Universities have long been thought of as the engines of the economy, providing the intellectual heft by which innovation occurs. Research from Duke Fuqua questions this narrative, and ponders whether universities really have the positive impact on productivity we assume them to have.
The researchers suggest that during the post-war years, universities didn’t tend to play much of a role in the innovation process, with private businesses leading the way. This period coincided with business investment into R&D that was four times higher than that by universities, with companies often wielding huge research laboratories.
Productive innovation
The new study suggests something important: the old way of doing science in big businesses was better at delivering productivity gains than the new approach led by universities. The researchers used a lot of data, looking at things like the number of PhDs and citations. They used a complex method to analyze changes in federal budgets to find a link between public science and corporate research and development (R&D).
In general, they found that breakthroughs from public institutions didn’t really impact established corporations for several years. A scientist in a university might publish great papers, pushing the boundaries of a field, but this often didn’t affect companies’ own publications, patents, or the number of scientists they employed—except for life sciences. This suggests a small impact on the overall productivity of the economy.
Why is it hard for companies to use ideas from universities? Losing corporate labs is part of the reason. These labs were full of a mix of thinkers and doers. For example, in the 1940s, Bell Labs had a team of chemists, metallurgists, and physicists working together to develop the transistor. That kind of collaboration is mostly gone now.
Lack of focus
Another reason involves universities. Without corporate pressure, research tends to focus more on satisfying the curiosity of experts or getting more citations than on making breakthroughs that will change the world or make money. Some research just for the sake of it is okay, and sometimes accidental discoveries lead to breakthrough technologies. But if everyone is arguing over trivial things, the economy suffers.
When universities create work that’s more relevant to the real world, it leads to concerning outcomes. As universities produce more new Ph.D. graduates, companies find it easier to come up with new ideas. However, the patents from universities have a downside—they cause corporations to produce fewer patents of their own.
It’s possible that existing businesses, worried about competition from university spinoffs, reduce their research and development (R&D) efforts in that area. While the exact balance between these opposing effects is unknown, the authors suggest an overall decrease in corporate patenting of around 1.5% each year. In simple terms, the significant financial resources invested in public science may actually make businesses in wealthy countries less innovative.
