The Impact of Higher Education Institution-Firm Knowledge Links on Firm-level Productivity in Britain

This paper estimates whether both sourcing knowledge from and/or cooperating on innovation with HEIs (Higher Education Institutions)1 impacts on establishment-level total factor productivity (TFP) using a dataset created by merging the UK government’s Community Innovation Survey (CIS) with the Annual Respondents Database (ARD). It also considers whether higher graduate employment (as a measure of human capital) also impacts positively on TFP at the establishment-level. Many studies have investigated the relationship between university-firm knowledge links and innovation (see, for example, Mansfield, 1991; Becker, 2003; Thorn et al, 2007). Most of these studies find a positive impact. Fewer studies have investigated the impact of university-firm knowledge links on productivity. Belderbos et al. (2004), using the Dutch CIS, find that cooperation with universities has no statistically significant impact on the growth of labour productivity. Medda et al. (2005) find no statistically significant effect of collaborative research undertaken by Italian manufacturing firms and universities on the growth of TFP. Arvanitis et al. (2008), using Swiss data, show that university-firm knowledge and technology transfer has both a direct impact on labour productivity and an indirect impact through its positive impact on innovation. In sum, there is as yet no clear consensus as to the impact of university-firm knowledge links on productivity.