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The Entrepreneurial University and the Future of Higher Education in China

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The Entrepreneurial University and the Future
of Higher Education in China
Chunyan Zhou
Abstract
This paper explores some future tendencies of academic development in China through the lens
of the triple helix model of innovation. University- -industry- government interactions may be
depicted as a triple helix of one type or another in different societies. The model, with each helix
having a central core and a surrounding field space, differentiates between institutional spheres
development under various conditions and provides a framework to analyze innovation. A
comparison of university systems and government policies and laws suggests contrasting US and
China models of a “university-pushed triple helix” and a “government-pulled triple helix.” This
analysis indicates different paths toward the entrepreneurial university, albeit with a common
objective of promoting economic and social development.
Key Words: entrepreneurial university, government-pulled triple helix in China, spin-offs,
university-run enterprises (UREs), triple helix – field interaction
Introduction
Formation of new firms from university resources became a strategy of Chinese university and
regional economic co-development in an era of severe resource constraints. Under
contemporary conditions, government is providing increasing resources for academic
development; however just two decades ago, academic resources had to be cannibalized to
jump start regional development. The exigencies of this situation produced enterprises that
were strikingly different from US academic spin-offs on two key dimensions:
1. Chinese firms were typically based on existing technology rather than
advanced-edged research. Indeed such firms often began by marketing, rather
than manufacturing “high-tech” products although they soon used the resources
accumulated from sales to begin manufacturing and then upgraded to increasingly
higher-tech products and extended national to international markets.
2. At the same time, government is a huge stockholder, owning many corporations
left over from the era of state controlled enterprises. Many government agencies
also established subsidiary enterprises. Thus, there is considerable
interpenetration and resulting confusion among three spheres.
An analogous situation may be identified in the US coming from the opposite direction. In a
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laissez-faire oriented society outsourcing of traditional government activities to private firms
has created flexibility in organizational design but also loss of control and direction by
government agencies of some their traditional activities. Nevertheless, both the US and
Chinese cases represent significant experiments in restructuring the relationship between the
“public” the “private” and the “academic” that may be instructive to countries and world
regions suffering from institutional and organizational sclerosis. This paper analyzes higher
education development in China during the early stages of transition from a Statist regime.
I Comparison of University, Industry and Government in China and America
China is different from US in its political system and cultural tradition. Will China universities
follow the US model or take another path? Lets consider this issue through a comparison
among university-industry-government spheres in China and US.
On one hand, there is an innovative and creative spirit in traditional US culture; on the other
hand, American has recognized the benefit of technological innovation since World War II.
The idea that basic science is an engine of technological innovation from V. Bush is strongly
rooted. The science policy following from Bush’s report, Science: Endless Frontier has
successfully supported basic research in universities, so that there are spillovers of technology
knowledge, resulting in university’s direct participation in innovation through firm-formation
and creation of the “entrepreneurial university”. At least in Boston and Silicon Valley, and
increasingly elsewhere, we can see that university, industry and government has evolved from
a laissez faire to a relatively ideal triple helix.
University System
U.S. and Chinese academic systems differ qualitatively and in their governance. Although
there is a long history of academic training in the western sense, including early development
of research since the mid 20th century; most universities in China focus on teaching and are at
a relatively early stage of upgrading to research and entrepreneurial university modes,
although progress has been rapid, especially in recent years as government has had the
resources to commit to academic enterprise and as universities have generated significant
resources on their own to jump start high-tech development in response to government
requirements, on the one hand and to financial stringency, on the other.
US universities began the transition to research in the mid 19th century and an increasing
number have made the transition in recent years even as a 2nd transition has been underway
promoting the commercialization of research. It is the US government support of research in
the post war era that has fueled the expansion of academic research through funding from a
variety of agencies, with responsibility for military and health, as well as basic research.
Moreover, state governments, foundations, private donors, both alumni and well to do persons,
play a significant role in the variegated US academic system. Higher education also plays an
important role in the national culture, providing sports and television entertainment.
Academic purists may decry the extension of university functions beyond the strictly
academic, but the loyalty to their alma mater engendered by university sports teams provides a
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significant impetus for support. Similarly university technology transfers contribution to the
economy legitimates government support to universities and research.
There are over 3000 universities, in US, including some of the best ones in the world. The top-
ranking universities have considerable strength in research. Top-ranking private universities
have in average of 910 postdoctoral fellows, top-ranking public universities 690; whereas their
counterparts in China only have 300.1
Since the late 1970s and the early 1980s, higher education in China recovered from the
Cultural Revolution. Especially entering the end of 1990s, a big jump” of higher education
occurred. The university system undertook an expansion strategy. To date, there are over 1200
universities and over a 25% gross enrollment rate. There is a rough equivalence in staff and
undergraduate student numbers, structure of student levels, professional curriculum. In other
word, the difference is not in educational scale, but quality; not in teaching, but research and
entrepreneurial capability.
The difference typically embodies: (1) staff: far behind US, in which all professors in top-
ranking universities have got their PhD. (2) educational quality: in recentl years, getting
worse,due to rapid expansion. (3) research capability: weak and hard to strengthen from
disordered graduate education, i.e. educational corruption” (4) the number of postdoctoral
fellows should be increased but there is inadequate financial support. These gaps must be
filled by accumulation, rather than an “educational big jump”.
Academic technology transfer has grown into a recognized profession in the US, with a
professional organization, AUTM Association of University Technology Managers,
complementary to LES, the Licensing Executives Society, representing its counterparts in
industry. Technology transfer has evolved from a marginal academic activity carried out by an
intermediary not-for profit entity, the Research Corporation, serving a relatively few interested
universities, in he early 20th century, like MIT, into a “decentralized-enhanced” model in
which the transfer function has been internalized into individual schools, and at an increasing
number, has devolved down to the school level, especially to medical schools.
Transfer has also expanded from patenting and licensing to include increasingly direct
assistance to firm formation, including provision of venture capital and business assistance.
Reflecting this expansion of capabilities, technology transfer and related incubation functions
is increasingly organized as a higher level administrative unit co-coordinated by a Vice
President. Research Corporation, having lost its original purpose as its customers internalized
the tech-transfer function, has transformed itself into a venture capital firm specializing in
university spin-offs.
In China, technology transfer is attracting greater attention as its potential for economic
development is realized. However, technology transfer typically means technology transfer in
its classic sense, that is movement of technology across national boundaries rather than
introducing indigenously invented university sourced technology to industry. Nevertheless,
National centers of technology transfer have been established by government policy in six top-
ranking universities, i.e. Tsinghua University, Shanghai Jiaotong University, Xi’an Jiaotong
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University, China East University of Science and Technology, China University of Science and
Technology and Sichuan University. Some universities have even set up international centers
of technology transfer by themselves. It seems that a transition to university tech transfer and
the entrepreneurial university in China is underway. The problem is how a university can
generate technologies by enhancing research, instead of importing technologies from abroad,
and subsequently commercialize research from the university campus.
Government Policies and Laws
Government in US, including federal, state and local levels, supports the innovation in
university and industry, through making policies, enacting laws, direct investment or indirectly
encouraging (venture) investment, government stock, as well as developing medium and small
firms and so on. The development of aviation, electronic computer and semiconductor industry
greatly depends on government support. During the 1960s, government bought 37%-44% of
all integrated circuit products, thereby accelerating the development of the industry even
though the overt purpose was simple military procurement. In Silicon Valley, one- fourth order
forms are from US government. In conclusion, the policies and laws, which have powerfully
stimulated high-tech industry in US, are relatively stable, consecutive and effective, despite
the absence of a coordinated industrial policy.
Since 1980s, China has created policies and laws to promote the development of science and
technology, knowledge industrialization and high-tech industry. Some of them are very helpful
to three spheres development. For example, the State Council decided to delegate management
power of universities which were subordinate to Educational Ministry to local government. It
greatly encouraged these universities to serve for local growth, accelerating procedure of
entrepreneurial university in China.
However, sometimes the policies lack stability and continuity. So far there has not been a
follow-up to the ambitious promotion of UREs as took place in the Resolution on Accelerating
S&T Development, which was jointly promulgated by the State Council and the Chinese
Communist Party in 1995. This resolution encouraged universities to establish high-tech firms
using their own research results, and promoted the formation of strong linkages between
academy and industry. It coincided with a sharp decrease in funds for teaching and research
that left entrepreneurial activities as the only recourse for university development. On the
other hand, state funds through loans and easy credit made possible the construction of
university science parks and rapid expansion of firms. These high growth firms took advantage
of imported technology, low wage rates and expanding domestic and international markets for
their products. However, in November of 2001, the State Council issued the “Circular on the
Experiment of Standardizing University-run Enterprises Management at Peking University
and Tsinghua University” that seems to restrain university-run enterprises and call for the
separation of UREs from universities.
In addition, there has been lack of foresight in policy-making in China. It seems policies and
laws in US aim at guidance and prevention in advance, whereas in China greatly they are ex
post facto used as tools to control or remedy, forming dominant power to control tracks of
university and industry. Some overdo policies results in university and industry is in negative.
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They don’t try to obey any policy, even though it is a worst one. Moreover every official, who
has taken an important action, is typically followed by another person who has his/her new
ideas to put forward in order to demonstrate achievement in the post, i.e. “official will”. This
leads to less-consistent policies but is a commonplace of policy and politics everywhere.
However, it may weaken government’s role in promoting innovation. To sum up, unlike US
government as a referee, Chinese Government works as a referee, a player and an organizer
for sport. However this broad-brush comparison must be qualified since in key areas of
national security US government also plays a pro-active role in innovation, for example,
through DARPA, the Defense Advanced Research Projects Agency, founded in 1958, in
response to the Soviet Sputnik success.
Industrial Firms
Industrial firms in US provide most of the researchers and expenditures to conduct research
work possess broad R&D financial sources and pay more attention to training. Thus they have
strong self-innovation capability. Some corporations, such as IBM and GM, keep large-scale
research labs for basic research, which have made significant contributions to innovation.
Some of them work together with other corporations and national labs to develop and improve
technology. Most of them have established their own office of technology transfer, in order to
track the research in universities and national labs and sell technologies to other companies.
In US, industry firms typically view intellectual property right (IPR) as the core of their
strategy for development, and attach importance to protecting IPR. They compel government
to protect IPR powerfully, and then protect US enterprises’ competitive advantages all over
the world.
Most of Chinese industry in which manufacturing is dominant operates at a low-technology
level in a labor and natural resources economy. Forms are very weak in absorptive capacity
and innovation ability in traditional industries. The transition to understand and respecting
IPR requires a longer time. Enterprises are also in transition from Plan to Market Economic
System. They can not yet become the main sources of technological innovation. That is why
university-run enterprises could develop increasingly. University takes on innovation tasks to
form new firms and industries. Based on this premise, universities in China may play an
increasingly important role in economic and social innovation. Thus, the entrepreneurial
university and the future of higher education in China will be a significant issue.
II Entrepreneurial University: Definition and Characteristics
According to the theoretical model of triple helix- field interaction, outside of the helices,
there is a triple helix (field) space, with various hybrid organizations, such as science park,
spin-off (in US), university-run enterprises (in China), incubator, etc. They come from the
interactions between university and industry. Why can university-industry affinity take place?
The radical reason is conformance of the objects or reciprocity, that is, both of them aim at
innovation, the first business application for science findings or technology inventions. In a
knowledge-based economy, knowledge has replaced material, labor and capital, becoming the
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most important factor of production. Not surprisingly, university, as producer for knowledge,
and industry, as user for it, need each other, forming a common goal.
Nevertheless, a relationship to industry is a necessary condition for an entrepreneurial
university, but not a sufficient one. An entrepreneurial university is not an only a university
with many industrial entrepreneurship activities. It has own meaning and characteristics. In the
West, entrepreneurship activities of a university typically include four aspects: (1)
entrepreneurship education: to organize teaching through facing to needs of industry,
encourage students to form start-ups, tell them how to do it; (2) consultation for industry; (3)
technology transfer from university to industry; and (4)spin-offs: firm formation.
In practice, a university has the potential to engage with the development of industry, no
matter its level and type. However, different universities have different education goals and
missions. Universities in various levels and types meet different societal needs. The teaching
university is based on education and engagement with the personnel market; the research
university engages production of knowledge, as well as teaching; the entrepreneurial
university has three missions: teaching, research and service for society. In fact, only the
entrepreneurial university can participate in the whole society’s innovation effort to improve
the interaction process of the triple helix, to complete a circulation of trilateral cooperation.
See Figure 4.
In our opinion, an entrepreneurial university must have three primary characteristics:
! Entrepreneurship culture is accepted and supported systematically.
! There are interface mechanisms e.g. a technology transfer office, such as Office of
Technology License (OTL) and corresponding achievements.
! There are significant numbers of staff members to form firms, which can receive
considerable income to support university’s research and other activities.
Thus, only the third and fourth among entrepreneurship activities of university above represent
the characteristics of entrepreneurial university, not the first two. Of course, an entrepreneurial
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university still has other entrepreneurship activities in question.
III University-pushed and Government -Pulled Triple Helix
US Triple Helix is a university led model, according to case studies from MIT, Stanford, and
elsewhere in recent years. New England, a “brownfield region, had a declining industrial
foundation in the 1930s; whereas the Peninsular region of Northern California, a
“Greenfield” site, lacked a significant industrial base. However, these two universities took the
lead in creating new industry and innovation, auguring the emergence of the university as a
leading power in regional development. Therefore we call this US model a “university-pushed
triple helix.” The model operated simultaneously in New England, where all three spheres
were available to support high tech development. For example, although manufacturing
industry had declined; the region retained a strong financial industry that had been built on the
base of the regions previous commercial success. The financial industry supported the
invention of the venture capital firm, designed to support firm-formation from academic
inventions. 2
By contrast, a triple helix emerged successively in California where a university initiated
development project, from the late 19th century through the 1930’s, was largely university-led,
with some industry collaboration as firms were formed by local technology entrepreneurs
including those that emanated from Stanford. The project was supported by the federal
government in the early post war; building on the base that was available to attract R&D
funding that was newly available on a large scale by military procurement of semi-conductor
devices from this growing industry. 3 The project then became industry led in the 1990’s, in
response to a recession in what had by then become the world’s leading high-tech region. 4
From 1949 when the People Republic of China was established until 1980, the university in
China was strongly influenced by the practice of the former Soviet Union and mainly engaged
in teaching. Research, especially for the military, was carried on by research institutes. This
policy followed the French tradition, influential in Russia that the Soviets found useful for
political purposes. Only ideologically reliable persons were allowed to become university
teachers while researchers, of lesser reliability, could still be utilized in Institutes where they
would be cut off form influencing youth. The separation of research and teaching, in contrast
to the Humboldtian tradition of integration in support of the emergence of the nation state, was
imported to China where it similarly had the effect of separating university from industry.
Since 1980, China’s universities underwent a sea change as a result of then President Deng
Xiaoping’s thesis of science and technology as the primary forces of production. The Chinese
government inaugurated a series of policies and laws to encourage university research activity
in order improve the capacity of the university to contribute to economic development. As a
result, university research developed rapidly. In January of 2006, a National Science and
Technology Conference, with a goal of creating an innovative state, were held in Beijing. The
meeting objective was to increase the capacity of university and industry to contribute to
innovation. University and industry, as innovation actors, are both controlled or pulled by
government. Such a model can be called a “government-pulled triple helix”.
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Liaoning Province, in Northeast China, provides an exemplary case of university transition.
Before 2000, the two research universities, Northeast University and Dalian University of
Technology, were managed solely by Educational Ministry. They paid little attention to local
economic development. However, in 2000, some management power was decentralized to
Liaoning Province government, placing these two research universities under joint central and
local government management control. This arrangement greatly encouraged cooperation
between university and industry. Indeed, an increasingly close relationship has improved local
new technology and industry development at a surprising speed.
Moreover, government also controls industrial development. For example, before 2000,
Liaoning Province government undertook a high-tech strategy for development, abandoning
old industries in which the region formerly excelled. However, in the face of failure, it decides
to change the strategy to renew the old industries with the help of new ones. This strategy
reorganized the direction of university and industry development and achieved much greater
regional growth than the previous strategy.
V Development of Entrepreneurial University and the Future of Higher
Education in China
Can Triple Helix theory be used to investigate the specific situations in developing countries?
Are there any essential differences between the innovation processes of developed and
developing countries?
Jong-Hak Eun, Keun Lee and Guisheng Wu “depart from the critique that the ‘Triple Helix’
and the ‘New Economics of Science’, which assume typical situations of advanced countries,
fail to provide a satisfactory theoretical framework to address the university-industry
relationship in developing countries”, 5 to explore university-run enterprises in China. The
New Economics of Science has revealed the commercialization feature of science, and based
university-industry-government cooperation on reciprocal principles. In their new framework,
the authors admit the hierarchy of UREs, which can freely use the mother university’s
resources, including labs facilities, and are controlled by the university. There is an umbilical
cord connecting baby to mother. Apparently, the hierarchy was generated by the political
system of China. This partly is due to most universities in China are public. Therefore, to
neglect the government sphere’s influence in the study of UREs is improper.
Identifying Industry and University: From UREs to Spin-offs
Although universities in US and China are both encouraged to create enterprises or form firms,
they are spin-offs in US, whereas university-run enterprises (UREs) in China. They are quite
different in their ownership. A spin-off by definition is an economic entity of academic origin
that becomes an independent entity. A URE is an economic enterprise that remains part of the
administrative structure of the university. Spin-offs in Boston and Silicon Valley exemplify
that universities have made tremendous contribution to local economic and social
development. Many UREs (from some universities such Tsinghua University, Beijing
University, have also taken the leading role in Chinese high-tech industry, but can not play
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dominant role in regional economy development, although Tongfang, Wangxin and Northeast
Software respectively established and operated by Tsinghua University, Zhejiang University,
and Northeastern University have become the No. 3, 12, 15 and 25 Chinese Top-100 S&T
Firms in 2002.6 They only exemplify the advantages of UREs as high-tech enterprises.
The rise of UREs in China started from 1980, because old style enterprises in the planned
economy were poor in absorptive capacity, to say nothing of R&D and innovation. Most of
UREs started from low-tech and then grew up to higher-tech industry. Their routine of growth
is low-tech to capital and then toward high-tech enterprises. They are neither “spin-offs”, nor
“start-ups”. The research results with commercialization potential were rarely transferred into
industry. Thus the university has to fulfill technology transfer and knowledge capitalization
through establishing UREs.
As a whole, UREs have three characteristics: (1) university takes up absolute or relative
holding status to its UREs in asset relationship; (2) those who operate UREs basically come
from university staff or students, especially at the very beginning of them; (3) R&D of UREs
mainly rely on their mother universities. Therefore UREs actually are “enterprises possessed
by universities”. This ownership problem is being resolved by Chinese government through
policy now. As ownership right changes, there will appear various issues, involving
stockholders, managers, operators, as well as intellectual right problems. Development of
entrepreneurial university in China will accompany with solution of these problems. In the last
part, we will discuss why UREs in China should be changed into spin-offs.
UREs in China are in the core area of the university institutional sphere, but spin-offs in the
US are in the external triple helix field space 7, where university and industry interact. As a
result, UREs brought confusion in ownership, became one of sources of corruption and
disordered university system, while they created revenue for universities in question. The
development of UREs has raised the issue of c university’s character and missions. They have
consumed too much energy and time from faculty in business of low-tech firms. There has
increasingly been complaint that the university is becoming “industry.” For example,
university is taking on enterprise actors in innovation, through its advantage in high-tech
research; it is increasing the tension between university and industry. Since university has its
own companies; excessively competitive university-industry relationship will eventually
induce a difficult technology transfer from university to industry; and so on.
According to Branscomb et. al.8, the role of university in a society is determined not only by
the economic logic, but also by the “social contract” concerning the division of labor. A
“Social contract” has prescribed that the university as an institution for education and
production of knowledge. Thus, ownership of UREs which have intruded industries into the
university really becomes an improper focus of university-industry relationship. In addition,
university should be a social commonweal enterprise, i.e. non-profit, by “social contract”,
however, UREs made them rich now. In China, poor professors before the end of 1990s now
have already become one of “Seven Wolves”1.
Based-on interest considerations, universities are reluctant to give up the ownership to UREs.
1 Seven Wolves means the first seven groups of top wealthy.
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However, as a university expands enrollment opportunities and the absorptive capacity of
industry is enhanced and the university improves its capabilities in technology transfer, there is
a tendency to devolve UREs and explore other forms of entrepreneurial activity. See Table 2.
Table 2 University-run Enterprises in China (1992-2001) 9
Year
Number of total UREs
Number of S&T UREs
1992
Not available
850
1996
Not available
2912
1997
6634
2564
1998
5928
2355
1999
5444
2137
2000
5451
2097
2001
5039
1993
Source: Year 2001 Statistical Report of University-run Industry in China, 2002, P.10, China University
Industry (Zhongguo Gaoxiao Chanye), 2000, No.6, P.10, University S&T Industry News (Gaoxiao Keji
Chanye Tongxun), 1998, No.3-4, P.2
Jong-Hak Eun et al. suggest that the absorptive capacity of industry affects university’s
decision to establish UREs. When it is weak, the university feels that it is the only path to
fulfill its technology transfer or industrialization mission is to set up UREs and make them
flourish. As absorptive capacity increases, universities prefer transfer technology and UREs
decline.
In addition to the decrease of UREs related to the improvement of absorptive capacity of
industry, there are at least three factors: new government policies, development of (venture)
capital guarantees and enhanced knowledge production abilities on university campuses.
Certainly, another important factor to affect UREs is traditional culture. The solution of
ownership problem is the focus of current policy changes. In the recent past, unstable policies
have caused uncertainty in universities. Since 2000, some universities in China have been
supported by expanded government R&D investment, 211Project, Innovation Project and
increase of enrollment (tuition), which reduced greatly financial pressures on universities.
Moreover, teaching universities can get enough money from tuition. These factors cause the
university lose its willingness to establish UREs. Furthermore, no president wants to involve
the university in ownership due to the problems it creates. From a long term perspective, it
appears that university, industry and government want UREs to disappear. Of course, whether
they will be replaced by spin-offs is another issue.
The Starting Point of China Entrepreneurial University: Professor Consultation
Consultation is the starting point of US entrepreneurial universities, having become an
important practice of professors in some US universities as well as bringing a financial return
to their faculty members. In MIT’s experience, the start of entrepreneurship was consultation
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by its faculty for industry, followed by spin-offs. In the 1930s, Professors such as V. Bush
learned about firm technological needs through consultation. They brought problems back to
labs in the university to do theoretical investigation while they dealt with the practical
problems. At the same time, teaching was greatly improved by introducing vivid examples
from consulting practice to the classroom.
Consultation for industry is arising among a few top-ranking universities such as Beijing
University and Tsinghua University, but it is at the very beginning. The resources are
concentrated in a few highly reputed universities. For example, under the leadership of faculty
in Beijing University a consultation firm was organized, with more than 200 business or
technology experts living in different cities and divided into five groups depending on their
expertise. A series of books on consultation edited by authors at Beijing University was
recently published by Zhongxin Press. Nevertheless, relative lack of consultation led to
teaching and research becoming separated from industry practice. Moreover, there has been a
lack of absorptive capacity and self-innovation ability on the part of industry.
From Entrepreneurship Activities of University to Entrepreneurial University
There are various levels of universities, including national, province and city levels in a
hierarchy. Universities may also be categorized as technology academy, teaching university,
research university and entrepreneurial university, according to the priority of their objectives.
A matrix is formed here. See figure5.
Figure 5 the Evolution of University
In Chairman Mao’s era, it was proposed that education should be related to the practice of
industry and agriculture. Schools had their own factories, workshops and experimental fields.
Intellectuals in universities had to participate in industrial practice. This was mainly done for a
political purpose: to change intellectuals, but there is a byproduct: to draw university-industry
together. Since 1950, there have been a variety of entrepreneurship activities in universities.
See Figure 6.
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An entrepreneurial university conducts basic research and achieves technological innovation
from its research results spillover, taking the lead in putting them into practice. On the other
hand, a vocational college or professional school may work closely with industry and be
focused on meeting its need but is not necessarily an entrepreneurial university unless it
innovates from a science base and plays an active role in regional economic and social
development.
Conclusion: Policy Implications
All three helices, in China, have serious deficiencies, especially industry. Thus, university
becomes an important actor to promote high-tech industry through setting up various
university-run enterprises. Government, at national, province and city levels, participates in
economic activities through sector bureaus. For example, the light industry bureau is not only
responsible for administration of the sector but also has some affiliated enterprises. As a result
of economic instability, every sphere entered the market, thus making it disordered. How can
government with remit to regulate and supervise the market deal with the firms run by itself?
Can universities resolve the tension among teaching, research and creating/running
enterprises? What is a university’s nature? In other word, is the third mission of university to
foster development of industry, or to run some enterprises like industry?
The problems above arise from absence of boundaries among the three core areas. Their lack
of independence makes it very difficult for the spheres to create an external field space for
interaction undertaken by mutual consent. The confusion of actors inevitably results in each
helix’s inability to acknowledge its specific missions and play its role very well. Thus, entities
which have clear enterprise characteristics may grow in university or government since there
is not a clearly defined “spin-off” path.
Such enterprises are quite different from spin-offs in ownership. Indeed, they have been
labeled University run enterprises or URE‘s to denote their legal status as part of the university
system. More recently government has acted to encourage university’s to devolve these
enterprises to reduce university’s liability for product defects, as the legal system has
strengthened, and opportunities for corruption due to intermingling of academic and firm
resources. The URE model is not unique to universities, the Chinese armed forces has engaged
in significant firm formation efforts and the URE movement has also spiraled back as some
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enterprises have established subsidiary higher education entities, e.g. software college of
Northeast Software, a Northeastern University URE.
Although a few Chinese universities created some of the largest and most successful high tech
enterprises in the country, they remained part of their originating organizations until quite
recently, rather than spin-offs as independent entities. This created problems for their sponsors
since as an independent legal system took hold, dissatisfied consumers or business partners
gained the right to sue for redress. Since the enterprises remained the ownership to the
universities, it placed them at risk. To redress this anomaly, government has recently taken
steps institutionally to separate university firms from their academic source.
Chinese universities are in the midst of transition from teaching to research and
entrepreneurial modes of academic organization. This academic transformation is influenced
by transition from a Statist society in which government controls academia and industry to a
Triple Helix society in which each sphere is relatively independent of the other. Since 1990s,
existing enterprises are lack of capacity of to technological innovation and not able to become
real main actors for technological innovation, although the government has completely
recognized “the key to enhance the capacity of enterprises’ self-innovation is to emphasize the
main actor status of enterprises in technological innovation, making them the main actor for
R&D, innovation activities and application of innovation results”.10
This format is hypothesized to provide the optimum conditions for innovation. In recent years,
government support focuses on research universities, through Project 211 and Protect 985;
other universities, especially those local ones, set up their own enterprises to fill the gap left
from lack of government financial support. Universities which were supported by the state
also operated enterprises whose business activities remained within the universities rather than
being spun off as independent firms. Several universities have successfully operated high-tech
companies like Tsinghua Tongfang, Beida Fangzheng and Northeast Software. A similar
process of creating enterprises from available resources took place in Eastern Europe after the
demise of the Communist regime. However, in the abrupt transition from a statist to a laissez-
faire regime the sponsoring organizations lost most of their resources and were typically
unable to provide significant support to grow these enterprises.
Although the factors to decide the intensity of each helix are complex, the most important
includes the R&D capability and financing ability of university; in industry, investment in
R&D activity and absorptive capacity; feasibility and effectiveness of government support by
policy and laws, or by direct investment. Among the three helices, industry is closest to the
market and production practice. In general, it is the main actor or subject in innovation.
Sometimes university can be an organizer or subject for innovation. But government shouldn’t
be involved in it directly.
In the triple helix – field interaction model, the cores and outside space of the helices are
separated. It is helpful to explain China’s current state of the art with respect to the triple helix.
According to the theory, first of all, China should resolve the problems existing in the core
area, i.e. UREs’ ownership issue. The present situation of cores of triple helix spheres involves
the transition from a statist model. This transformation is shown by Figure 8. It is against
14
Figure 2, with three spheres’ cores apart from each other but better than a pure statist triple
helix.
A policy to develop entrepreneurial universities will raise academic research capacity and
strengthen university-industry links. In order to accelerate the construction of entrepreneurial
universities in China, several measures for university development should be taken:
(1) actively upgrade research universities and encourage the transition from teaching to
research universities, with the help of government policy;
(2) government should encourage consultation practice greatly;
(3) try to change UREs to spin-offs right now
(4) make government policies more stable, credible and continuous.
(5) work with government and industry to develop hybrid organizations like science
parks and incubators around the universities in question to enhance industry and university
link.
The research ability of universities in China has to be improved. However, the university
sector is still secondary to the research institute sector in research funding. This situation does
not take full advantage of the human capital flow through and idea generation capability of the
academic research group format. Nor does it take advantage of the research capacity of
graduate students and post-doctoral fellows as a cost-effective R&D strategy in contrast to
higher paid advanced Institute research personnel.
Universities need more financial support and policy assistance. In 2003, only ¥16.23 billion
(B) of total R&D outlay, ¥153.96 B, was for universities, ¥96.02 B for enterprises and ¥39.90
B for research institutes. From the investment to science and technology activities, the total
amount is ¥312.16 B, including ¥212.62 B in enterprises, ¥68.13 B in institutes and ¥25.39 B
in universities. Obviously universities are not seen as main source of research. 11 China also
has a long way to go achieve world-class research universities.
Most universities will continue transforming from teaching to research universities. In addition
15
to this transition, there is also a strong movement towards integration of specialized Soviet-
style, specific industry focused universities. In recent years, government, both at the central
and local levels, has merged many universities. After the “merging motion”, a relative stable
university system will be formed. The next task should be to create their specialties. Further
more, the professional schools or German-style polytechnic school will increasingly become a
complement to the technology universities. A national conference in profession education has
been held during Nov.7-8 of 2005, in order to enhance training technicians. There will
continue to be many technology academies in China.
Universities will be increasingly differentiated. Tsinghua University may become an
entrepreneurial University; Zhongnan University is trying to be an innovation university.
Some foundations may continue as teaching universities, others may persist as polytechnic
schools. Nevertheless, an overall movement can be discerned towards development of multi-
universities, simultaneously oriented to teaching, research and regional economic
development. Thus, regional innovation may take place through a university-pushed and
government-pulled triple helix, with a statist or laissez-faire model trending towards to a triple
helix of overlapping, yet relatively independent spheres. China, however, still has a long way
to go to form an ideal triple helix model for innovation.
Reference
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刘念才、程莹、刘莉、赵文华2002.我国名牌大学离世界一流有多远,高等教育研究,23(2)19
2 Etzkowitz, Henry. 2002. MIT and the Rise of Entrepreneurial Science. London: Routledge
3 Rebecca S. Lowen , 1997. Creating the Cold War University: The Transformation of Stanford, University
of California Press
4 Saxenian, AnnaLee.1994. Regional Advantage: Culture and Competition in Silicon Valley and
Route 128. Cambridge, Mass.: Harvard University Press.
5 Jong-Hak Eun, Keun Lee, Guisheng Wu. Explaining the University-run Enterprises in China: A New
Theoretical Framework and Applications. http://www.kiep.go.kr/inc/download.asp/
6 Jong-Hak Eun, Keun Lee, Guisheng Wu. Explaining the University-run Enterprises in China: A New
Theoretical Framework and Applications. http://www.kiep.go.kr/inc/download.asp/
7 Etzkowitz, Henry and Zhou, Chunyan, 2007. The Theme Paper for Triple Helix VI International
Conference in Singapore at www.triplehelix6.com
8 Lewis Branscomb and James Keller,1998. In Investing in Innovation. Cambridge, MA: MIT Press
9 Jong-Hak Eun, Keun Lee, Guisheng Wu. Explaining the University-run Enterprises in China: A New
16
Theoretical Framework and Applications. http://www.kiep.go.kr/inc/download.asp/
10 Decision on Enhancing the Capacity of Self-innovation by performance of Science and Technology Plan’s
Outline , by Chinese communist State Council2006.1
11 http://www.stcsm.gov.cn
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Article
Compares the organization of regional economies, focusing on Silicon Valley's thriving regional network-based system and Route 128's declining independent firm-based system. The history of California's Silicon Valley and Massachusetts' Route 128 as centers of innovation in the electronics indistry is traced since the 1970s to show how their network organization contributed to their ability to adapt to international competition. Both regions faced crises in the 1980s, when the minicomputers produced in Route 128 were replaced by personal computers, and Japanese competitors took over Silicon Valley's market for semiconductor memory. However, while corporations in the Route 128 region operated by internalization, using policies of secrecy and company loyalty to guard innovation, Silicon Valley fully utilized horizontal communication and open labor markets in addition to policies of fierce competition among firms. As a result, and despite mounting competition, Silicon Valley generated triple the number of new jobs between 1975 and 1990, and the market value of its firms increased $25 billion from 1986 to 1990 while Route 128 firms increased only $1 billion for the same time period. From analysis of these regions, it is clear that innovation should be a collective process, most successful when institutional and social boundaries dividing firms are broken down. A thriving regional economy depends not just on the initiative of individual entrepreneurs, but on an embedded network of social, technical, and commercial relationships between firms and external organizations. With increasingly fragmented markets, regional interdependencies rely on consistently renewed formal and informal relationships, as well as public funding for education, research, and training. Local industrial systems built on regional networks tend to be more flexible and technologically dynamic than do hierarchical, independent firm-based systems in which innovation is isolated within the boundaries of corporations. (CJC)
Decision on Enhancing the Capacity of Self-innovation by performance of Science and Technology Plan's Outline
  • Jong-Hak Eun
  • Keun Lee
  • Guisheng Wu
Jong-Hak Eun, Keun Lee, Guisheng Wu. Explaining the University-run Enterprises in China: A New Theoretical Framework and Applications. http://www.kiep.go.kr/inc/download.asp/ 10 Decision on Enhancing the Capacity of Self-innovation by performance of Science and Technology Plan's Outline, by Chinese communist State Council,2006.1