Effects of University-Industry Collaboration on Technological Newness of Firms

Exploring new technological opportunities and reacting to environmental changes are key factors for firm performance. Collaborating with external partners, especially universities, is considered to be a powerful engine of technological development. However, there are several barriers associated with university-industry collaboration (UIC), such as divergent cultures and competing objectives. Previous studies show rather mixed effects regarding the purported benefits of UIC, and empirical evidence on the effects of UIC on technological newness of innovation is lacking. This study investigates whether and under which conditions UIC enhances the recombination of extant knowledge across technologies and facilitates the implementation of novel technologies at the firm level. The paper is based on the resource based view of the firm and analyzes the interaction between collaboration diversity and UIC intensity. This longitudinal analysis examines joint publications and the patent data of 318 technology-oriented companies from the S&P 500 Index in the years 1985-2007. This study focuses on technological newness as the dependent variable, defined as the extent to which new technology fields are discovered as a result of either exploration of completely new technologies or the novel combination of existing technology fields. Results show that UIC has a significant positive effect on technological newness, with a time lag of two years. The effect follows an inverted U-shaped pattern in UIC portfolios with high diversity, and a U-shaped pattern when diversity is low.