Industry-university knowledge flows and product innovation: How do knowledge stocks and crisis matter?

This paper explores the relationship between Industry-University (I-U) R&D collaborations and product innovation and how this nexus is affected by different types of firms' knowledge stocks proxied by firm age, employees' educational level and exporting activity. Our research is based on a unique dataset derived from a two-wave survey in 524 Greek manufacturing firms during the crisis period (2011 and 2013). The analysis also provides insights into the mechanisms through which the crisis may affect innovation. We find that I-U R&D collaborations are important in shaping firm innovation towards a form of an inverted U. In addition, the results show that crisis deepening is associated with reduced probability of introducing a product innovation, with liquidity constraints and public policies identified as mediators. Finally, knowledge stocks are found to play a moderating role in the relationship between I-U collaborations and product innovation suggesting that firms with low levels of knowledge stocks benefit more in terms of innovation from the development of knowledge flows with universities, especially in industries characterized by knowledge proximity with universities and regions with social trust.