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Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 1 -
26. Dimensions of openness: universities’ strategic choices for innovation
Markus Perkmann
November 8, 2022
Abstract and Keywords
Universities are destined to engage in open innovation because they generally do not
commercialize products themselves. Yet, they have strategic discretion over how to perform
innovation and shape outcomes. I consider two dimensions of strategic choice for universities: the
degree of control universities exert over how innovations are developed; and, how widely they
intend their inventions or expertise to spread. Choices with respect to these two dimensions inform
how licensing deals and research partnerships are structured. I discuss trade-offs and strategic
implications of each choice with respect to licensing to spin-offs and established entities, exclusive
vs. non-exclusive licensing and closed vs. open research partnerships.
Keywords: University Technology Transfer, Commercialization, Licensing, University
Spinoffs, Academic Entrepreneurship
Introduction
Universities are destined to engage in open innovation; they generate knowledge and
intellectual property from their research, but rarely develop their own products and services. In
patent language, they are almost always non-practicing entities. Hence innovation generated from
university research is ‘open’ by default.
Within the confines of this imperative, universities have strategic discretion over the way in
which they conduct or participate in innovation. In this chapter, I discuss two basic dimensions of
openness in outbound innovation that universities consider when evaluating their approaches to
commercialization and industrial application: the degree of control they retain over the innovations
they originate, and the spread of innovation they aim to achieve.
To illustrate, by licensing a technology to a tightly held spin-off company, a university will
retain tighter control over how an innovation is developed, compared to licensing to established
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 2 -
corporate entities. Equally, granting non-exclusive licenses to multiple entities or establishing
university-industry centers with open IP policies allow innovation to spread more widely
compared to engagement with select parties. Hence, for each given invention or area of expertise,
universities have discretion over how to proceed in terms of facilitating innovation1.
The purpose of discussing universities’ strategic discretion over how to partake in innovation
is two-fold. First, universities’ choices with respect to open innovation may be informed by
multiple organizational rationales, ranging from maximizing revenue to considering
interdependencies with universities’ other missions, to playing a broader part in societal innovation
and progress. Second, universities often face resource constraints and shortcomings in terms of
capability and processes, which in turn, may inform their choices. In other words, certain choices
may be made for reasons of expediency rather than strategy. A closer consideration of the range
of strategic options and possible outcomes may be useful in informing how university resources,
skills and capabilities are configured.
First, I provide an overview of the basic channels that universities can deploy for facilitating
open innovation. I then identify two key dimensions for the strategic choices that universities can
make across these channels: degree of control and spread. From the vantage point of an open
innovation perspective, these dimensions appear particularly pertinent. The first, control, relates
to trade-offs involved in exerting a strong influence over the development of an innovation versus
allowing others to take the lead. The second, spread, pertains to the volume of impact that the
originator of an invention, or embryonic innovation, may be able to achieve by varying the number
and type of parties engaged via the open innovation strategy.
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 3 -
Channels Through Which Universities Enable Innovation
Before considering the two basic dimensions of openness over which universities can exert
strategic discretion, I provide a summary of four primary channels through which universities
perform or enable innovation (Cohen et al., 2002; Perkmann et al., 2021).
As a preamble, it is worth mentioning that universities’ approaches to innovation are grounded
in a long tradition of engaging firms and other external users to generate innovations and build
large techno-social systems (Martin, 2012; Mowery, 2009). Collaboration and expert mobility
between universities and chemical firms enabled the rise of the German synthetic dye industry
(Murmann, 2003) and the creation of firms in the Bay area (Kenney, 1986; Lenoir, 1997). The 19th
century saw the emergence of universities explicitly aimed at fulfilling societies’ industrial needs,
including the grandes écoles in France, and technical universities in countries including Germany,
Switzerland and the UK (Rüegg, 2004) as well as land grant universities in the US (McDowell,
2001). Even through the post-World War 2 period, when public science significantly expanded
with an emphasis on basic research (cf. Bush, 1945), universities formed an integral part of
innovation efforts across multiple sectors, including the space industry, pharmaceuticals and
agriculture. Regulatory measures, such as the Bayh-Dole Act (1980), and new technological
opportunities in biotechnology and information technology brought a renewed emphasis on
universities’ role in the innovation process (Mowery and Nelson, 2004).
Historic evolution across several diverse institutional contexts has resulted in a considerable
repertoire of instruments that universities deploy to encourage innovation. For the purposes of the
current discussion, they can be grouped into four categories, described briefly below: academic
entrepreneurship, licensing, research services and research partnerships.
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 4 -
Academic Entrepreneurship
Academic entrepreneurship refers to the creation of spin-off companies by faculty, university
personnel or outsiders, most often based on university-developed technology. The proportion of
faculty who become founders generally corresponds to a low single digit percentage, yet the
economic impact of university spin-offs is considerable, particularly in sectors such as
biotechnology, medical devices and information technology (Bonardo et al., 2011). Some
university spin-offs are founded without inventors’ formal involvement and are instead led by
surrogate entrepreneurs (Franklin et al., 2001).2 In many cases, faculty inventors-turned-
entrepreneurs choose to remain in employment at their universities and continue to contribute to
public science (Fini et al., 2022b).
In 2020, the US universities and research institutions that responded to a survey by the AUTM
organization3 each formed 5.7 spin-offs, corresponding to one spin-off for every $83 million in
total research expenditure (AUTM, 2021). In the UK, in the same year, universities originated
around 300 spin-offs (including staff spin-offs), corresponding to approximately one spin-off for
every £30m of research expenditure.4
Licensing
Universities routinely obtain or claim intellectual property on their inventions and creations,
which can then be licensed to interested parties (Debackere and Veugelers, 2005; Owen-Smith and
Powell, 2001; Siegel et al., 2003). Most licensing activity at universities relates to patented
inventions and, to a lesser extent, copyrights on software code or other artefacts. Licensing activity
by universities surged after 1980 when the US government legislated that universities should own
the intellectual property generated from federal grants, and provided incentives for
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 5 -
commercialization (Mowery et al., 2001). This development occurred in conjunction with major
technological breakthroughs in key scientific areas, such as biotechnology. Similar policy
frameworks were put in place across many other nations, leading to the establishment of
technology transfer offices at most universities, and a surge in intellectual property protection and
licensing (Mowery and Sampat, 2005).
For perspective, in 2020, universities accounted for 5.8% of all PCT patent applications
worldwide (World Intellectual Property Organization, 2021). In 2020, the US public research
organizations that responded to a survey by the AUTM organization granted, on average, 52
licenses or options to license, corresponding to 1.21 licenses or options per $10m research
expenditure (AUTM, 2021). In the UK, in the same year, higher education institutions granted
approximately 14,000 non-software licenses, of which 600 were producing income. This
corresponded to approximately 16 licenses per £10m of research expenditure.5
Research Services
Research services are a type of academic engagement that includes consulting and contract
research performed by academics for external clients (Perkmann and Walsh, 2007). Consulting
refers to the provision of advice and expertise by an academic, usually for personal income, while
contract research involves the use of university equipment or personnel whereby the generated
proceeds benefit the university or research group (Perkmann and Walsh, 2008). Research services
are typically regulated through agreements that define the ownership of any IP arising from the
engagement. In consulting, ownership may accrue to the client, particularly when no university
equipment is used. One US study found that 26% of patents assigned to academic inventors were
not assigned to universities, but to firms (Thursby et al., 2009); some US academics’ work as
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 6 -
consultants for firms during the summer months, and any intellectual property arising from this
activity, can be legitimately assigned to their commercial partners.6 Similar to engagement in
academic entrepreneurship and patenting, participation in consulting is skewed, with the bulk of
activity performed by a small proportion of academics (Perkmann et al., 2015). Consulting may
extend to advisory activities performed by academics as members of advisory boards (Chok, 2009;
Ding and Choi, 2011). By contrast, contract research involves formal contracting between a
university and a client firm where, in many cases, the university will claim ownership on any
intellectual property arising, though approaches differ across universities (Fini et al., 2018).
Research Partnerships
Research partnerships are collaborative arrangements between universities and third parties.
Such relationships can take many forms which are variably referred to as, among others,
collaborative research, joint research or research joint ventures (Perkmann et al., 2021). They can
range from small-scale, temporary projects involving an individual academic to larger, medium-
term university-industry research centers to permanent, large-scale consortia with hundreds of
industrial members (Bozeman and Boardman, 2003; Perkmann et al., 2019; Santoro and
Chakrabarti, 1999). Across OECD countries, industry pays for approximately 5% of universities’
total research expenditure, which is primarily apportioned to research partnerships, but also
includes contract research.7 Additionally, in many jurisdictions, governments provide subsidies to
private sector organizations to take part in research partnerships with universities; meaning, the
5% figure underestimates the actual volume of collaboration.
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 7 -
Strategic Choices in Universities’ Approaches to Open Innovation
Across the range of channels, universities have discretion over both the volume and shape of
activities. The overall volume of activity is generally correlated with the extent of resources that
universities decide to dedicate to fostering innovation-related activities. Resources dedicated to
technology transfer will inform the volume of disclosures that can be converted into intellectual
property and how many licenses can be awarded. Similarly, investment in partnership capability
– both at the central university and department level – will inform how many partnerships with
industry can be developed and concluded.
In this chapter, I focus on the strategic choices that universities have with respect to shaping
innovation. I discuss two basic dimensions: the degree of control universities wish to exert over
the development of an innovation from university-originated knowledge, and the spread of
innovation they may wish to achieve.
Control: Entrepreneurial vs. Corporate Innovation
Universities have a choice with respect to the organizational distance at which they encourage
or facilitate innovation, and implicitly, the degree of control which they exert. This dimension is
particularly relevant with respect to universities’ approach to licensing out their inventions, and to
what kind of entity inventions should be licensed.
Licensing represents the primary mode by which universities ensure appropriability for two
reasons; universities can commonly not rely on non-IP strategies, such as trade secrets or speed-
to-market. First, they are non-practicing entities who rarely develop their own innovations, hence
any valuable knowledge assets must be formally protected so they can be ‘transferred’ to entities
that will develop an innovation. Second, regardless of the route the university chooses for an
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 8 -
innovation to be developed, there are agency problems – often involving a three-way interaction
between faculty inventor, university and third-party licensee - that require the formalized
protection of intellectual property and subsequent license (Dechenaux et al., 2011). This means
universities will largely seek to obtain formal intellectual property and license it out to a suitable
operator.
In this respect, universities have two choice sets with respect to whom an invention should be
licensed: to a spin-off, or alternatively, to an existing incumbent.8 A recent AUTM survey suggests
that approximately 20% of all licenses by US universities were granted to universities’ own spin-
offs (AUTM, 2021), with another 20% granted to large corporates and the balance falling to SMEs.
Licensing out to a spin-off means that the university is organizationally more proximate as the
innovation is being developed, which allows for more control on the part of the university. The
founders are often faculty-inventors who remain employed by the university. Moreover,
universities often take an active interest – at times coupled with a financial stake – in their spin-
off, and support the latter with various services, including lab and incubator space, help with
customer development and market research and the identification of investors. Licensing to a spin-
off, therefore, is the closest a university can come to developing an innovation in-house.
There are several considerations for a university when deciding what type of operator a
technology should be licensed to. First, consider the advantages of licensing a technology to an
existing company. Licensing to a company would appear a safer bet because spin-offs are untested
entities and have fewer resources for developing profitable market applications. An established
entity is bound to have more ample complementary assets and superior ability to commercialize
technology, compared to a spin-off company that needs to build capabilities from scratch (Shane,
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 9 -
2002b). In addition, when licensing out to an established entity, universities may be able to
combine the licensing agreement with a contract or collaborative research agreement, which would
generate further revenue for the institution, and boost research opportunities for faculty.
By comparison, licensing to a spin-off comes with more risk. The spin-off’s failure to
successfully commercialize a technology would mean that the technology may remain stranded
and unexploited because time will have passed, and subsequent licensing options may be limited.
Consistent with this assessment, some research suggests that licensing to spin-offs is overall less
financially lucrative for universities (Shane and Stuart, 2002); however, there is evidence that
royalties accrued from spin-offs may be higher once the effect of post-acquisition income is taken
into account (Lowe and Ziedonis, 2006).
From a portfolio viewpoint, universities may attempt to mitigate the stranded asset risk by
additionally taking equity in spin-off licenses to ensure they can adequately partake in gains,
should the commercialization be successful (Savva and Taneri, 2015). Equity has an additional
advantage in that early licensing fees can be reduced, bringing benefits for resource-strapped spin-
offs. Indeed, some analysts suggest that taking equity is more profitable for universities, compared
to pure licensing (Bray and Lee, 2000). In addition, theoretically, an equity stake also aligns the
interests of the university and the firm because it should deter the university from myopically
seeking licensing income at the expense of investment in the technology. Finally, equity stakes
may also benefit a spin-off via a certification effect, particularly at universities with high prestige
(Feldman et al., 2002).
However, there are also considerations in favor of licensing an invention to a university spin-
off. University inventions are commonly embryonic and require inventor involvement to be
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 10 -
successfully commercialized (Agrawal, 2006; Jensen and Thursby, 2001). This means that for
many inventions the preferences of the faculty inventor must be considered (Feldman et al., 2002).
Even disregarding the need to convince the inventor to stay involved in the commercialization
process, universities’ quest for attracting and retaining high quality faculty may mean that
inventors are given the opportunity to find a spin-off, even when there is potential for licensing an
invention to an incumbent operator.
Patent characteristics are likely to inform the choice between spin-off and corporate entity.
When university licensing officials are skeptical that a patent is effective, it is more likely for the
patent to be licensed to a spin-off rather than an established corporate entity (Shane, 2002b). This
happens because licensing to a spin-off with inventor involvement minimizes some of the
information problems – such as, adverse selection, moral hazard – that may plague licenses on
technologies that are only embryonically developed and that require inventor tacit knowledge for
further development.
Finally, established entities often license single patents as they seek to complement their
already complex portfolios. By contrast, spin-off firms tend to prefer to license entire ‘pipelines’
around a technology, typically generated by a single inventor or inventor team, as the technology
is developed over a period of time (Shane, 2002a).
Overall, the choice between licensing to a spin-off and established entity, is also one of control.
Spin-offs are organizationally close to the university, as founders often remain university
employees and continue working on their technology pipelines. The companies often spend the
initial period of their lives in a university lab before perhaps being migrated to a university-
operated incubator. Moreover, universities often retain a financial stake in the company and are
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 11 -
represented on the board. By contrast, established entities are further removed from the university
and, additionally, any university IP licensed to them is likely to play a much smaller role within
their overall technology portfolio.
This implies that a university can achieve a higher degree of control over how a technology is
developed by licensing to a spin-off dedicated to the technology’s commercialization.9 This
applies even though relationships with faculty can be complicated, and spin-offs will emancipate
themselves from the university as they raise funding from outside parties or begin to sell their
product. The benefit for universities of retaining more control may include faculty satisfaction and
retention as well as reputation effects driven by the higher visibility of realized innovations toward
external stakeholders. The benefits of relinquishing control may consist in reduced risk of being
left with stranded IP, higher income from research agreements and consulting, as well as most
likely reduced operating costs, given the resource demands posed by spin-offs.
Finally, one cannot take for granted that higher control translates into better prospects for
technology commercialization, nor that a university is better placed than a corporate entity to
provide high-quality support for technology commercialization. This depends on the resources
available for incubation at the university as well as its connectivity with venture capital investors
and labor markets for surrogate entrepreneurs and ‘joiners’.
Spread: Focused Deployment vs. Wide Impact
Universities have discretion over how widely they wish innovation from their knowledge
assets to spread. Universities are a specific class of organization. Many are not-for-profit or public
sector organizations and operate under the primary mandate of educating students and conducting
scientific research. While the commercialization of research is found in many universities’
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 12 -
mandates, it represents only part of their overall mission. Against this particular institutional
backdrop, universities’ strategic rationale for working on innovation with external parties is often
not uniquely commercially focused, but includes a range of objectives.
Extra-commercial objectives are often captured by the term “impact” (Hughes and Martin,
2012). While universities have long played a key role in providing societal infrastructures for
achieving objectives including education, equality and productivity, a case can be made for
universities to also pursue impact with respect to their innovation activities. These kinds of
considerations are relevant with respect to various channels that universities use for open
innovation.
Spread in licensing. Universities have a choice between exclusive and non-exclusive
licensing. Exclusive licenses grant the licensee use of an invention by excluding everyone else
while non-exclusive licenses provide the right of use without precluding that the invention may be
licensed to other licensees by the licensor. It is possible that the same invention can be exclusively
licensed multiple times, such as by type of application, geography or other stipulated conditions
(Thursby and Thursby, 2007). Open-source licensing is the least exclusive form, allowing
everyone to deploy the invention or partake in its development.
Some technologies with broad applicability, such as research tools, naturally lend themselves
to being licensed on a non-exclusive basis to many licensees. One of the most successful
university-generated technologies, the Boyer-Cohen recombinant DNA process, was licensed by
Stanford University to almost 500 entities on a non-exclusive basis (Bera, 2009). Simultaneously,
the Boyer-Cohen process is historically one of the most successful financially commercialized
technologies, with proceeds of $255b.
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 13 -
More broadly, comparing three elite US universities, Mowery et al. (2001) reported that a
relatively high share of university-generated patents (60 to 90%) were licensed on an exclusive
basis, with the exception of software inventions. At the same time, however, the largest share of
revenues came from non-exclusive licenses (Mowery et al., 2001). Recent figures indicate a
growing number of non-exclusive licenses, relative to exclusive licenses. The 2021 AUTM survey
indicates that approximately three quarters of licenses are non-exclusive, which may be due to the
growing proportion of software licenses, but also the increasing propensity by universities to
license their inventions in this way.
Exploring the underlying factors informing licensing type decisions by universities, Öcalan-
Özel and Penin (2019) could not find any invention-based predictor for the degree of exclusivity
granted for a license and interpreted this as universities having strategic discretion over the degree
of license exclusivity. They found that many technologies in their sample were generic, offering
multiple applications across domains, and were still licensed exclusively. The reason for this
potential failure by universities to execute optimal licensing contrasts may lie in both skills
shortages and a lack of bargaining power vis-à-vis resourceful potential licensees. In addition,
universities may act preferentially toward their own faculty spin-offs, and award exclusive licenses
to them, even when this may not be the most financially rewarding route of action (de Larena,
2007).
In conclusion, there are two strategic aspects to licensing with respect to spread. First,
universities may leave money on the table when they err on the side of exclusivity. Particularly for
broadly applicable inventions, non-exclusive licensing often reconciles universities’ interest in
revenues and commercial users’ needs (Mowery et al., 2001). Reasons behind forgoing revenue,
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 14 -
and hence wider economic impact, include an implicit preference for supporting faculty spin-offs
as well as expertise and resource restrictions within universities’ TTOs (Öcalan-Özel & Penin,
2019).
Second, universities may consider other criteria than financial when deciding the degree of
exclusiveness of licenses they grant (Siegel and Wright, 2015). Some public science stakeholders
have argued that universities should be more strongly oriented towards social impact (Martin,
2012). Also, Chaifetz et al. (2007) argued that universities should grant open licenses to
pharmaceutical manufacturers in poorer countries. The University of Oxford’s stipulation that its
COVID-19 vaccine be sold at cost for the duration of the pandemic represents an example of
impact-oriented technology transfer approach. Participation in open software development
represents another example of universities engaging in the maximization of the social benefits of
university inventions (Lemley, 2008). Some have even suggested that the legal ownership of
inventions by universities is a less than optimal situation from a societal point of view as it reduces
the speed and spread of commercialization of university-based research (Kenney and Patton,
2009). However, there is little systematic data on the proliferation and scale of open licensing
strategies by universities, hence this subject requires more research.
Spread in research partnerships. Spread considerations also matter with respect to how a
university structures research partnerships. If we characterize working with industrial partners
broadly as being aimed at innovation, we can distinguish between relationships that are restricted
to a small group of partners, and those that aim to spread innovation opportunity more broadly.
Put differently, closed partnerships seek to tightly control the kind of spill-overs that are commonly
associated with university research (Jaffe, 1989). Conversely, open partnerships are less concerned
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 15 -
about maintaining tight control over spillovers and may even be designed to facilitate spillovers
across an industry.
Closed partnerships tend to be funded by large corporations and commonly stipulate that
commercial confidentiality be upheld. Intellectual property arising from collaboration will usually
be owned by the university, but the partners will have the right of first refusal for licensing it under
reasonable terms (Perkmann and Salter, 2012). Open partnerships are where collaborating firms
pose few or no restrictions to the publication of research results, and exclusive appropriation
considerations retreat into the background. An example of such an open collaboration is the
Structural Genomics Consortium that operated an explicit policy of not pursuing any intellectual
property rights protection (Perkmann and Schildt, 2015). These types of collaborations are often
primarily funded by public or charitable organizations, and aim towards tackling grand challenges
relevant for entire industries (Cavalli and McGahan, 2023, Chapter 34).
For universities, one of the key trade-offs to consider with respect to the spread of innovations
from industry partnerships is the degree to which a partnership is coherent with faculty preferences,
and by implication, the system of public science. Unlike academic entrepreneurship, the primary
attraction of industry partnerships for faculty lies in their ability to provide research opportunities.
An orientation towards academic research outcomes may be at odds with firms’ preference for
applied research and strict appropriability. Hence, universities need to consider how partnerships
can be structured so they remain attractive to both firms and faculty. One consideration pertains to
the organizational design of partnerships. For instance, university-industry centers can be
structured in a way that satisfies firms’ desire to influence the direction of research and address
appropriation concerns. This may include a negotiation of protected spaces for junior faculty to
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 16 -
aid their academic career objectives, combining corporate projects with publicly funded research
(Perkmann et al., 2019).
A second consideration relates to the choice of topics and activities within partnerships. Firms
are more willing to embrace the academic modus operandi when the field of study or technology
in question is novel and not well understood (Panagopoulos, 2003). Firms may be interested in
helping to resolve fundamental challenges experienced across an entire industry if they believe
they are well placed to benefit from a sector commons that are created this way. In the case of the
Structural Genomics Consortium, three large corporations committed to providing resources –
though small compared to those provided by public and charitable funders – aimed at making
research on key human proteins openly available. In a similar fashion, ‘big oil’ has sponsored large
scale university programs in alternative energies or carbon capture.
To summarize, universities may shape both the design of a collaboration and chosen topic to
reconcile the public science agenda and faculty development needs with industrial requirements.
Beyond this incentive issue (D’Este and Perkmann, 2011), universities may also choose to embrace
initiatives that have the potential to spread the reach of their expertise wider, rather than limiting
their impact to the direct benefits of industrial sponsors10.
Summary: Control vs. Spread
The conceptual distinctions drawn in this chapter are summarized in Table 26.1. Control
exerted by universities can be high or low, and the spread of innovation can be narrow or broad.
Licensing intellectual property to faculty-led spin-offs presents a high control and narrow spread
scenario where risks and rewards are concentrated within a proximate venture (quadrant 1). By
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 17 -
contrast, by granting an exclusive license to an established incumbent, a university retains less
control but would still be betting narrowly on a single operator to successfully develop the
technology (quadrant 2). Exerting high control, yet intending for a wide spread (quadrant 3) would,
for instance, apply to university-housed initiatives aimed towards a large-scale impact via open
source software or special pharma initiatives. Finally, a scenario of low control and wide spread
(quadrant 4) would prevail when a university grants non-exclusive licenses to a large number of
parties, or engages in partnerships with liberal licensing policies aimed at maximizing diffusion.
==== Insert Table 26.1 about here ====
As the matrix represented in Table 26.1 suggests, both dimensions are conceptually
independent, hence each permutation is possible. In terms of empirical incidence, however, one
may argue that control and spread are commonly negatively correlated. Notwithstanding the
Cohen-Boyer case, most licenses to university spin-offs tend to be exclusive licenses, and many
non-exclusive licenses are granted in low-control mode. This indicates that universities take a high
control approach to support their faculty inventors in their quest to commercialize their technology
via spin-offs, reflecting preferences by both faculty as well as university tech-transfer officials.
Yet, in theory, nothing prevents universities and faculty to adopt a high-control approach in
facilitating innovations aimed at a wider spread. This would require universities to dedicate
resources, possibly augmented by philanthropy, towards building mission-oriented downstream
entities that focus on development (rather than research); for instance, pharmaceutical products
aimed at developing markets, neglected diseases or societal emergencies like the COVID-19
pandemic.
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 18 -
Conclusion
I have outlined two dimensions that provide levers for how universities may conduct open
innovation, and I have discussed some of the trade-offs that universities face with respect to their
strategic options across these dimensions. First, universities can determine the degree of control
they wish to exert on how an invention, or academic expertise, is developed into an innovation.
Second, universities can shape the spread of open innovation, that is, how widely they expect
innovative activity, based on their inventions or academic expertise, to be performed.
The first dimension, degree of control, is primarily relevant with respect to whether inventions
are licensed to spin-offs or established entities. Licensing to a spin-off means the university can
remain involved in the process of commercialization in various ways, including faculty founder
involvement, equity investment, incubation services and so on. Maintaining control in this way
has to be set against potentially higher licensing revenues from out-licensing to corporate entities
and achieving a potentially higher economic and social impact.
The second dimension, spread, is related to the degree to which a university chooses an
invention to be restricted to one or a few licensees, or a research partnership to be limited to one
or a few benefitting partners. Non-exclusive licenses or open partnerships provide an option for an
invention to be widely deployed in technology development or spillovers from university research
to be deliberately spread across a wider audience of stakeholders. These kinds of intended spill-
overs are different from, and come in addition to, the standard spill-overs that commonly arise
from universities’ activities through open literature and the flow of researchers and students
(Mohnen and Hoareau, 2003; Salter and Martin, 2001).
Considering these dimensions of openness may prove useful in informing universities’ strategy
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 19 -
process. Notably, considering where an activity is positioned with respect to control and spread
can help universities to determine the degree to which a technology transfer activity will be adept
at maximizing revenue, serving faculty interests, increasing regional competitiveness, serving
social goals or achieving other potential objectives. For instance, our discussion suggests that
revenues can be maximized in multiple ways, contingent on the nature of technologies and
universities’ capabilities. Revenues can flow from both exclusive and non-exclusive licensing,
including to university spin-off companies if universities are prepared to accept a higher level of
risk (quadrants 1, 2, 3 in Table 26.1). If faculty interests are paramount, high-control mechanisms
(quadrants 1, 2) are likely to be preferrable: exclusive licensing to university spin-offs for faculty
motivated by pecuniary considerations, and facilitation of mission-oriented entities for faculty
motivated by impact considerations. Targeted regional impact may be achieved by deploying
narrow-spread mechanisms (quadrants 1, 2). By contrast, societal impact, and related recognition,
may be best achieved by deploying wide-spread mechanisms (quadrants 3, 4).
Clarity on these goals, and the degree to which they are combined, is important when policies
and approaches are designed that govern how a university protects its intellectual property rights,
to whom proceeds from them accrue, to whom they are licensed, the extent to which faculty
entrepreneurship is encouraged and subsidized, and the terms that industry partners receive in
research partnerships.
Discussing the various modalities of open innovation at universities has raised future research
needs. To date, there has been relatively little research on how specific approaches to engaging in
innovation translate into high social impact for universities’ innovation efforts (but see D’Este et
al., 2018; Roncancio-Marin et al., 2022). For instance, one could imagine that a high-control
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 20 -
approach, combined with a wide spread (quadrant 3 in Table 26.1), could be an instrument not
unlike social entrepreneurship for universities attempting to achieve high societal impact. The
concept of socially engaged universities chimes with the values held by many individual academics
(Lee, 1998). There is an opportunity, therefore, for future work to pay more attention to how social
impact can be achieved by universities as part of their overall innovation strategy.
Table 26.1: Universities’ strategic choice options in open innovation
Control
High
Low
Spread
Narrow
(1) Exclusive licensing to
university spin-offs (often in
conjunction with incubation
support)
(2) Exclusive licensing to
operating incumbents (e.g.,
large corporation)
Wide
(3) Facilitation of mission-
oriented development
entities (e.g., open-source
software; pharma)
(4) Non-exclusive licencing
to large number of entities;
open partnerships with
unrestrictive licencing
policies
Notes
1 For comparison, for a discussion of how IP decisions are made in industry, see Holgersson,
Chapter 11 of this volume.
2 For instance, at the University of California, inventors are involved in the founding teams of 66%
of spin-offs based on the technology they invented (Fini et al., 2022a).
3 A total of 63% of 312 higher education and research institutions were contacted.
4 Source: UK Higher Education Statistics Agency (HESA) (https://www.hesa.ac.uk/data-and-
analysis/business-community).
5 Source: HESA (https://www.hesa.ac.uk/data-and-analysis/business-community)
Perkmann, M., (2023). Dimensions of openness: universities’ strategic choices for innovation. In
Chesbrough, H., Radziwon, A., Vanhaverbeke, W. & West, J. (Eds.), The Oxford Handbook of
Open Innovation. Oxford University Press. Chapter 26.
- 21 -
6 In a study of one university, Imperial College London, we found that 31% of patents invented by
Imperial academics were assigned to entities other than the university. Of these, 63% were
assigned to a spin-out company founded by an Imperial academic (Perkmann et al., 2015).
7 Source: OECD (https://stats.oecd.org/Index.aspx?DataSetCode=MSTI_PUB).
8 An additional option arises when rights to intellectual property are granted to another university
(via an interinstitutional agreement), which then in turn negotiates and enforces licence
agreements on behalf of both universities.
9 There are additional avenues for a licensor to exert control over the development of a technology,
such as, stipulating march-in rights (the right to reclaim the intellectual property if no sufficient
progress is made). These instruments are independent from the type of licensee, hence act in
addition to the kind of organizational proximity and control discussed here.
10 More insights on industry – science collaborations with the innovation focus are discussed in
this volume in Poetz et al., Chapter 27 on Open Innovation in Science and Wareham et al.,
Chapter 28 on Deep Tech, Big Science and Open Innovation.
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