Research Policy 27 1998.

835851

Science-based technologies: universityindustry interactions in four fields

Frieder Meyer-Krahmer, Ulrich Schmoch
) Fraunhofer Institute for Systems and Innoation Research, Breslauer Str. 48, 76139 Karlsruhe, Germany

Abstract In recent years, the co-operation between industrial firms and universities has increased considerably, but the interaction pattern in different technological fields is not uniform. In science-based fields, university departments have a distinct focus on basic research and the major interest of industry is the observation of science. In less science-based fields, the solution of technical problems is a major concern of industry. In all fields, the exchange of knowledge in techno-scientific communities is a crucial element of interaction. In Germany, strong intra-disciplinary ties between universities and industry in mechanical engineering obviously imply an insufficient openness to, and integration of, new technologies. The particular combination of a long-standing culture of co-operation and the economic success in the mechanical industry can be interpreted in terms of a specific path-dependant evolution of a stable sector of the national system of innovation, but with the tendency to lock-in effects. q 1998 Elsevier Science B.V. All rights reserved.
Keywords: Universityindustry interaction; Technologicalscientific community; Path-dependence; Lock-in; National systems of innovation

1. Introduction The present society has been characterised as a knowledge society see, for example, the work of Stehr 1994... An important aspect of this phenomenon is the close relationship between science and technology and the rise of science-based technologies Freeman, 1974; Gibbons et al., 1994.. Industrial firms have coped with this demand for new technologies by building up substantial research capacities, but also by research co-operation with universities and other external research institutions.

Corresponding author. Tel.: q49-721-6809-114; Fax: q49721-6809260; E-mail: us@isi.fhg.de

This presentation deals with the relationship between industry and universities with a focus on Germany. According to recent statistics, the industrial funds for research activities at German universities increased by the factor 2.4 between 1985 and 1995 in real terms.; the relative share of industrial money within the total research budget of the universities increased from 5 to 9% calculated on the basis of BMBF 1996... In view of the fact that many university departments, e.g., in the humanities or social sciences, do not receive any industrial funds, we estimate the industrial share in the engineering sciences and other technology-related sciences at an average level of about 20%. These few figures show the considerable impact of industry on academic research. Therefore, the analysis of the linking mechanisms between universities and industry has become

0048-7333r98r$19.00 q 1998 Elsevier Science B.V. All rights reserved. PII: S 0 0 4 8 - 7 3 3 3 9 8 . 0 0 0 9 4 - 8

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a central topic of the sociology of sciences, at least in technology-related disciplines. The following contribution firstly addresses the question, which technologies can be characterised as science-based. For that purpose, we use the indicator of scientific citations in patents as a quantitative tool for describing different technical fields. Secondly, we examine, by means of patent indicators, which university departments contribute to industrial innovations and whether this pattern correlates with the hierarchy of science-based technologies. The focus of this paper is, thirdly, on the presentation and discussion of a survey at German universities concerning their interaction with industry. The method is heuristic and aims at collecting empirical evidence. The survey was conducted in the three science-based fields of chemistry, information technology, and biotechnology. In addition, the less science-based field of production technology was taken as a reference. The aim of this analysis is to assess the major forms of interaction between industry and universities, the advantages and shortcomings of such interaction from the perspective of academic researchers, and the specific interest of industry. In particular, the results will highlight the major motives of academic researchers for maintaining interaction with industry, according to their discipline. In the following chapter, we will confront this empirical evidence with the question whether against the background of technologicalrsectoral path dependence, the existing system of linking mechanisms leads to severe lock-in effects or is open to new technological paradigms. The results are interpreted against the background of the theory of national systems of innovation and the leap-frogging model as a part of modern trade theory.

2. Identification of science-based fields The categorisation of a specific technology as science-based is generally a statement of common sense without any clear definition. A pioneering empirical work for achieving an improved delimitation was undertaken by Pavitt 1984.. Based on a broad survey of British companies, he examined the inter- and intra-sectoral product and knowledge flows and firm structures, and identified four main types of

firms, with science-based firms as an important type having considerable impact on the whole economy. The science-based firms were primarily located in the sectors of chemicals, as well as electrical and electronic engineering. However, a further breakdown according to technology fields was not possible. Narin and Noma 1985. suggested an alternative approach and analyzed the citations of scientific articles in the official search reports of patents. These search reports document the state-of-the-art related to the legal claims of the patent application. The patent office examiners generally prefer to cite other patents, because they describe technical features more clearly than scientific articles. But if the examiners cannot find relevant patents, they also refer to scientific publications. Now, science-based technologies are defined as fields with frequent references to scientific publications. Thus, it is possible to operationalise the notion of science-based technologies in a quantitative way Grupp and Schmoch, 1992a,b; Schmoch, 1997b.. The determination of the average level of scientific references per patent implies some methodological problems, e.g., the citation preferences of the patent examiners or the question whether the cited publications represent basic or applied research. However, various validation studies showed that this indicator leads to meaningful results and can be used for analytical purposes Carpenter and Narin, 1983; Schmoch, 1993; Noyons et al., 1994.. Grupp and Schmoch 1992a,b. successfully transferred this approach, developed for US patents, to patent applications at the European Patent Office and applied it to the analysis of 30 technical fields. Table 1 documents the results in the form of indices with 0 as neutral point and positive values indicating a science relation above average from the works of Grupp and Schmoch, 1992a,b. The definition of these fields and the mathematical definition of the indices are documented in the work of Grupp et al., 1995.. The highest science linkage is found for biotechnology. The other areas above average are mostly related to chemistry and information technologyincluding semiconductors. The areas below average are generally linked to mechanical engineering and civil engineering. As intermediate result of this section, we can state that among the fields considered in this article,

F. Meyer-Krahmer, U. Schmochr Research Policy 27 (1998) 835851 Table 1 Relationship to science of 30 technology fields, measured by the relative science reference indices at the European Patent Office for 19891992 Technology fields Aboe aerage Biotechnology Pharmaceuticals Semiconductors Organic chemistry Food chemistry Data processing Optics Audiovisual technology Telecommunications Materials Control technology Basic materials chem. Surface technology Below aerage Nuclear technology Polymers Electrical engineering Environmental technology Materials processing Chemical engineering Machine tools Food processing Engines Handling, printing Thermal processes Medical technology Space technology Transport Mechanical elements Consumer goods Civil engineering Source: Grupp et al. 1995.. Index 81 66 61 58 52 37 36 30 29 28 20 15 9

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y1 y5 y12 y27 y33 y34 y44 y46 y57 y63 y64 y67 y78 y78 y84 y87 y91

chemistry, information technologyin particular data processing and semiconductorsand biotechnology are clearly science-based technologies, whereas the reference field of production technology represented in Table 1 by machine tools and materials processingis less science-based.

processes in the market place. Thus, patents show the interest in commercial exploitation of a new technology, and most of the patent assignees are industrial enterprises. The very high costs of patent applications are a further reason for this focus on firms. Against this background, a patent only makes sense for a scientific institution if it is interested in the commercial exploitation of a new finding and a collaboration with an industrial partner is aimed at or already exists. Therefore, a high share of patents on the part of scientific institutions can be considered a good indicator for a close relationship of scientific and industrial laboratories in the technology field analyzed, an assumption that is confirmed by empirical investigations Becher et al., 1996, p. 28.. In contrast to the United States or the United Kingdom, German universities generally do not apply for patents, because they do not have an appropriate legal and financial framework for this purpose for more details, see the work of Abramson et al., 1997.. The German professors can freely dispose of their intellectual property rights, and therefore appear themselves as patent applicants or sell their rights to firms. They can, however, be identified in the database PATDPA, documenting German patents, by their academic title Professor. We compiled the patent applications of professors for a longer observation period and foundcomparable to industrial funds at universitiesa considerable increase, between 1974 and 1994 by the factor 2.5, between 1984 and 1994 still by the factor 1.5 calculated on the basis of the work of Becher et al., 1996, p. 42.. For the year 1993, we checked all patent applications with professors as inventors or applicants manually, in order to determine whether the professors really work at universities, and to which university department they are affiliated. 1 According to Table 2 which documents the departmentsrdisciplines of the university professors in absolute and relative terms, the highest number of university-based patents is found for mechanical engineering. This result shows that a weak science linkage of a technology does not necessarily imply a low universityindustry interaction, but that other factors have to be consid-

3. Patenting at universities Patent applications are registered to achieve temporary protection of technologically new products or
A total of 81% of the sample of 1993 could be classified as inventions originating from universities.
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Table 2 Disciplinary field of German university professors with patent applications in 1993 and share of patent applications with industrial partners working in a related disciplinary area intra-disciplinary share. Discipline Patent applications Absolute Relative number share in percent. 252 237 156 101 84 42 39 27 23 19 17 11 4 3 18 1033 24 23 15 10 8 4 4 3 2 2 2 1 0 0 2 100 Intradisciplinary share in percent. 88 93 94 87 70 76 90 64 80 90 100 100 100 67 71 88

Mechanical engineering Chemistry Biomedicine Electrical engineering Physics Biology Agriculture Civil engineering Material sciences Other engineering Pharmacy Computer sciences Geosciences Mathematics Other Total

Sources: Becher et al. 1996., p. 35, own data collection and computation.

For an adequate picture, it is furthermore necessary to relate the patent numbers to the size of the disciplinary field. At German universities, mechanical engineering is the largest discipline with a research budget of DM 652 mio. Physics and chemistry rank in second and third positions with DM 554 mio and DM 519 mio. 2 These figures lead to a relative level of about 390 patent applications per billion DM in mechanical engineering, and about 460 in chemistry. In electrical engineering, this relative index is about 400. As a conclusion, the level of university patents is closely related to the size of the disciplines. 3 As additional information, Table 2 documents in its third column the share of patent applications where the university professor and his industrial partner work in the same disciplinary field intra-disciplinary share.. This could be calculated only for a subset of university patents which were applied for by firms, and for which professors were registered as inventors. 4 All in all, the share of intra-disciplinary co-operation between universities and industry seems to be high, or to formulate it from the opposite perspective, the share of inter-disciplinary co-operation is obviously low.

ered as well see Section 5.3.. In the case of chemistry, the science reference and the patent analysis are obviously in agreement. Furthermore, many patents from the biomedical departments refer to pharmacy and thus to chemistry in technological terms. As to information technology, the departments of electrical engineering and physics display considerable activity in semiconductors. It is worth to note the considerable number of patent applications from physics departments, which can be assumed to have a strong focus on basic research. The share of patents from the computer sciences is quite low, because according to the German patent law, it is difficult to take out patents in software, and some computer science institutes belong to the department of electrical engineering. As to biology, the number of patent applications seems to be moderate. However, many inventions from biomedical departments also concern biotechnology. So compared to German industry, the relative specialisation of university patents on biotechnology is even above average Schmoch et al., 1996b, p. 117..

4. Interaction between universities and industrial enterprises Although the relation of universities and industrial enterprises are an important topic of science policy and the sociology of science, only a limited number
These figures refer to 1990 Wissenschaftsrat, 1993b.. Since the increase of research at German universities between 1990 and 1993 is moderate, the linkage of the research figures of 1990 and patent applications of 1993 still leads to a realistic result, but should be interpreted with caution. 3 However, in physics with its strong orientation on basic research, the relative number of patents is low with an index of about 150. 4 This subset comprised 602 patent applications. In this type of analysis, most firms can be classified in a clear disciplinary field on the base of activity descriptions in company manuals. But in the case of some large firms, multiple attributions were necessary. For example, Siemens, Bosch, or ABB were classified in electrical as well as mechanical engineering. In the case of pharmaceutical firms we assumed a relation to pharmacy, chemistry, medicine, and also biology.
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of studies on the linking mechanisms has been undertaken. Some authors analyze the relationship between universities and industry on the basis of case studies for example, the works of Meyer-Krahmer, 1985, Kluge and Oehler, 1986 or Konecny et al., 1995.; various publications deal with the problem of how to improve the technology transfer from universities to industry for example, the works of Puttner and Mittag, 1989, and Schuster, 1990.; Allesch et al. 1988. conducted a broad survey at universities on their industrial contacts. This latter survey provides detailed information about different types of universityindustry interaction according to disciplinary fields and analyzes the institutional framework. However, the results describe the different interaction forms in a purely quantitative way, and it is not possible to derive qualitative conclusions as to their relative importance. Furthermore, the survey of Allesch et al. 1988. refers to the year 1984 when the co-operation between universities and industry was much less important than at present. At that time, the relevant actors from science, industry, and policy intensively discussed the problem how to improve the technology transfer from scientific institutions to industry. As a result of that debate, many transferoriented institutions like transfer offices at universities and public research institutions, technology centers, science parks, or university-affiliated institutes 5 were established in Germany. Thus, the discourse on universityindustry relations was primarily focused on organisational aspects and one-way approaches in the spirit of linear models of the innovation process for further details, see the works of Kline, 1985 and Hassink, 1997.. In the present situation, it is necessary to critically review that debate and to check whether the results of former studies are still valid. Our purpose is to demonstrate that in the meantime, the model of two-way interaction is a much more appropriate way of describing the links between industry and universities, especially in the area of science-based technologies. Although the studies cited above examine universityindustry relations in different national and historical contexts and by different approaches, they share the viewpoint that academic and industrial

researchers belong to distinctly different social systems and, linked to this, to different organisational cultures. On principle, we share this assessment, but we explain the present considerable growth of universityindustry interaction, as reflected in the budgetary statistics, by the existence of a broad area of joint interest where institutional differences still exist, but are less important.

5. Results of a survey at German universities 5.1. Methods, data, and results In this section, we document the results of a survey at German universities which was carried out in 1995 in the context of a bi-national project on technology transfer systems in the United States and Germany Abramson et al., 1997.. The bi-national panel agreed on a selection of the technology fields biotechnology, production technology, microelectronics, and software, wherein microelectronics and software reflect different aspects of information technology. The subsequent panel discussions revealed that these fields can be considered to be representative for important areas of universityindustry interaction in Germany, but that the key area of chemistry was missing. Therefore in 1997, a further survey in chemistry was conducted. In total, 994 questionnaires were sent out, and 433 valid questionnaires were sent back; i.e., a response rate of 44% was achieved. The questionnaires were addressed to professors representing a research center. 6 The five fields examined are best characterised by their research orientation, documented in Table 3. Of course, different researchers define the types of research in a different way, and the results have to be interpreted with care. Nevertheless, they draw an interesting qualitative picture. Chemistry as typical field of the natural sciences has the strongest orientation to basic research. 7 Production technology as a
6

The so-called An-Institutes.

That is, mostly Institut, sometimes Lehrstuhl, Fachgebiet etc., but not the aggregate level of department FachbereichrFakultat.. The detailed results of the survey are docu mented in the work of Schmoch 1997a.. 7 No institutes of chemical engineering were addressed, in order to include a real area of natural sciences.

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F. Meyer-Krahmer, U. Schmochr Research Policy 27 (1998) 835851 Table 5 Ranking of types of interaction between universities and industrial firms form the perspective of academic researchers Rank 18 12 12 7 6 11 1 2 3 Interaction type collaborative research informal contacts education of personnel doctoral theses contract research conferences consultancy seminars for industry scientist exchange publications committees Relevance index 74 71 60 60 56 56 52 39 39 35 31

Table 3 Orientation of research at German universities shares in percent. Technical field Production technology Microelectronics Software Biotechnology Chemistry Total sample Basic research 29 41 50 66 76 53 Applied research 53 47 38 27 18 36 Development

Source: Schmoch 1997a.. 4

subfield of mechanical engineering represents the opposite end of the spectrum with a strong orientation to applied research and even a considerable amount of development. The fields microelectronics and software, both related to information technology, display quite similar structures. As an interesting and perhaps surprising overall result, the professors questioned report a certain share of development. Thus, the frequent assumption that academic research is exclusively oriented to basic research cannot be maintained. The ranking of the fields according to the share of industrial funds within the total research budget is closely linked to their orientation to basic research: production technology has, on average, a considerable share of 25%, with some centers even totally relying on industrial money cf., Table 4.. By contrast, chemistry displays the lowest share with 11%. Thus, these results seem to support the thesis that the closest universityindustry relations can be found in application-oriented fields, whereas in science-based fields these relations appear to be relatively weak.

Source: Schmoch 1997a..

Table 4 Share of industrial funds within the total research budget of German universities shares in percent. Technical field Production technology Microelectronics Software Biotechnology Chemistry Total sample Source: Schmoch 1997a.. Share of industrial funds 25 18 13 12 11 16

However, contract research is not the only linking mechanism between universities and industry. Therefore, we asked the centers about various other types of interaction with industry as well. The selection of these mechanisms was primarily based on the former survey of Allesch et al. 1988., on a similar survey at US UniversityIndustry Research Centers UIRCs. conducted by Cohen et al. 1994., and 14 interviews with experts from universities and major research institutions. We did not ask for the frequency of the different types of interaction, as, e.g., research contracts, informal contacts, or the organisation of seminars are not directly comparable. Instead, we asked the professors to assess the different interaction types according to their importance on a four-step scale. 8 In consequence, we got rank-scaled, non-metrical data, and could only compute a ranking of the different interaction types. 9 In order to provide an illustration of the absolute relevance of the interaction forms, the relevance index in Table 5 also documents the share of answers with the assessments important or very important. According to the evaluation of the total sample, collaborative research and informal contacts were the most important interaction types between universities

The possible assessments were very important, important, less important, not important. 9 The ranking was determined by a combination of Friedman and Wilcoxon tests with reliability at the 10% level.

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and industry see Table 5.. 10 It is interesting that the academic researchers rank collaborative research distinctly higher than contract research. An explanation, supported by the interviews, is that collaborative research implies a bi-directional exchange of knowledge, whereas contract research is primarily a onedirectional knowledge export from universities. The high ranking of informal contacts supports this high relevance of mutual knowledge exchange, too. Obviously, industrial researchers have become members of informal networks wherein academic as well as industrial researchers discuss their research projects and findings as to informal networks of academic scientists, see the work of Crane, 1972.. A further interesting result is the higher ranking of conferences compared to publications. In the relation of academic and industrial researchers, conferences with the possibilities of a quick presentation of recent results and of informal discussion seem to be very effective. The ranking of the interaction types is not uniform across all fields considered. The relevance of collaborative research and informal contacts is important in microelectronics, software, and biotechnology. In production technology, however, contract research is in first place, together with collaborative research. In all other fields contracts are only in third or fourth place. In the basic field of chemistry, the professors see the education and provision of personnel as most important transfer channel on the same rank as informal contacts and collaborative research. In this special field, industrial grants or donations without clear deliverables were introduced as further interaction type. This channel is less important in most areas of academic research in Germany Wissenschaftsrat, 1993a., 11 but in chemistry it has a long-standing tradition see the work of Burchardt, 1979, and Richter, 1979. so that it ranks in first position, too. The next complex of questions referred to the advantages of interaction with industry see Table 6.. In the total sample and in all of the five fields,

Table 6 Ranking of advantages of interaction between universities and industrial firms from the perspective of academic researchers Rank 1 2 3 4 5 Advantage additional funds knowledge exchange flexibility of industrial funds additional facilities references for public projects Relevance index 87 84 75 61 52

Source: Schmoch 1997a..

additional funds rank in first position, and knowledge exchange in second position, but the relevance index of both advantages is nearly equivalent. 12 In the case of microelectronics, knowledge exchange even ranks first. The university professors were also asked what the interest of industry in interaction with universities is, according to their perception. As to the total sample, most respondents assumed that the observation of the scientific development is the major reason for industrial firms to stay in contact with universities see Table 7.. In production technology and microelectronics, the solution of technical problems was of equivalent importance. In all other cases, the solution of technical problems and the recruitment of personnel were in second place, except microelectronics where the recruitment of personnel also ranks first. Finally, the university centers were asked to assess the importance of disadvantages of, or barriers to, interaction with industry. All respondents saw the major problem in the short-term orientation of their industrial partners which obviously reflects a decisive difference of the research cultures at industrial firms and universities see Table 8.. As further disadvantages, the respondents see the restriction of publication and the limited industrial basis in second position. 13 However, the professors in production

In Germany, collaborative research is primarily initiated by public R&D programmes. For further details, see the work of Lutz 1993.. 11 In the United States, industrial grants are much more important than in Germany Abramson et al., 1997..

10

The different ranking is due to a greater weight of the assessment very important compared to important for additional funds. 13 Some university professors complain that they do not find appropriate industrial partners in their research fields in Germany cf., e.g., the work of Bujard, 1995..

12

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Table 7 Ranking of industrial interests in interaction with universities from the perspective of academic researchers Rank 1 2 3 Interest of industry observation of scientific development solution of technical problems recruitment of personnel Relevance index 82 70 69

Source: Schmoch 1997a..

technology and chemistry do not complain of an insufficient industrial basis. In software and chemistry, less interesting research topics are in second position whereas in production technology and microelectronics this barrier is negligible. Compared to the advantages, the disadvantages are less critical. So in the total sample, 87% of the respondents assess additional industrial funds as very important or important see Table 6, relevance index.. For the most relevant disadvantage, this share is 68%, all other relevance indices of disadvantages being much lower. Therefore, the advantages largely outweigh the disadvantages. 5.2. Interpretation of general findings The results of the survey show that the acquisition of additional research funds is a major motive for university centers to co-operate with industrial firms. The exchange of knowledge with industrial researchers is, however, a further key issue that can explain the considerable growth of universityindustry interaction, addressed in Section 1. The relevance of knowledge exchange is reflected in various aspects: first, the respondents of all fields rank the advantage of knowledge exchange very high at a nearly equivalent level to additional funds. Second, among the different interaction types, the respondents consider informal contacts, i.e., the informal discussion of research results, as most important. Third, they clearly prefer collaborative research with a bi-directional knowledge flow to contract research with a primarily one-directional orientation. This interpretation does not contradict the second position of less interesting research topics among the list of disadvantages, since the absolute level of this state-

ment is low compared to the advantages. Furthermore, the university researchers assume that the main interest of industry is the observation of recent scientific developments, i.e., the exchange of knowledge with universities, too. These findings support the view that industrial firms conduct significant research and are, therefore, important producers of new knowledge which is also interesting for academic researchers. In consequence, the classic notion of technology transfer should be replaced by exchange of scientific knowledge in order to emphasise the bi-directional flow. The exchange of knowledge can be considered as the common denominator where the interests of academic and industrial researchers meet. The academic researchers need new knowledge to support their personal research activities and, thus, their academic careers. The industrial researchers need new knowledge in order to improve their products or processes or to develop new ones. This interpretation is supported by the analysis of Hicks 1995., according to which industrial researchers publish papers in order to flag scientific competencies and become acknowledged as discussion partners of academic researchers. That means that industrial researchers increasingly become members of the invisible colleges Crane, 1972. which are decisive for knowledge diffusion in science. Rappa and Debackere 1992. and Debackere and Rappa 1994. also found close communication networks with both academic and industrial researchers with a focus on informal contact and suggested the term technological communities following the common notion of scientific communities. We would prefer the term techno-

Table 8 Ranking of disadvantages of interaction between universities and industrial firms in the perspective of academic researchers Rank 1 2 3 4 5 Disadvantagerbarrier short-term orientation limited industrial basis restrictions to publications less interesting topics administrative problems unfair terms of contract Relevance index 68 42 38 35 25 18

Source: Schmoch 1997a..

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logical. scientific communities, as the advance of science is an important aspect of their activities. 14 5.3. Specific findings for technical fields Despite this common denominator of knowledge exchange, the linking mechanisms differ among the fields examined. Chemistry is an academic field with an explicit focus on basic research. At the same time, the science references in patent search reports RSR index. show that new technical developments are closely linked to advances in basic research. In this context, we would like to indicate that the new Frascati Manual has introduced the notion of oriented basic research, that is research without a specific practical aim, but which is carried out with the expectation that it will produce a broad base of knowledge likely to form the background to the solution of recognised or expected current or future problems or possibilities OECD, 1994, p. 69.. If we consider chemistry from the perspective of industrial life cycles, it is an old industry with many mature subsections. At the same time, the chemical industry has steadily generated completely new sections and radical, science-based innovations, presently, e.g., in the areas of catalysts for polymerisation. In Germany, the chemical industry had a very strong position already in the 19th century and, at present, is still a leading sector Gehrke and Grupp, 1994; Keck, 1993.. Since the 19th century, there is a long-standing tradition of universityindustry collaboration with emphasis on more open interaction types. Against this background, industrial grantsrdonations are a more important interaction type than contracts. Furthermore, the chemical industry has established a foundation that explicitly supports basic research at universities. 15 This way of open relations with a considerable focus on basic research has proved to be fruitful. The high number of university-based patents in chemistry is an ample illustration for its effectiveness.
14

Mechanical engineering, with production technology as a typical subfield, has also a long-standing tradition in Germany and is still an industrial core area Gehrke and Grupp, 1994; Krull and MeyerKrahmer, 1996.. From the perspective of industrial life cycles, it is, like chemistry, an industry with mature subsectors, but technologically, in contrast to chemistry, most subsectors are less dynamic with many incremental, but few radical, science-based innovations, leading-edge technologies such as gas turbines being an exception. Mechanical engineering was never much of a science-based technology, even in former times, but primarily an application-oriented discipline see the works of Freeman, 1974 and Bohme et al., 1978b.. Therefore, its present charac teristics can be hardly explained by the maturity of the industrial life cycle, but primarily by the specific cognitive structures in the knowledge generation in this field. The artefacts in mechanical engineering are tangible and thus open to direct, experience-based manipulation, 16 whereas the products of sciencebased fields such as chemistry or microelectronics can generally only be indirectly analyzed and produced by the mediation of instruments cf., the work of Latour, 1987, p. 64 ff. and theoretical considerations. Mechanical elements could always be produced without substantial scientific support, so that the role of engineering science is, to a large extent, an optimisation and systematisation of products and processes cf., the works of Bohme et al., 1978b and Fuchs, 1994.. 17 This characterisation of the cognitive structures is, of course, quite stylised and simplified, but illustrates why academic mechanical engineering has, and always has had, a strong orientation to application. Although mechanical engineering can be characterised as less science-based, i.e., less oriented to theoretical, long-term research, the frequency of universityindustry interaction is high, as reflected in the high level of university patents see Section 3.. This finding is largely due to the existence of a broad industrial basis and thus, more opportunities
16 Cf., the double meaning tangible and understandable of the German word begreifbar. 17 This does not mean that mechanical engineering is simple, but the relative weight of theory-based approaches is lower than in other technologies.

See the work of Schmoch et al. 1996a, p. 291.. In a comparable context, Bohme et al. 1978a. suggested the term problem communities. Constant 1984. used the concept of technological communities for describing informal communities of industrybased engineers. 15 Fonds der Chemischen Industrie.

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for collaboration than in other fields. According to the university survey, the respondents see a sufficient industrial basis in production technology similar to chemistry. However, the interaction types in production technology distinctly differ from those in chemistry. In contrast to all other fields examined, contract research ranks in the highest position; and the respondents in production technology assess the solution of technical problems as the top priority interest of their industrial partners. Thus the university industry interaction in production technology has a strong focus on problem solution via contract research. This specific orientation is reflected in the highest share of industrial funds among all fields considered, and the strongest weight of applied research. It would, however, be misleading to dismiss the university centers in production technology as simple consulting firms. For the university researchers still devote about one third of their activities to basic research, and like other respondents, they put high emphasis on knowledge exchange, and see the short-term orientation and possible restrictions of publication as major disadvantages of interaction with industry. So academic researchers in mechanical engineering must permanently cope with the often diverging requirements of application- and theory-oriented research cf., the work of Fuchs, 1994.. A further important difference between the chemical and mechanical industries is their company structure. The chemical sector is dominated by large enterprises, whereas mechanical engineering is characterised by small- and medium-sized enterprises SMEs. see Statistisches Bundesamt, 1997.. This difference in the firm structure and the different tradition of co-operation are the main reasons why academic researchers in mechanical engineeringin contrast to chemistryare not able to achieve more open and generous forms of industrial funding. The structures in microelectronics, software, and biotechnology can be located between chemistry and production technology, with more similarities to chemistry. Although their focus is more on applied research than in chemistry, their interaction with industry primarily aims at medium- and long-term knowledge exchange. Nevertheless, as the findings of Section 3 show, this interaction is less close than in chemistry. This difference can be explained, first,

by the less elaborated tradition and culture of an open universityindustry interaction in electrical engineering see the work of Konig, 1995 277 ff.. Second, the industrial basis in information technology in Germany is less strong than in chemistry and mechanical engineering. There are some large and internationally competitive corporations in this area, such as Siemens in microelectronics or SAP in software, but there is no broad basis of SMEs, and the number of national co-operation partners for universities is limited Abramson et al., 1997.. In biotechnology, the first commercial breakthroughs were achieved by university-based start-up companies in the United States. Therefore, the German pharmaceutical industry is primarily oriented to collaboration with US universities although German universities are also very competitive in biotechnology Abramson et al., 1997.. Against this background, it is not surprising that more than 50% of the academic respondents in microelectronics, software, and biotechnology assess a limited industrial basis as important barrier to interaction with industry. The national industrial framework also has a decisive impact on the structures of universities through the demand for well-trained students. This implies for the German situation that the absolute volume of academic research in electrical engineering is about half of the research activities in mechanical engineering Wissenschaftsrat, 1993b.. These various factors explain why information technology and biotechnology can be categorised as science-based technologies, and at the same time, the level of universityindustry collaboration in these fields is, in absolute terms, moderate compared to the less science-based field of production technology. 18

6. Assessment of the empirical evidence: lock-in or evolutionary dynamics within the German innovation system? While the sections above were presented from a sociological viewpoint, we now introduce a theoreti-

18 In the United States, the universityindustry collaborations in biotechnology and information technology are much stronger than in Germany Abramson et al., 1997..

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cal economic approach for assessing the empirical findings on cognitive structures. The question which forms the starting-point for the following section is: whether and to what extent the represented interaction between universities and industrial sectors is an indicator of lock-in effects or rather of the ability of the German research system to pick up new developments and evolve these dynamically. The theoretical starting-point is provided by: 1. the path dependency of technologies and industrial sectors, 2. recent foreign trade theories which refer to changes in the technological paradigm as a threat to a countrys internationally leading position, and 3. the concept of national innovation systems which permits these foreign trade theories to be developed. According to the evolutionary innovation theories, four main characteristics dominate the process of science production, innovation and diffusion: path dependence of technologies, diversity of structures and practices, irreversibility of processes and learning. The theory of path dependency has since been taken up and widely discussed in the literature so that it will not be treated in more detail here cf., the works of David, 1984, Freeman and Soete, 1997 and Foray, 1997. Our approach makes use of the idea that the interaction between universities and industrial sectors is strongly characterised by path dependency and thus faces the structural problem of not recognising and adopting new technological paradigms and technology paths quickly enough. The more recent theories of growth and foreign trade started from the explicit or implicit assumption of path dependency as they predict the outcome of a hardening of innovation-driven growth development, especially the divergence of economic development between industrial and developing countries Krugman, 1981a,b; Romer, 1986, 1990; see the excellent review made by Munt, 1996.. According to these approaches, the speed of innovation and learning effects are higher anyway in technologically leading countries so that their level of affluence increases faster than in economies lagging behind success breeds success.. In contrast to these theories, in the so-called leap-frogging model, Krugman et al. tried to show

that the superiority of a countrys foreign trade which is hardened in this way can always be challenged Brezis et al., 1993.. Countries catching-up are quite able to overtake the economically leading power. This is triggered by the previously dominant technology being replaced by a new technological paradigm. Krugman et al. show under what conditions such a process takes place. In a very simple model, they argue that the technologically leading country is confronted in time with sinking marginal benefits of its learning and technological accumulation processes and thus their effect of increasing productivity is reduced. In this model, an economically backward, less productive country has the chance to react to a new technological paradigm early on, which as Krugman et al. assume. due to its lower productivity, represents an attractive technology only for this country in its early phase. The economically backward country can thus gain a foothold in the field of the new technological paradigm at an earlier point in time. It can then realise the self-accumulating learning effects and productivity increases faster than in the economically superior country, and ultimately overtakes it. In the beginning, the original productivity disadvantage of the new technological paradigm is compensated for by the lower labour costs in the backward country. Finally, the learning effects of the new technology lead to advances in productivity which lie above those in the formerly superior country which has stuck to the old technology. This model explains how the formation and hardening of patterns of technological and economic specialisation in foreign trade and production support the growth of an economy until a new technological paradigm transforms the technological advantage into a disadvantage. The innovation trap described by Krugman et al. is that the previously successful countryon account of its competence and experience in the fieldclings to the dominant technological paradigm for too long and turns into the new technology path too late. Fig. 1 illustrates this development for two countries A and B. The main argument of Krugman et al. is based on the productivity differences of the two countries considered. At this point we dispense with this drastic simplification and instead fall back upon a much more differentiated concept. The advantage of being

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Fig. 1. Leap-frogging: dynamics of technological trajectories, product specialisation and wealth of countries two country case.. The source is Brezis et al. 1993..

able to formulate the model mathematically is then lost, but this disadvantage should be accepted, at least initially. The theory of national innovation systems developed in the second half of the 1980s and the beginning of the 1990s provides, from our point of view, a concept which replaces the simple examination of productivity differences by a system of participants, networks and interactions and which represents a more appropriate approach for the question of interest here. 19 According to this approach, a national innovation system consists of participants who are involved in searching and research processesprincipally research and developmentsuch as companies, universities, research institutes etc. The production and market structure, the finance system, the education system and other institutional

frame conditions are added to this. In a very simplified way it can be summarised that the following factors and characteristics of such a national system matter: the role of the main players in the research system and their division of labour; the linkages between these players, especially between the public and private research subsystems, available resources knowledge, human capital, natural resources. and infrastructures such as education, public research infrastructure.; and several conditions of the supply and demand side. 20 The various authors regard different aspects controversially. Freeman accounts for stability and changes of the innovation system primarily in terms of a strongly co-ordinating role of the state, horizontal co-ordination and longer term time horizons he is oriented towards the Japanese

19 The theory of national innovation systems was developed by Freeman 1988., Lundvall 1992. and Nelson 1993.; see also the works of Edquist 1997. and Freeman and Soete 1997..

20 An overview of recent changes and trends of most of these factors of the German innovation system can be found in the work of Krull and Meyer-Krahmer 1996..

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innovation system.. In contrast, Nelson places more emphasis on the mechanisms causing variation and competition. In his examination, Lundvall focuses upon the relations between user and producer. Regardless of this, different levels of the national innovation system can be distinguished: macro-structures, meso-structures industrialrtechnological level. as well as microprocesses. Table 9 provides an overview of this but does not claim to show the complete picture. In the national innovation systems concept, the interaction between universities and industrial sectors is determined by the following variables: the absorptive capacity in each institution, which makes interaction possible in the first place. Theeconomically speakingincentive structure of the interactions which accounts for their intensity and, finally, important frame conditions which are found in both the macro-structures e.g. decentralised or centralised research system, financing system with a long-term or short-term orientation. and the mesostructures e.g., industrial and technological structure.. Central to the present question of interest is the ability of the participants involved to grasp new scientific and technological developments which evolve outside their classical areas of competence early enough and to assess their relevance. In this context, the distinction between networks with weak ties and those with strong ties seems to be important. 21 The pattern of weak and strong ties is, to some extent, historically determined. Studies by Grabher 1990. and Werle 1990. show empirically the deficiencies of strong ties between the industrial sectors of the Ruhr region and missed innovation opportunities in telecommunications in the 1970s caused by relationships between the Federal Post, bidders and suppliers which were not very competitive. In order to keep the lock-in tendencies low and to allow relative openness to new technological paradigms, the important conditions of a national

Table 9 Selected factors determining national systems of innovation Level Macro-level Meso-level Factors degree of centralisation of the research system time horizon of the financing system industrial structures e.g., sector-specific governance, size, structure. technological structure e.g., science-based. degree of competition in specific markets industryruniversity interaction absorptive capacity incentive structure

Micro-level

21 We will not discuss the extensive literature on networks in any detail; see the works of Granovetter 1973., Marsden and Lin 1982., Wegener 1987. and Witt 1997..

innovation system are, from this viewpoint, the following. 1. A well-developed absorptive capacity, i.e., the ability of companies to successfully acquire the research results of others universities, other companies. Cohen and Levinthal, 1990.. Absorptive capacity is frequently equated with the existence of own research and development activities. However, it is of greater significance here that the companies are capable of absorbing knowledge from those areas of science and technology often unfamiliar. out of which potentially new technological paradigms could evolve. In the same manner we would argue in the case of research institutes; in this case absorptive capacity means the ability to respond to new problems and in this connection to communicate within and beyond the border of scientific disciplines. 2. A broad network of the companies with public research institutions as well as other companies. It is probably decisive whether this network is restricted to relationships to the most important protagonists of the currently dominant technological paradigm or whether it allows admission to a wide range of research areas from which potentially new technological paradigms could result. Our assumption is that the latter case depends primarily upon weak ties and flexible interaction. 3. These two system characteristics are probably even more significant the more turbulent and unpredictable the environment, the more advanced the maturity of the currently dominant technological paradigm, the stronger new inter-dependencies and synergies, and the more science-oriented new technology regimes are. Additional main driving forces

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are the dominating industrial structure and the intensity of competition. Our view is that the empirical evidence presented in the first part of this paper indicates that considerable lock-in effects can be found in the German innovation systems. First, the R & D capacities which have been reduced or have been stagnating since the end of the 1980s presumably have negative effects on the absolute level of absorptive capacity. Second, the networks seem to be based primarily on existing technological paradigms. Especially in the field of production technology, it could be problematic that the mechanical and systems engineering companies interact mostly with the production technology departments of universities cf., Table 2.. Legler et al. 1992. also document that German companies focus their R & D on their own branch rather than on neighbouring areas, completely different areas or areas giving new impulses. The available empirical evidence tends to favour the model of strong ties in the field of the dominant technology paradigm rather than the model of weak ties with a broad and flexible network, especially in the new advanced technology fields. This situation is especially the case in the area of the machinery industry and production technology. Against the background of its maturity within the industrial life cycle, its openness towards new technological paradigms is decisive for its evolutionary capabilities. An assessment of recent technology forecast studies reveals that traditional areas such as mechanical engineering have to integrate new fields such as information technology, new materials or biotechnology for remaining competitive. 22 As shown in Section 5.2, the meso-structural conditions in these industrial sectors also tend to support lock-in effects. 23 In science-intensive fields, the integration of external technologies seemsat least in the present situationless critical. However, even there, a trend towards inter-disciplinarity can be observed, like the examples of computer-based drug design in pharmaceuticals Reiss et al., 1997. or the combination of

micromechanics and microelectronics illustrate. The attitude of firms in these fields is inconsistent: On the one hand, the German chemical industry followed the old profitable paradigm of inorganic mass chemistry too long and neglected the new paradigm of biotechnology. On the other hand, some chemical firms adopt new technologies through open co-operation with universities and other external research institutes cf., the example of superconductivity in the work of Jansen, 1996.. German companies are quite able to pursue the strategy of engaging all the best possible academic groups and allowing them to work in parallel as freely, but as mutually well-informed as possible, in a way which generates variance. That means that these firms follow the strategy of weak ties and flexible interaction.

7. Conclusions Although there is a broad consensus that the linear model of innovation is inadequate, the concept of the one-way bridge from public research to industrial research is still widespread in the discussion on technology transfer. Our investigations support the need to refocus the traditional policy of technology transferthe establishment of transfer institutions and incentives within the public research worldand to convert it into a concept supporting a two-way bridge Meyer-Krahmer, 1996.. 24 The survey at German universities has shown for all fields examined that the central linking element in the co-operation between universities and industrial firms is the exchange of knowledge in both directions. Although the institutional orientation of academic and industrial researchers is different, the exchange of knowledge can be considered a common denominator where both interests meet. The mutual exchange of knowledge in techno-scientific communities is obviously a broad phenomenon that is not limited to some exceptional cases, but applies to whole disciplines and subdisciplines.

The automobile industry is a positive example of such an integration of new areas. 23 The present short-term orientation on the financial markets support lock-in effect, too.

22

24 The two-way concept only applies to universityindustry relations. If other actors such as governmental agencies are included in the analysis a multi-way concept must be introduced.

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Our second major conclusion underlines a characteristic of a national innovation system which we call structural absorptive capacity. We call the absorptive capacity of firms, research institutes or universities. structural, because it largely depends on meso-level characteristics. This structural absorptive capacity depends, according to our empirical evidence, on the science intensity of technologies, the industrial life cycle, and the firm size structure of the industrial sectors. Furthermore, the structural absorptive capacity also depends on micro-level factors: internal R & D capacity of firms, and interaction patterns to relevant technologies outside traditional linkages, as well as formal co-operation and informal networks. Our case study for Germany shows the success of the chemical industry in stimulating or asking for relevant research activities at universities. 25 This is the result of its activities in forming close relationships relevant for research aspects as well as in recruiting qualified personnel and introducing the most up-to-date insights from industrial research into academic curricula. Formal co-operation and informal networks are essential ingredients. This shows that successful or deficient interactions of industry and universities occur over a whole range of dimensions and can be measured by a corresponding multitude of indicators. We conclude that there is sufficient evidence that the limited focus of the concept of absorptive capacity on the micro-level and mostly on R & D. should be broadened to a structural absorptive capacity concept which has manifold consequences for analysis, actors and policy. The emergence of national systems of innovation has to be considered as a path-dependant evolutionary process where various economic, technological, social and cultural factors interlock and strengthen each other mutually. The cognitive structures we identified are strongly influenced by the co-evolution of industry structure, technology and institutional factors see also the work of Nelson, 1995.. The close interaction of application-oriented university departments and industrial firms in the less sciencebased area of mechanical engineering has to be

interpreted in this theoretical perspective. For many years, it has been a successful model of co-operation, but in the present situation, it implies risks of lock-in effects which can be overcome only by deliberate efforts. There is broad evidence that in addition to the factors already mentioned, the specific cognitive structure in this area supports the relatively strong orientation of universities on application and hampers the openness towards new, more theory-based technologies. However, this aspect has not yet been studied in a systematic way. So we suggest that more research on cognitive structures of different technologies is undertaken, because it can contribute to an improved understanding of national systems of innovation, but also of related problems such as the organisation of inter-disciplinarity or the relations between science and technology.

8. Unlinked References Schmoch et al., 1993

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