former EU-funded COMETT project and
an integrated graduate scheme.
NEPTUNE was a COMETT-initiated university training enterprise which co-

ordinated individual submissions from HEIs in the Northern region. It comprises a
partnership between the six HESIN members, the Regional Technology Centre
(RTC North), the Northern Development Company and three private sector
organisations.
Knowledge House
More recently in 1996, HESIN set up the Knowledge House to provide an interface
connecting the universities and industry in the North East. Its task is to encourage
local SMEs to take advantage of the combined resources located within the six
North Eastern universities. The Knowledge House functions as a centrally co-
ordinated enquiry and response service providing local industry with a single point
of contact for advice, guidance and support on a range of technology and
management-related issues. RTC North acts as the central co-ordinator of the
Knowledge House, with additional managers based at each of the universities.
94
Box 5.B
The Sussex Academic Corridor
The Sussex Academic Corridor involves the collaboration and support of Brighton
College of Technology, the University of Brighton and the University of Sussex,
together with Brighton Borough Council, East Sussex County Council, Lewes
District Council and Sussex TEC. The aim is to help contribute to the economic
regeneration and development of an area running along Lewes Road from
Brighton to Falmer. The vision is for the HE sector in Brighton to become an
engine of local and regional growth, both through its own development along the
Corridor and through the co-location of advanced, competitive, high value-added
enterprises across a range of industrial, technological, professional, commercial
and cultural activities. One mechanism the initiative seeks to use is that of
providing technological and research support to existing or newly locating
businesses in the area. Another is that of spinning out commercial activities from
the partner academic institutions. In addition, the Sussex Innovation Centre (see
below) will provide a key resource centre for innovative activity in the Brighton
area.
The Sussex Innovation Centre
The Sussex Innovation Centre is a 20,000 square foot business campus located
adjacent to the University of Sussex’s campus at Falmer near Brighton. It
represents a public-private partnership between the University of Brighton, the
University of Sussex and Brighton College of Technology. The Centre has
received funding from Brighton Council and East Sussex County Council and is
sponsored by Seeboard plc. It is subdivided into units, ranging from 145 square
feet to 1,500 square feet. The units are available as offices, laboratories, or a mix
of both on rental terms of up to five years. Tenants have access to a group of
external advisers and consultants on various issues, including finance, marketing,
and intellectual property protection.
95
Box 5.C
System Level Integration Institute
Scottish Enterprise, together with the Universities of Glasgow, Edinburgh, Heriot-

Watt and Strathclyde, established in 1997 a System Level Integration (SLI) institute
which specialises in the science of combining increasing numbers of hardware and
software functions within ever-reducing dimensions on a computer chip.
The institute forms part of two other facets comprising Project Alba, supported by
Scottish Enterprise. This project represents a major investment by Cadence Design
Systems, the world’s leading supplier of semiconductor design technology and
services, in Livingstone, West Lothian. The last facet is the establishment of an
independent design complex based on SLI. This will be the focus of a friendly
environment to facilitate the trading of intellectual property, thus speeding up time-
to-market in an industry where product life can be extremely brief.
The institute is based at the new design complex in Livingstone, where it will provide
a focus for teaching and research and will work closely with the companies based
there. The new institute aims to develop MSc courses and professional development
modules relating to system-level design.
6) Policy-led collaborations
There is also an important set of industry-academic links which are initiated, managed
and funded through policy-led schemes run principally by the European Commission
and UK central government initiatives, but which may also involve local authority
funding and support. These initiatives include all the main EU Framework
Programme schemes and, within the UK, the LINK Programme, Faraday
Partnerships, the Teaching Company Scheme and CASE (which are covered in more
detail elsewhere in this report, Section 5.2.1; Annex 1; Annex 4). These schemes have
all had an important part to play in raising the profile and status of industry links in
the UK higher education system as well as simply providing additional funding. The
initiatives have had by their nature a strong top-down approach. This has been
implemented through taking disparate research teams (HEIs) or research interests
(industry) working in the same field and bringing them together, as in the case of
LINK, or in providing an administrative and funding support framework to encourage
both industry and HEIs to participate, as with the TCS and CASE. Such schemes have
also had an ‘educational’ role for many academics and HEIs by encouraging and
enabling them to link up with industry for the first time.
Research clubs
Research clubs were originally developed outside the higher education system to
facilitate technology transfer with industry, but they have been embraced by some
HEIs. They remain an important mechanism despite falling out of favour in recent
96
years. Konecny et al (1995, pp80-2) argue that research clubs belong to three basic
categories:
i) Information disseminating clubs: where information is collected by a central

body or by sometimes by participants themselves and is then disseminated to
all the other members of the club. One example is the UK Universities Internal
Combustion Engine Group.
ii) Double membership clubs: where industrial members pay fees and receive
reports, and academic members can attend meetings and submit research
proposals. An example is the Optical Sensors Collaborative Association
(OSCA) set up to promote the use of optical fibres and supported by the DTI.
It has 28 full members (firms) and 14 affiliate members, mainly universities.
OSCA sponsors research projects in organisations (members and non-
members), although the projects are generally small.
iii) Clubs with a limited number of research laboratories: which are distinguished
by their focus on specific research projects and where the number of projects
instituted is small. The amount of funding per project is generally large, and is
focused on a single laboratory.
In general, research clubs form an interesting mechanism whereby firms can ‘listen
into’ and participate in research initiatives at relatively low cost. The University of
Kent at Canterbury is exploring the idea of setting up a set of research clubs as a
cheap and effective mechanism to reach out to SMEs in the Kent economy. Other
HEIs have also expressed an interest in developing the research club model as a
mechanism to improve the reach of their industrial collaborations.
HEI intermediary and consortia links
Section 7.6 noted that recently the institutional framework of government agencies
and quasi-public agencies has been bewildering both its growth and in its frequent
changes. There are a number of circumstances relating to this growth and the
increasing importance of the role of such intermediaries and consortia.
1) The basic fact is that intermediaries and/or consortia provide an essential

mechanism in cases where if they did not exist, industry-academic links would
not occur. This in turn relates to two scientific and economic factors:
a) in scientific or technological fields, where one firm could not afford to

fund, or risk funding, the research;
b) equally, where a single HEI could not supply all the scientific and
technical capabilities of the required research.
2) There are situations where an intermediary provides a link between a firm(s)

and a suitable HEI(s), which otherwise would not occur through lack of
information, or the high costs of information scanning for the firm (especially
in relation to an SME).
97
3) There are more complex areas where a single firm on its own would not fund
the research and needs an impartial arbiter and ‘animator’ to set a project up.
This would occur in situations such as research on aspects of industry
standards or use of shared facilities or networks.
Many of these intermediaries are local or regional in character. Good relations with
these bodies and agencies have been seen as increasingly important, particularly when
paralleled with HEIs’ growing recognition of their local and regional responsibilities.
In particular, links both directly and through their intermediary role with TECs, LECs,
Chambers of Commerce, Business Links, new and existing national and regional
development agencies, former development corporations, RTCs and local authorities
have therefore gained increasing significance.
Good relations and frequent contact with these agencies is important, but there remain
significant differences between the old and new universities. One survey (Goddard et
al, 1994, p47) revealed that 50% of new universities meet regularly with TECs, but
only 38% of old universities. Equally, 81% of new universities were able to report
‘very good’ or ‘quite good’ relations with local authorities, but only 43% of old
universities. These differences are perhaps not surprising given the more vocational
profile of the new universities, but good relations and frequent contact are not always
the case even for new universities. In this survey, one vice-chancellor noted that his
former (new) university had terrible relations with its local TEC, which saw the
university as somehow a competitor in many of its activities. The vice-chancellor,
however, equally recognised the value of good relations with the local TEC and other
agencies, and recommended that vice-chancellors should sit on the board of their local
TEC to overcome precisely this sort of problem.
Industry and trade associations, together with other professional bodies, can also form
important intermediaries between HEIs and firms. For example, the Royal College of
Arts has had some of its most successful collaborations with industry when it was
mediated by such bodies as The International Wool Secretariat, The British Furniture
and Furnishings Council and The Cable Communications Association, in addition to
the wealth of its one-to-one relations with industry. Industry and trade associations
can form useful mechanisms by which more general and long-term research issues
can be collated and then ‘parcelled out’ to HEIs with the relevant research expertise
(this echoes the initial factors behind the foundation of the original industrial research
associations after the First World War; Johnson, 1973).
98
Annex 6: Regional Classifications
_____________________________________________________________________
The following regional aggregations of government regional office areas were used in
the analysis:
1. Region 1 London
South East
Eastern
2. Region 2 South West

West Midlands
East Midlands
3. Region 3 Yorkshire and Humberside

Merseyside
North West
North East
Northern Ireland
It should be noted that these regional areas differ from the UK Standard Regions used
in most standard government regional statistics.
99
Annex 7: Abbreviations and Acronyms
AURIL Association for University Research and Industry Links

BBSRC Biotechnology and Biological Sciences Research Council
BERD Business Expenditure on Research and Development
BTG British Technology Group
CASE Co-operative Awards in Science and Engineering
CBI Confederation for British Industry
CCLRC Council for the Central Laboratories of the Research Councils
CEC Commission of the European Community
CEO Continuing education officer
CEST Centre for the Exploitation of Science and Technology
CET Continuing education and training
COMETT Community Action Programme for Education and Training for
Technology
CR Contract research
CRTO Contract Research and Technology Organisation
CVCP Committee of Vice-Chancellors and Principals of the
Universities of the United Kingdom
CVE Continuing Vocational Education
DED Department of Economic Development (Northern Ireland)
DENI Department of Education in Northern Ireland
DfEE Department for Education and Employment
DGXII Directorate-General for Science, Research and Development,
Commission of the European Communities
DGXIII Directorate-General for Telecommunications, Information
Market and Exploitation of Research, Commission of the
European Communities
DGXV Directorate-General for Regional Policy, Commission of the
European Communities
DoH Department of Health
DTI Department of Trade and Industry
ECU European Currency Unit
EEA European Economic Area
100
EPSRC Engineering and Physical Sciences Research Council
ERDF European Regional Development Fund
ESRC Economic and Social Research Council
EU European Union
FE Further education
GDP Gross domestic product
GERD Gross Expenditure on Research and Development
GOVERD Government Intramural Expenditure on Research and
Development
GR Generic Research
GRE Government research establishment
HE Higher Education
HEFCE Higher Education Funding Council for England
HEFCW Higher Education Funding Council for Wales
HEI Higher education institution
HERD Higher Education Expenditure on Research and Development
HESA Higher Education Statistics Agency
HESIN Higher Education Support for Industry in the North
HMSO Her Majesty’s Stationery Office
IACR Institute of Arable and Crops Research
ICT Information and communication technologies
IGDS Integrated Graduate Development Scheme
ILO Industrial liaison officer
IPR Intellectual property rights
JREI Joint Research Equipment Initiative
LEC Local Enterprise Company
LGC Laboratory of the Government Chemist
MAFF Ministry of Agriculture, Fisheries and Food
MBA Master of Business Administration
MRC Medical Research Council
NEB National Enterprise Board
NERC Natural Environment Research Council
NEST Network for the Exploitation of Science and Technology
NHS National Health Service
101
NRDC National Research and Development Corporation
OECD Organisation for Economic Co-operation and Development
OST Office of Science and Technology
PBA Personal business adviser
PNP Private Non-Profit
PPARC Particle Physics and Astronomy Research Council
PPP Purchasing Power Parity
PRE Public research establishment
R&D Research and development
RAE Research Assessment Exercise
RDA Regional Development Agency
ROPA Realising our Potential Award
RTC Regional Technology Centre
RTD Research and technological development
SERC Science and Engineering Research Council
SHEFC Scottish Higher Education Funding Council
SIC Standard Industrial Code
SME Small and medium-sized enterprise
SOEID Scottish Office Education and Industry Department
TCD Teaching Company Directorate
TCS Teaching Company Scheme
TEC Training and Enterprise Council
TLO Technology Licensing Office
UfI University for Industry
UK United Kingdom
UKSPA United Kingdom Science Park Association
USA United States of America
WDA Welsh Development Agency
102
Annex 8: ILO and CEO Questionnaires
103

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Higher Education Funding Council for England

Policy Research in Engineering, Science & Technology

Industry-Academic Links in the UK

HEFCE ref 98/70

Jeremy Howells, Maria Nedeva and Luke Georghiou

Mr Paul Hubbard, HEFCE (Chair)

ISBN 1 902369 033

1.1 Aims and objectives 13

1.2 Industry-academic links: historical context 14

1.3 Policy initiatives to stimulate HEI-industry linkages 15

1.4 Report structure 16

2.1 Study elements 17

2.2 Scope of the study 17

2.3 Response rates 18

3. Research and Consultancy Links 19

3.2 HEI-Industry links: main trends 19

3.3 Motivations and barriers to industry-academic collaboration 21

3.4 Country and regional perspectives 25

3.5 Industry-academic links and type of institution 28

4.2 Intellectual property 32

4.3 Spin-outs and exploitation companies 35

4.4 Science parks and incubator units 36

4.5 Company laboratories on campus 37

5. Links in the Process of Teaching and Training 39

5.2 Postgraduate teaching 39

5.4 Short courses and distance learning targeted to industry 44

5.5Initiation of links in education and training 46

5.6 Success factors and barriers in providing CET for industry 47

6. Staff Support and Funding 51

6.1 Overview of funding support 51

6.2 Industry sponsorship and work experience 52

7. Structures and Policies to Support Linkages with Industry 54

7.2 Frameworks and procedures for IPR and technology management 54

7.3 Frameworks and procedures for spin-out companies 56

7.4 Mission statements 57

7.5 Level at which links are initiated and managed 57

7.6 Links with intermediaries and consortia: one-to-one to complex relationships 61

8. Conclusions and Key Issues 62

8.2 Overall conclusions 62

References and Bibliography 67

Annex 1: Policy Initiatives Associated with Developing HEI-Industry

Joint Research Equipment Initiative 75

University Challenge Fund 76

The University for Industry and company universities 76

Other Research Council schemes 78

National and regional initiatives 79

Annex 2: Research Instruments and Procedures 80

Annex 3: HEIs and the issue of Intellectual Property Rights 83

IPR and some associated problems 83

Annex 4: Teaching and training policy initiatives 85

Teaching Company Scheme 85

Co-operative Awards in Science and Engineering 86

Other postgraduate schemes 86

Annex 5: HEI Frameworks for Industry Collaboration and Linkage 88

Research and liaison offices 88

Continuing education offices and ‘lifelong learning’ 89

Changing organisational and management structures 89

Initiation and management of industry links by HEIs 92

Annex 6: Regional Classifications 100

Annex 7: Abbreviations and Acronyms 101