Changing Roles of Universities in Developing Entrepreneurial Regions:

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Changing Roles of Universities in Developing Entrepreneurial Regions: The case of Finland and the US

Alok K. Chakrabarti and Mark Rice

MIT-IPC-03-003

September 2003

Changing Roles of Universities in Developing Entrepreneurial Regions: The Case of Finland and the US Alok Chakrabarti and Mark Rice MIT IPC Working Paper IPC-03-003 September 2003

Universities have critical roles as sources of intellectual property and talent in regional development and high technology industries. We present a theoretical framework based on social capital and knowledge management literatures describing the knowledge generation and transfer processes for universities. Our research questions are: 1. What are the roles of universities in regional economic development with respect to knowledge generation and transfer processes and how are these role changing? 2. How do these roles and trends differ between the U.S. and. Finland?

The views expressed herein are the author’s responsibility and do not necessarily reflect those of the MIT Industrial Performance Center or the Massachusetts Institute of Technology.

1 Changing Roles of Universities in Developing Entrepreneurial Regions: The Case of Finland and the US 1 Alok Chakrabarti Industrial Performance Center Massachusetts Institute of Technology & New Jersey Institute of Technology Mark Rice F. W. Olin Graduate School of Business Babson College ABSTRACT Universities have critical role as sources of intellectual property and talent in regional development and high technology industries. We present a theoretical framework based on social capital and knowledge management literatures describing the knowledge generation and transfer processes for universities. Our research questions are: 1. What are the roles of universities in regional economic development with respect to knowledge generation and transfer processes and how are they changing? 2. How do these roles and trends differ in the U.S. vs. Finland? INTRODUCTION The competitive environment for most firms has been transformed by global competition, rapid changes in technology and shorter product life cycles (Ali, 1994: Bettis & Hitt, 1995: Quinn, 2000). Innovation has become critical in survival in this competitive environment. The average life cycle of the products in many industries has reduced to less than a year. Moreover, the diversity of product standards across the countries and rapid changes in the standards with the evolution of technology are exacerbating the uncertainty and complexity. Successful companies have reduced the cost of innovation and risks by outsourcing. A few scholars (Parkhe, 1993; Pisano, 1990; Shan, Walker & Kogut, 1994) have examined the inter-organizational collaboration in development of new technology.

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Some of the interviews reported in this paper were conducted with Professor Richard Lester and his students in the context of a larger project on Local Innovation Systems at the Industrial Performance Center. The authors thank Professor Lester for his support. The authors are responsible for the interpretation and insights presented in this paper.

2 The problems of product development in a dynamic industry can be explained in terms of newness of the technology, customers and trajectory of the technology development. Classical models of product development assume the process to be a linear one. But as Leonard-Barton (1995) has shown, the process of technology development varies with these parameters. The role of the company changes with the novelty of the technology and novelty of the market. In cases of new technology intended for existing market, the firm has a dominant role. Customers take an increasingly important role in situations where existing technology are modified for new applications. There are situations where market and technology evolve in a symbiotic way. Information and communication technology industry, particularly in the mobile communication area, represents this...
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