Policies to stimulate regional innovation capabilities via university–industry collaboration: an...

Policies to stimulate regionalinnovation capabilities viauniversity-industry collaboration:an analysis and an assessment

Bart Van Looy, Koenraad Debackere and PetraAndries

KU Leuven, Faculteit ETEW, Naamsestraat 69, B-3000 Leuven, [email protected]; [email protected];Petra.Andries @econ.kuleuven.ac.be

In this paper, we demonstrate how regional economic policies to stimulate entrepreneurship

and innovation, can lead to successes. More specifically, through a detailed theoretical and

empirical analysis, we discuss the critical ingredients that can lead to regional innovation and

economic success. These critical ingredients consist of a balanced mix based on the presence of

research institutes, a texture of endogenous knowledge-intensive start-ups coupled to larger

R&D-intensive incumbents, all of them embedded in a professional environment that supports

business advice and services. We illustrate the effects of this mix using empirical material from

various innovative regions around the world.

1. Introduction

S ince the arrival on the scene of JosephSchumpeter’s groundbreaking body of

thought, it has been clear that innovation andentrepreneurship are closely interrelated. Thisinterrelation has become the point of departurefor a wide range of studies that make the linkbetween innovation, entrepreneurship and eco-nomic growth. In particular, in recent years theinteraction between innovation, entrepreneurshipand regional economic development has becomea central theme in many policy circles. Examplessuch as Cambridge UK and Cambridge USA,and, more emphatically, the phenomenon ofSilicon Valley, are the driving forces behind this

interest. Today almost every European region isattemping to put together the ingredients neces-sary for endogenous economic growth, based onthe innovative capacity and the enterpreneurialdynamics that can be mobilised in a particularregion. The realisation of such endogenousgrowth does, however, necessitate a deeper in-sight into the parameters and the dynamics uponwhich it is based. That is the aim of this article.

On the basis both of a study of the literatureand of empirical data, we offer an overview ofand an insight into the manner in which knowl-edge-driven entrepreneurship shapes regionaldevelopment. The results of this synthesis pointto the necessity for a complex and guidedinteraction between insititutions of learning,

R&D Management 33, 2, 2003. r Blackwell Publishing Ltd, 2003. Published by Blackwell Publishing Ltd, 2099600 Garrington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

established businesses and new start-ups, withsufficient attention paid to the network ofprofessional enterprises and infrastructure whichframes such interaction. Drawing on examplesfrom the USA, Europe and, more specifically, theLeuven region, this synthesis will be furthersubstantiated.

2. Positioning regional innovation systems

Innovation and the stimulation of innovationrequires interaction and connectivity betweenmultiple actors. Besides the corporate world andthe knowledge centres present (including univer-sities), (local) governments are also involved.Over the last decade, there has been an increasingconsensus on this point in the literature ontechnology and innovation policy. A particularlyimportant contribution in this regard is theinfluential work of Michael Porter (1995), as wellas the notion of the ‘triple helix’, which rose toprominence during the second half of the 1990s(Leydesdorff and Etzkowitz, 1996, 1998; Etzko-witz and Leydesdorff, 1997, 1998). The ‘triplehelix’ model can be seen as a way of providinggreater insight into the complex dynamics be-tween three types of actors: government, businessand knowledge centres. These dynamics influencethe creation and the diffusion of knowledge, theproduction of value added with its attendantmarket dynamics, and finally, regulation.

The explicit starting point is the notion of co-evolution, in which the various actors influenceone another, each with a particular role andcapacity along the innovation value chain.Karnoe and Christensen (1999) have recentlyadded a contextualised perpective to this discus-sion:1 the most relevant form and trait ofeconomic organisation – and thus of goal-or-iented policy as well – are partly function of thespecific institutional context of a country or aregion. In this sense, it is also possible to speak ofa more and more contextualised view on innova-tion policy. This observation is important forreaching potential policy conclusions. ‘Best prac-tices’, such as those discussed below, alwaysimply a ‘translation’ to a particular situationand context. Moreover, this observation fitsperfectly into the models dealing with technol-ogy-development as described in the work ofNathan Rosenberg (1982), in which the role and

the presence of technological interdependenciesare outlined.

3. Current insights into regionalinnovation systems

Recent literature has paid much attention to thevarious factors that influence the creation and thesuccess of high-tech start-ups. In general, it ispossible to distinguish three groups of factorsthat facilitate this process. In the first place, thereare general environmental factors, necessary forinnovative starters to be able to establishthemselves in a particular place and to developsuccessfully. Second, recent literature and empiri-cal studies have further distinguished industry-related success factors. Finally, high-tech start-ups must themselves possess a number ofqualities and competencies in order to surviveand to grow. Each of these groups of factors willbe further discussed below.

General environmental factors

In their study on the innovation policy of theMalaysian government, Joseph Tidd and MichaelBrocklehurst (1999) point to two importantdynamics: on the one hand, innovation impliesendogenous growth while on the other hand,collaboration with or investment by foreigncompanies in a country is a highly necessarycomplement to endogenous growth. Both endo-genous and exogenous innovation appear only tobe successful when a country or a region has at itsdisposal a critical mass of research and produc-tion competencies.

Closely related to this, it can be stated that theaccess to knowledge centres – implying the pre-sence of such centres – is a crucial facilitatingfactor. This relation, cited in the models of theauthors already mentioned, has recently beenempirically confirmed in a German study. Re-search into 18 technology regions in Baden-Wurtemberg and Nordrhein-Westfalen (Blindand Grupp, 1999) suggests a clear link betweenthe public institutions of higher education andlearning and the technology-output in a particu-lar geographical area or region.

This conclusion can be complemented byfurther specifying the role of knowledge centres,

B. Van Looy, K. Debackere and P. Andries

210 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003

including universities. The greater the ‘enterpre-neurial’ character demonstrated by these institu-tions, the greater the positive impact on thedevelopment of a region in terms of its innovationperformance (Porter, 1995). Universities canhereby play a crucial dual role, related to thedichotomy of knowledge-creation and knowl-edge-diffusion. This dual role provides the uni-versities with the status of preferred and naturalpartners for high-tech innovation and venturing.Likewise, Tijssen and van Wijk (1999) underlinethe importance of collaboration between aca-demic institutions and industry. The absence ofinteraction between scholarship and technologyis, according to these authors, one of the mostimportant reasons for the technological inferior-ity of Europe compared with the USA and Japan.This is the so-called ‘innovation deficit’. Biblio-metric analyses show that Europe is very muchpresent in terms of scientific scholarship, but thatEuropean industry has only to a more limiteddegree been able to translate this knowledge intopatented applications (Debackere et al., 1999Debackere, 2000). This opinion is shared byPorter (1995). It is also confirmed by the recentinnovation scoreboards developed and publishedby the European Commission.

All of this would tend to suggest an increasingcomplexity in the collaborative relationshipsbetween the academic world, industry andgovernment. For instance, Cox et al. (2000)mention that the nature of the relationshipbetween the academic world and industry be-comes increasingly diversified, a situation whichcalls for a new balance between collaboration andcompetition. Universities and companies arepartners in collaborative ventures, but they areat the same time also competitors, since uni-versities are increasingly commercialising theirknowledge through licensing activities andthrough spin-off companies. Universities competewith one another for research funds (partiallyprovided for by companies) and for winningcompanies’ sponsorship and financial assistancefor training. Cox et al. (2000) emphasise theimportance of intermediary structures that influ-ence the interaction between research institutionsand industry, monitoring it in the ‘right’ directionwhile balancing the need for academic freedomon the one hand and the industrial requirementsof confidentiality and protection on the otherhand. This role can be performed by the

institutions themselves, by major laboratories orby special transfer companies set up for exactlythis purpose.

A last important environmental factor, foundin the literature, is the presence of well-developedfinancial markets. Starting a company oftenrequires considerable amounts of external finan-cing. Once a company has successfully survivedthe start-up phase, its continued growth is oftenonly possible by an even greater injection ofnew capital. Banks are often not well-placed toassess a start-up’s chances of success: they are ingeneral averse to risk, opting for relatively safeinvestments with an early return on invest-ment. For this reason, the availability of venturecapital and the accessibility of more informal‘business angels’ are of crucial importance for thechances of success of a young high-tech firm(Van Osnabrugge and Robinson, 2000).Such investors are better able to assess the risksand likelihood of success associated with acompany based on their experience with riskmanagement at a portfolio level; this also putsthem in a position to provide advice on financial,strategic and commercial matters (Bygrave et al.,1999). In addition to the presence of capital, thenotion of ‘networked incubators’ (Hansen et al.,2000) has been advanced as yet another criticalcontextual success ingredient. Hence theemphasis on both capital and networking ascritical ingredients of a stimulating high-techenvironment.

Industry-related ingredients

Besides the general environmental factors, Tiddand Brocklehurst (1999) also identify severalsector-related supply and demand factors thatstimulate innovation. The success of new high-tech ventures is partly dependent on the localdemand for their products and/or services. If thelocal market is too small, internationalisation willquickly appear on the agenda, adding to thecomplexity of the total operation of the company,including the need for financing. An orientationto local, existing needs and markets will allow acompany to progress more quickly along thelearning curve, with decreased risk and lessfinancing needs.

On the supply side, a sufficient degree ofcompetition appears to provide a stimulus for

Stimulating university-industry collaboration

r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 211

companies to innovate. As a result, an innovationpolicy should not only aim towards the expansionof a few large firms, but ought also to allow for adiversity of competing companies and evenstimulate this diversity. Did not Bill Gates saythat ‘the problem in Europe is not the lack ofknowledge, it’s the lack of knowledge-basedcompanies’? The number of software firms thatwas created in the USA in the period 1980–1995was almost 6000. This is about tenfold whatEurope produced in the same period (SecondEuropean Report on Science and TechnologyIndicators, 1997). When ‘a thousand flowers orinitiatives are allowed to blossom,’ the dynamicsof competition, innovation and subsequent fail-ure and success can more fully come into play. Oras Lester Thurow, the former dean of MIT SloanSchool of Management, aptly and provocativelyput it in his insightful book, Creating Wealth(1999):

But when it comes to generating billionnaires,the mystery is not in America, Asia, or Africa.The mystery is in Europe. Why have theEuropeans been able to exploit neither theAsian-style developmental disequilibrium op-portunities that exist between Western andEastern Europe nor the American-style tech-nological disequilibrium opportunities thatexist because of new technologies? Whyhaven’t they invented some new sociologicaldisequilibriums? (p. 36) y In the centuryahead the economic game will be played onthree levels. If any nation wants all of itscitizens to have first-world earnings, it has toensure that each of its citizens is as well skilledand educated as any in the world. If they are toparticipate in the new man-made brainpowerindustries of the future, their countries willhave to be leaders in research and developmentand have the entrepreneurs to develop some ofthe big breakthrough ideas into actual pro-ducts. Companies will play the game basedupon the skills they employ, the capitalinvestments they make, their technical pro-wess, and their ability to globally source andsell new products. Individuals will play thegame based upon their education and skills—and their willingness to change. There is noreason to believe that Western Europe cannotplay this three-dimensional game. But it has towant to lead change rather than be dragged

unwillingly into the very different twenty-firstcentury economy. It has to want entrepreneursand be willing to reorganize itself to allowthem to come into existence (pp. 97–98).

Additional points of interest for an innovationpolicy clearly include the degree to which and therate at which young starting companies areexposed to the market (cf. the notion of‘protected niches’, as developed by Schot andRip, 1997). In this respect, it should be empha-sised that the growth and the development ofhigh-tech ventures must not be limited to ‘mak-ing’ technology ready for the market. Thedevelopment of the management experience in acompany is equally necessary. Here successdemands a certain degree of equilibrium. Toomuch exposure to excessive competition can alsohave a very negative influence on a high-techstarter’s chances of continued growth, a factshown clearly in the work of Zahra and Bogner(1999), who document the ups and downs of 116software start-ups.

Also relevant in this respect are the observa-tions by Deeds et al. (1997). In their study on thebiotech industry in the USA, they looked at theinfluence of various factors on the amount ofcapital that IPOs (Initial Public Offerings)generated. These amounts give an indication ofthe value and thus the potential success of a start-up. Geographical proximity was shown to be veryinfluential in these cases: a geographical concen-tration of companies in the same sector leads tothe competitive rivalry mentioned above but alsoto more collaboration between companies (seealso Stuart, 1998). Geographical clustering isthereby shown to have a positive effect on acompany’s market value and on its product-development competencies. This phenomenonwill come to light again in our subsequentdiscussion on a number of specific regionalinitiatives.

Moreover, in the context of high-tech ventur-ing, this observation can be further developed.Innovation is stimulated not only by the geogra-phical concentration of companies with similartechnologies, but also by a concentration ofcompanies that are active in different technologysectors. New technologies and even completelynew sectors of economic activity often arise out ofprecisely this interplay and the convergencebetween different knowledge disciplines and



technologies. A good example of this is the sectorof bio-informatics, which originated from data-mining/computer science know-how on the onehand, and bio-genetic/biomedical know-how onthe other hand. The physical proximity thatsupports this kind of cross-fertilization is animportant facilitating factor in such cases.

Company-specific ingredients

In addition to the above, it is obvious that high-tech venturing implies a number of specificchallenges in the area of operational manage-ment. Besides the relevance of experiencedmanagement, a number of specific points ofinterest can be further underlined in relation tosuccessful high-tech venturing at the companylevel (Zahra and Bogner, 1999; Deeds, et al.,1997; Griliches, 1990; Narin et al., 1987; Coxet al., 2000; McCann, 1991; Bruno et al., 1992;Stuart, 1998). These relate to the availability ofsufficient human capital and talent, to finding abalance between scientific/technical ambitionsand market developments and customer impera-tives and finally, to the development of a suitableinternationalisation strategy (certainly in in-stances where home markets are small) includingthe appropriate handling of make-and-buy deci-sions when teaming up with partners during thesearch for and the development of complemen-tary assets. Cox et al. (2000) emphasise theimportance of well-trained employees in all theserespects: for high-tech ventures, this is the sinequa non for the further expansion of the firm.Once again, the proximity of – and interactionwith – knowledge centres (particularly universi-ties) is of vital importance here.

In addition, a balance needs to be foundbetween the technology- and the market-orienta-tion of a high-tech venture in situations char-acterised by a high degree of uncertainty. In their1999 study, Deeds et al. state that the quality ofthe research team has an important influence onthe product-development competencies of acompany. These are then positively influencedby the experience of the entrepreneurs/CEO withthe management of product development. Theauthors further recommend that managementand research functions be kept strictly separate.In their opinion, the interference of scientists inthe management of a company hampers the

successful development and commercialisationof new products, since it diverts attention andtime away from R & D. Counterexamples can,however, also be found in this regard. Ratherthan a strict separation, it results in striking asuitable balance between technological (R&D)ambitions and objectives – the effects of whichmay be situated in the middle term – and theshort-term realisation of turnover and valueadded. This twofold aim demands an evenlycomposed management team; the same goes forthe organisational structures that are implemen-ted (see also Steyaert, 1995). Attracting experi-enced, complementary management skills clearlyis an important factor (see also McGee andDowling, 1994).

Finally, it should be noted that high-techventures are in general confronted relatively earlyon in their lives with questions of internationa-lisation. This observation is linked to theincreasing internationalisation so clearly mani-fested in the area of science and technology.Coupled with this is the observation that high-tech firms often occupy a niche position. Therealisation of a sufficient critical mass, inparticular in terms of turnover and margin,generally implies some form of internationalisa-tion. In interviews with founders of successfulcompanies in Northern California (Bruno et al.,1992), international expansion was identified asone of the critical milestones in the growth of thecompany. This milestone will be reached morequickly when the entrepreneur/CEO has a posi-tive attitude towards internationalisation, as wellas sufficient access to the necessary competencieswithin the firm (Preece et al., 1998). This studyshows that a broad or all-inclusive internationa-lisation in the initial phase is a less appropriatestrategy. In order to implement an internationa-lisation strategy successfully, the company needsto have at its disposal a critical mass of knowl-edge, experience and resources. The greater theextent to which this critical mass is lacking – asituation usually inherent in starting enterprises –the more appropriate the choice of a dedicatedinternational focus, which is then best limited to anumber of well-chosen regions in the world.However, if such competencies are successfullyacquired and developed early on in the lifespan ofa firm, then the rapid seizure of the opportunitiesof internationalisation seems to have a positiveeffect both on the growth of the firm and on the



motivation of the entrepreneurial team (Autioet al., 2000).

The interaction between factors: a fewrecent empirical insights

The various studies mentioned above all empha-sise the importance for a high-tech start-up toboth think and act locally and globally. Asuccessful internationalisation strategy can, how-ever, only bear fruit if the local/regional environ-ment offers the high-tech start-up enoughopportunities to build up its critical mass of bothtechnological and market-oriented competencies(Debackere, 1998, 2000). The importance of thislocal/regional embedding is further underlined bythe empirical research recently carried out on 125regional statistical entities (the so-called ‘Metro-politan Statistical Areas’ or MSAs) in official usein the USA (Varga, 1998). The main results ofthis research are given below in Table 1.

On the basis of this research, the followingobservations may be made concerning the stimu-lation of the innovation-output in a particularMSA:

1. R&D employment in the industry sector of aparticular region {variable: log (RD: industrialRD employment)} has a positive main effecton the innovation-output (as measured in thisstudy) in the MSAs under consideration;

2. The R&D expenditures in the universities ofthe regions under consideration {variable: log(URD: university RD expenditures)} have in

and of themselves a statistically significant yetnegative main effect on the innovation-output(dependent) variable being used (when nointeraction-effects with other local variablesare taken into consideration). As we shall see, aregion’s university-level research only has apositive effect on the innovation-output in thatregion if there is sufficient interaction betweenthe academic research and the high-tech/professional entrepreneurial environment. It isobvious that this calls for a sufficient presenceof such a high-tech/professional environment;

3. In contrast to the previous main effect (log(URD)), the interaction variable {log (Con-centration high-tech ventures)*log (URD)}does have a positive and statistically significanteffect on the dependent variable. In otherwords, the interaction between the presence ofa flourishing texture of high-tech ventures/start-ups, coupled with the presence of astrong basis in a region’s university-levelresearch, has a significant and positive impacton the innovation vitality of the MSA;

4. However, the interaction between academicresearch and the high-tech entrepreneurialenvironment is not the only factor with apositive effect on the regional innovation-output as identified. The interaction betweenthe presence of a sufficient degree of profes-sional entrepreneurial support systems (suchas consultancy, venture capital and legalcompetencies) in a region and the degree ofacademic research has a positive and statisti-cally significant effect on innovation-perfor-

Table 1. Regional location-factors promoting innovation.

Model OLS full OLS intermediate OLS final

Constant �0.230* (0.183) �0.315* (0.157) �0.381* (0.154)Log (RD: industrial RD employment) 0.270* (0.056) 0.283* (0.054) 0.295* (0.054)Log (URD: university RD expenditures) �0.302* (0.141) �0.190* (0.067) �0.186* (0.067)Log (Concentration high tech)*log(URD) 0.185* (0.036) 0.184* (0.036) 0.188* (0.036)Log (Presence business services)*log(URD) 0.081* (0.015) 0.085* (0.014) 0.088* (0.014)Log (Enrollment)*log(URD) 0.026 (0.029) — —Rank*log(URD) 0.033 (0.020) 0.035 (0.020) —Log (% large established firms)*log(URD) �0.094* (0.025) �0.096* (0.025) �0.098* (0.025)R2-adjusted 0.737 0.738 0.733

Dependent Variable¼Log(Number of innovations counted – specifically, patents and new product-introductions – on MSAlevel).N sample¼ 125 US Metropolitan Statistical Areas,*¼Coefficents significant at p¼ 0.01-level.Standard deviation from the average shown in brackets.Model: Ordinary Least Squares regression models.Source: Varga (1999).



mance in the region {interaction variable: log(Presence business services)*log (URD)};

5. Furthermore, the education-related variables{log enrollment} as well as the interactionbetween ‘ranking’ and university research{rank*log (URD)} appear to have no statis-tically significant effect on the innovation-output at the regional level. An overly strongpresence of large, established firms, in inter-action with academic research {interactionvariable: log (% large established firms)*log(URD)}, appears in turn to have a significantyet negative effect on the innovation-output inthe regions in question.

In short, the picture that emerges from studiesinto the influence of regional embeddedness andlocation factors on regional innovation perfor-mance demonstrates the need for sufficienttexture and critical mass in terms of the interac-tions beween university research on the one handand a high-tech, R&D-intensive industrial envir-onment on the other, whereby sufficient attentionis also to be paid to a professional supportsystem.

4. Findings regarding the establishment ofa high-tech venturing policy

High-tech venturing: a survey of severalregions

As mentioned earlier, high-tech venturing benefitsfrom geographical proximity. This comes as nosurprise. The creation of new products andservices, depending on new insights in bothscientific and technological domains, impliesinteraction and cross-fertilization. In discussionswith players actively involved with the develop-ment of such initiatives (Leuven, Cambridge,Sophia Antipolis), this connectivity is repeatedlycited as a necessary – yet often overlooked –condition for the creation of a successful breed-ing-ground for high-tech venturing. In a qualita-tive study published in Wired (August, 2000), asurvey is made of regions that occupy a strongposition in terms of high-tech venturing. Theregions are scored according to four factors: thepresence and performance of universities andother knowledge centres, the presence of estab-lished firms, the presence of high-tech start-upsand finally, the availability of venture capital.

These four factors are each scored on a scale from1 to 4, where 1 represents ‘moderate’ and 4‘excellent’. The results of this analysis are shownin Table 2.

In the following paragraphs, a number ofspecific initiatives for venturing policy are furtherdiscussed, while crucial ingredients concerning apolicy aimed at stimulating high-tech venturingare identified.

German governmental policy

Over the past 15 years, Germany encounteredsome difficulties in launching ‘new’ high-techindustries. The number of high-tech starters waslimited. According to Lehrer (2000), these pro-blems were caused by missing links in theinnovation chain, at the national, regional andcompany/employee levels respectively.

At the national level, the absence of well-developed capital markets formed an obstacle tostarting up new technology firms. The Germanfinancial system was characterised by the dom-ination of banks oriented to existing Germanindustries, with much less interest in – admittedlyriskier – investments in new technologies andtheir related industrial sectors. Moreover, theseexisting industries were thriving in an institutio-nalised environment characterised by sector-specific unions and employers’ organisations thattogether with the government shaped economicpolicy, which again tended to be directed towardsalready existing sectors, rather than new indus-tries. At a regional level, Lehrer identified a clearlack of the relevant structures and instrumentsnecessary for creating and supporting high-technetworks. At the level of individuals, finally,Lehrer observed a climate of risk-aversion and ashortage of entrepreneurship, a situation encour-aged by a public university educational system inwhich entrepreneurship was not stimulated.

The German government recognised the needfor a technology and innovation policy. A Delphistudy was carried out in the early 1990s,commissioned by the Federal Ministry of Re-search. Various problem areas at the individual,regional and national level were identified. Theregions had, since the middle of the 1980s, takenon the role of technology stimulators. Regionaltechnology parks and incubators were set up.Industrial networks were developed at a regional



level, while the establishment of new branches ofthe Fraunhofer Institute, a highly successfulcentre for technology transfer, was stimulatedby the Lander. The regional policy was directedtoward the improvement of regional systems oftechnology transfer in connection with existingindustries. There were, however, few if any

initiatives to support the launch of new technol-ogy sectors. And yet there was – and is – a broadbase of knowledge present in the area of basicresearch and applied scientific research. The weakposition of Germany in new high-tech industrieswas therefore rather to be found in the manner inwhich this scientific knowledge was translated

Table 2. High tech venturing ‘hot spots’ (source: Wired, 2000).

Location Country Universities/research

Establishedcompanies

Starters Venturecapital

Totalscore

Silicon Valley California 4 4 4 4 16Boston Massachusetts 4 4 3 4 15Israel 4 4 4 3 15Stockholm-Kista Sweden 3 4 4 4 15Helsinki Finland 3 4 4 3 14London England 4 3 3 4 14Raleigh-Durham North Carolina 4 4 3 3 14Austin Texas 3 4 4 2 13Bangalore India 3 4 3 3 13San Francisco California 3 3 3 4 13Taipei Taiwan 4 3 3 3 13Albuquerque New Mexico 4 3 3 2 12Cambridge England 4 3 3 2 12Dublin Ireland 3 3 3 3 12Montreal Canada 3 4 2 3 12New York City New York 3 3 3 3 12Seattle Washington 3 4 3 2 12Beieren Germany 3 3 2 3 11Hsinchu Taiwan 3 4 1 3 11Kyoto Japan 4 1 3 3 11Los Angeles California 3 3 2 3 11Malmo Sweden 3 3 2 3 11Copenhagen Denmark 3 3 2 3 11Tokyo Japan 3 2 3 3 11Flanders Belgium 4 2 3 2 11Baden-Wrttemberg Germany 3 3 2 2 10Melbourne Australia 3 2 3 2 10Oulu Finland 3 2 3 2 10Paris France 2 2 3 3 10Thames Valley England 3 3 2 2 10Virginia 3 3 2 2 10Chicago Illinois 3 2 2 2 9Hong Kong 3 2 2 2 9Queensland Australia 2 3 2 2 9Sao Paulo Brazil 1 3 3 2 9Campinas Brazil 4 3 1 0 8Glasgow-Edinburgh Scotland 3 3 1 1 8Inchon South-Korea 2 2 2 2 8Kuala Lumpur Malaysia 2 3 1 2 8Sachsen Duitsland 3 2 1 2 8Salt Lake City Utah 3 2 2 1 8Santa Fe New Mexico 3 2 2 1 8Sophia Antipolis France 2 3 2 1 8Singapore 1 2 2 2 7Trondheim Norway 2 1 2 1 6El Ghazala Tunesia 1 1 1 1 4Gauteng South-Africa 1 1 1 1 4



into commercialisation in new markets. In addi-tion, there were few collaborative arrangementsbetween public research organisations and com-panies. Moreover, there was a clear lack ofentrepreneurial mindset.

In the middle of the 1990s, the Lander took anumber of steps aimed at improving the interac-tion between scholarly work and industry, as wellas at stimulating entrepreneurship. For instance,over the past five years alone, Bavaria has alreadyinvested an additional DEM 5.5 billion in settingup a broadband IT infrastructure betweengovernmental bodies and research institutes, inincreasing the number of technology-orienteduniversity programmes, in the development ofliaison offices to support the knowledge transferbetween universities and the business world andalso between public research institutes andcompanies, and finally, in supporting entrepre-neurs.

A number of auxiliary measures were furthertaken. German law – especially the strict rulesconcerning bankruptcy – was discouraging en-trepreneurship. At the beginning of 1999, the lawwas relaxed in order to decrease risk aversion.The universities attempted to counterbalance thelack of entrepreneurial mindset by appointingspecialised professors and by implementing spe-cialised courses.

Problems were being caused not only by thelack of entrepreneurs, but also by the attitudes ofthose who were already active as entrepreneurs.German entrepreneurs seemed to be highlycontrol-oriented in comparison with their collea-gues in the USA. The fact that they wished tokeep a firm grip on the financial control over theirstart-ups sometimes had an inhibiting effect onfurther expansion as well as on attracting foreigninvestors and venture capitalists. Since the mid-1990s, the German government has thus beentrying actively to finance entrepreneurship. Prizeshave been awarded in order to stimulate regionalbiotechnology centres, business plan competi-tions have been organised and the promotion ofspin-off neworks around universities has beenencouraged. The government has also partiallytaken on the role of a venture capitalist via thecreation of various funding mechanisms for start-ups, including R&D soft loan schemes.

Concurrent with all these regional and govern-mental measures, the economic situation inGermany after the unification also played a role.

Entrepreneurship in general and high-tech ven-turing in particular are indeed increasingly seenas crucial for arriving at a more positive anddynamic business climate.

Silicon Valley

The best known high-tech region – and the onethat appeals most to anyone’s imagination – iswithout doubt Silicon Valley. Firms such asHewlett Packard, SUN Microsystems, Intel andCisco were born there. However, Silicon Valley isalso a gigantic innovation and entrepreneurshiplaboratory. For every successful tech start-upthere are at least ten that fail to realise their goals.In other words, inherent in the success stories inthe Valley are the cases of failure. It has becomesomething of a cliche to point out that everySilicon Valley entrepreneur has at least twofailures to his or her name before success comes(Nesheim, 2000). Furthermore, not all failureslead eventually to success. Some people neverlearn from their ‘mistakes’. This explains theconsiderable ‘failure rates’ in the Valley.

However, the tolerance for failure and theculture of entrepreneurship, and the ability tolearn from these failures has turned Silicon Valleyinto a success story which today we all recognise,admire and to some extent envy. Today SiliconValley numbers several thousand high-tech firms.The average salary in the region is twice thenational average. Silicon Valley has the largestconcentration of companies in sectors such ascomputers, semiconductors, telecommunicationsequipment, software and internet software andhardware. In addition, it holds a strong positionin biotechnology and biomedical applications.

These accomplishments are the result of aprocess of development that had already begunbefore the Second World War and in which bothStanford University and UCBerkeley played keyroles. Stanford University was founded in 1891.Right from the beginning there was an opennesstowards ‘technical venturing’. For example, thefirst president of the university, D.S. Jordan,made $500 available to Lee de Forrest, who usedit to develop the vacuum tube as a way ofintensifying electrical signals (1908). In the 1930s,with the arrival of Frederick Terman as a dean,this approach and attitude gained furthermomentum. In particular, he encouraged Bill



Hewlett and David Packard, just before theSecond World War, to start their own electronicscompany which concentrated initially on preci-sion-measurement instruments and later diversi-fied very successfully into the direction ofcomputer applications and semiconductors. Ter-man’s role was not limited to offering a stimulat-ing work environment, but also involvednetworking, thereby creating new combinationsand collaborations. For example, he brought thestarters Hewlett and Packard into contact withHarold Black from Bell Labs, a specialist in‘negative feedback’ for amplifiers in telecommu-nications. This would result in the developmentof the audio oscillator, the first product from HP.

This ‘Terman effect’ – a reference to theenterprising character of the staff and studentsat Stanford – is perhaps the biggest differencebetween Stanford and UCBerkeley. The latteruniversity – with 20 Nobel Prize winners – too is aleading world centre of knowledge generation.However, researchers and professors at UCBer-keley seem to opt more exclusively for a careerwithin research, and are inclined to leave high-tech entrepreneuring to their alumni: here AndyGrove and Gordon Moore (the founders of Intel)come immediately to mind. In addition, theregion also boasts Santa Clara University andSan Jose State University, which together turnout some 4000 new engineers each year.

It is important to note that in the pioneeringperiod the phenomen of ‘Silicon Valley’ as suchdid not yet exist. Even at the end of the 1960s,there was no reference to Silicon Valley as weknow it today. Intel was founded in 1968,attaining a turnover of less than $600,000 in1970. By the mid 1980s, IBM sold its 20%participation in Intel because it had lost its beliefin the future of the company (Pugh, 1995).During the War years, high-tech venturingactivities on the West Coast remained relativelyinsignificant, especially when compared with theBoston area (MIT). In a region where agriculturedominated, the only expertise worth mentioningaround 1940 was in the field of radio engineeringand a number of related sectors and technologies.

Since 1932, Litton Engineering Laboratorieshad been active as a specialised maker of vacuumtubes and instruments for glass processing.Among their important customers were theManhattan project, led by Robert Oppenheimer,and the Department of Defense ‘at large’. Other

important pioneers were the Varian brothers,who started their work in the thirties, again withthe support of Stanford University.2 By the endof the decade they had invented the Klystron, oneof the most important components of radarsystems. In 1948, they started their own company.In this sense, it was possible to speak of a growingbut still small electronics centre by the end of the1940s. In 1943, some 25 Californian firms –including 13 from Northern California – unitedunder the banner of the West Coast ElectronicManufacturers Association, the precursor towhat later would become the American Electro-nics Association.

In 1951, Stanford University made a decisionunique for its time: it opened the StanfordIndustrial Park, thus making available 234ha ofuniversity land for industial projects. The firstcompany that set up there was Varian Industries,the second Hewlett Packard. Today this parknumbers 150 firms active in the areas of electro-nics, software, biotechnology, financing, strategicmanagement consulting and venture capital.

The presence of Stanford and UCBerkeley wasnot the only important element in this scenario.The very early presence of Fairchild Semiconduc-tors (founded in 1957), itself a spin-off of BellLaboratories, was also important. In this con-nection, it is interesting to observe that it wasFrederick Terman who convinced WilliamShockley, one of the co-inventors of the transistorwithin Bell Laboratories, to come back to thearea where he was born, Palo Alto, in order to setup Shockley Semiconductors. Despite his bril-liance as a scientist, his performance as a managerwas less successful. Eight of his best engineers leftto create Fairchild Semiconductors several yearslater (Kenney and von Burg, 1997). The colla-borators at Fairchild Semiconductors in theirturn laid the basis for a multitude of high-techcompanies (the ‘Fairchildren’), among which wecount AMD and Intel. It is clear that besides‘enterpreneurial universities’, the presence ofcompanies and a professional support network– with its own knowledge and expertise – eachtook part in creating regional dynamics ofeconomic development and growth. The researchlaboratories set up by IBM (San Jose Laboratory,in 1952) and later the Xerox Palo Alto ResearchCenter (PARC) should also be mentioned in thisregard. In a similar way, regional knowledge-networks came into being, quickly becoming



recognised and legitimate nodes in a globalnetwork of knowledge and entrepreneurship(Van Dierdonck et al., 1991). In other words,the advantage of well-developed regional net-works of knowledge and entrepreneurship is thatthey quickly become part of similar networks at aglobal level. There is thus an evolution from anisolated network to a network within andbetween other networks.

In the sixties and seventies, Silicon Valley grewquickly. The number of start-ups in the period1956–65 within the semiconductor industry was‘only’ ten. In the period 1966–76 there werealready 60, while ten years later (1977–87) itamounted to 157. And yet the 1980s marked thebeginning of a difficult period for Silicon Valley.The semiconductor industry evolved more andmore into a situation in which operationalexcellence and mass production were makingthe difference when it came to a firm’s perfor-mance. In particular, a number of Japanesecompanies emerged as leaders, and the conse-quences were felt all the way to Silicon Valley.For example, in the eighties, Intel was forced tolay off 8000 employees, pulling out of thememory market and devoting itself completelyto microprocessors. In this sense, the point ofview of Kenney and von Burg (1997) becomesclear, when they rightly point out that manyfactors play a role when it comes to the creationof a high-tech entrepreneurial region (see alsoabove). And we are here not only dealing with‘cultural’ aspects such as entrepreneurial valuesor even organisational structures; the technolo-gies themselves and their intrinsic paths ofdevelopment (cf. the notions, inspired by JosephSchumpeter and Thomas Kuhn, of ‘technologytrajectories’ and ‘paradigms,’ Dosi (1984); seealso Nelson and Winter (1982), Arthur (1988)and David (1986)) equally play a role, incombination with the strategy of and its imple-mentation by the dominant players.

In other words, the success of a number ofregions – and thus the relevance of a number ofcompetencies – cannot be separated from the lifecycle of the technologies implied (see alsoLanglois and Robertson, 1992, 1995). Equally,this explains the need, on a regional level, toavoid the ‘Not-Invented-Here’ syndrome (De-backere, 2000). A healthy high-tech region needsa mix of technologies. Technological mono-cultures are to be avoided at all costs if a regional

innovation dynamic is to be maintained. Ahealthy diversity in the regional technology-basisis thus desirable and highly recommended. In itsabsence, there is a danger of becoming toodependent on the ups and downs of oneparticular technological growth cycle, with allthe possible negative consequences that thisentails. Hence, if the diversity of the (regional)technology-base is poorly monitored (and heretechnology forecasts clearly prove their useful-ness, Zimmerman et al. (2000)) by the actors inthe ‘Triple Helix’, then the consequences can bedramatic whenever competing or new technolo-gies take off.

What makes Silicon Valley so distinctive andso competitive is the breadth of the knowledgeand technology available as well as the fact thatthe region clearly possesses the skills to continueto develop, to reinvigorate itself and to diversify.The presence of a sufficient critical mass across awide range of competencies, in combination withits geographical proximity, are seen by theStanford Research Institute as key elements:

The region possesses a special kind of infra-structure that has in effect institutionalizedinnovation in technical fields across the board.The Bay Area is unrivalled in sheer variety ofcompanies and level of formal and informalnetworking among companies in technicalfields. Hardware and software are closelyaligned. Prototype development and engineer-ing is particularly strong. It is this cross-cutting strength – and economic infrastructurecomprising strong technology, human re-sources, capital input, and numerous industrialsynergies – that makes Northern California amagnet for top engineering talent, innovativestart-ups, and major breakthroughs in techni-cal fields across the board (SRI International,1988).

This characteristic is also emphasised by Sax-enian (1994):

Most companies or stable regions pursue asingle technical option and, over time, becomeincreasingly committed to a single technologi-cal trajectory. A network-based regional econ-omy like Silicon Valley, alternatively,generates and pursues a rich array of techno-logical and organisational alternatives.



Equally striking is the emphasis by many authors(see, among others, Collins & Porras (1994)) onthe management style on the one hand and thedynamics in the region on the other hand. Interms of management, the role model of HP hasset the tone within the literature. Particularattention is paid to the concept of participationwithin a non-hierarchical, informal managementstyle, in which status differences are minimised.Within the region, there exists, besides competi-tion, a great deal of interaction, in the form ofmeetings and discussions, both between companypersonnel and academic partners. These authorsalso note a remarkable degree of openness inexchanges of information between experts and‘juniors’, concerning both technical and com-pany-related matters. The region further is, as itwere, naturally bounded by the ocean on one sideand by the Santa Cruz mountains on the other. Infact, we are dealing here with an area ‘only’ 80kilometers long and a few dozen kilometers wide.Thus, physical proximity plays a role equal tothat of technical affinity. This facilitates thenecessary interaction between a diversity ofactors and competencies, so important for creat-ing and nurturing innovative entrepreneurship.This sort of interaction is characterised by anopenness and informal style that is in starkcontrast to the more classic hierarchical companyorganisations. The authors cited above point outthat this more network-oriented style of organis-ing, in combination with an atmosphere and aculture in which risk – and thus failure – areconsidered to be normal3 and even positive,allowed the Valley to survive the crisis of the1980s and emerge strengthened. This is in markedcontrast to, for example, the less diversifiedRoute 128 region (Boston), where firms such asDEC never quite recovered from their problemsin the 1980s.

Hinoul (1999) goes on to list a number of theseingredients. As we have seen, the presence ofknowledge centres (in this case Stanford andUCBerkeley) is crucial. Besides their technicalexpertise and know-how, these institutions alsoprovide other essential specialists, chief amongwhich are people with management skills andlegal expertise. Silicon Valley is further charac-terised by its international orientation, accordingto Hinoul. The continuous influx of people fromother regions of the USA as well as Europe andAsia is seen as an essential, moderating element.

The resulting diversity once again helps to createthe right kind of breeding-ground, suitable for(international) high-tech venturing. In terms ofthe work culture, a certain degree of homogeneityis noted nonetheless: the region is characterisedby a ‘freedom of exchange of ideas’, an informalstyle of collaboration, and a culture in whichentrepreneurship is stimulated, even if it leads tofailure. This philosophy is shared by the academicworld, the business world and the government.

Complementary to this is the strong presenceof venture capitalists and private investors: theregion accounts for a third of all the venturecapital in the USA. A crucial element here is theintensity of the collaboration between investorsand innovators/entrepreneurs. Collaboration andguidance involve much more than financialparticipation: the active contribution to thedevelopment of a professional organisation, aswell as networking and the elaboration ofstrategic alliances all point into the same direction(see also Hansen et al., 2000).

In addition, the USA possesses well-developedcapital markets which make it relatively easy torealise second and third rounds of financingefficiently. Such markets form, moreover, anecessary (exit) condition for venture capitaliststo pursue their goals. An additional virtue ofSilicon Valley is the region’s quality of life, bothin terms of its climate and its culture. Finally, theconnection to the large American market is acrucial macro-economic factor: the extent of thisconnection allows for faster growth on a largerscale.

Cambridge

In 1954, the government of the region aroundCambridge made an explicit policy-planningdecision to limit the flow of immigration intothe region. There was a desire to maintain thehistoric character of the university city by keepinglarge-scale industry out of the region. Since thesemeasures greatly hindered the collaborationbetween Cambridge University and industriesdependent on scholarship and research, a propo-sal was worked out whereby certain forms ofgrowth – in particular, the establishment of high-tech firms – would be allowed. The proposal wasapproved in 1970 by the regional government and



has since then formed the guideline for develop-ment around Cambridge.

A number of high-tech spin-offs and consultingfirms emerged from the university’s competenciesin the areas of electronics, instrument develop-ment and computing. This resulted, in turn, in thecreation of new companies. The consulting firmscoordinated the collaboration between industryand the academic world. Entrepreneurs fromother parts of the UK choose to locate in theuniversity area and large multinationals, too,established small branch offices in the region.

In 1996, the population of Cambridgeshire wasover 700,000. Of these, 28,000 were employed inhigh-tech companies. In the period 1994–95,some 87 new firms were set up in high-techsectors. According to Jim Martin of the 3iGroup,the success of the technology valley aroundCambridge is a result of the presence of severaldeterminants: sources of innovation (knowledge),possibilities for financing, a high quality of life inthe region, a sufficient critical mass of compe-tencies in terms of management and organisation,and finally the interaction between local initia-tives and international collaboration.

The first determinant is the presence of sourcesof innovation. Cambridge University is one of themost renowned universities in the world, with avery strong knowledge base both in the scientificand management areas. It is worth noting thathere, too, there was a conscious choice to becomean ‘enterpreneurial’ university. A second factorare the numerous possibilities for financing start-ups: the proximity of London’s financial centreguarantees sufficient venture capital of highquality. A third factor identified by Jim Martinis the healthy fiscal and cultural environment. Anenvironment that guarantees a high quality of lifemakes it much easier for a region and itscompanies to attract the best international talent.Specifically in terms of running a business, theauthor emphasises the importance of the manage-ment capabilities available and the generalmarketing and sales skills of the companiesaround Cambridge. As a final factor, he pointsto the importance of a balance between endogen-ous and foreign investment (exogenous growth) inthe Cambridge area. Each time a foreign firmestablishes offices in the region, the local high-tech firms have an increased chance to learn. Anover-concentration of foreign companies is, how-ever, undesirable, since the region hopes to keep

the resulting economic and social benefits close tohome.

All these factors were advantageous for start-ing high-tech ventures around Cambridge Uni-versity. However, at the end of the 1980s, thesuccessfully launched firms were confronted withincreasing growth pains. In ‘The CambridgePhenomenon: the Growth of High TechnologyIndustry in a University Town’ by Segal QuinceWicksteed Limited (1990), the most commonproblems were identified to be the unwillingnessof company founders to allow their firms to grow,as well as a lack of support by large companies,financial institutions and the government for thesmall company texture. There were also not yetlarge, successful endogenous firms in the area thatcould serve as role models for the small start-ups.Finally, there was a shortage of highly-trainedpersonnel and an increasing pressure because ofthe demographic expansion, traffic problems,housing shortages and environmental problems.The local population began to protest against thecontinual expansion of the industry zone. Thestrain on the quality of life also made itincreasingly difficult to attract top internationalpersonnel. By the end of the 1990s, the ICTmodel (information and telecommunication tech-nology) was proposed as a possible solution tothis problem. Concepts such as teleworking,telegovernment, telelearning, telemedicine, e-commerce and smart cards were embraced inorder to facilitate the technology zone’s growthwith a minimal effect on the quality of life. Thisgrowth to the north and south is now wellunderway.

Sophia Antipolis

Cambridge’s best-known European rival is SophiaAntipolis on the French Cote d’Azur. In 1962, anindustry zone was created in Valbonne, where,among others, IBM and Texas Instrumentslocated. In 1965, Sophia Antipolis Universitywas founded in Nice. As an incubator for publicand private, scientific, industrial and tertiaryactivities, the Sophia Antipolis science park wasset up. From 1974 onward, various companies andeducational institutions located on the site.

By the beginning of 1999, 1164 companies hadbeen located, of which more than 300 were activein the ICT, electronics and health sciences sectors.



Of the 20,530 people employed in all thesecompanies, some 10,000 work in these threesectors. More than 5000 researchers and studentswork for public education and research institu-tions in the region. Foreign companies have alsoestablished themselves on the plateau: there are110 foreign firms in Sophia Antipolis, of which 48are European and 43 North American.

The evolution of the science park shows clearlythe importance of a local scientific infrastructureand how slow and complex the establishment of a‘scientific conurbation’ is. Sophia Antipolis,hoping to become less dependent on seasonaltourism, was established in a region with noindustrial tradition. The idea began as a privateproject, led by Pierre Laffitte, director of the‘Ecole Nationale des Mines de Paris’, but wasquickly taken over by the public sector because ofa lack of financial resources. Large firms such asFrance Telecom located on site. Over time, twomain activities emerged: ICT (65% of the park’semployment) and life and health sciences (20%).The park’s progress was, in fact, stimulated onlyby the contribution made by the large firms thatsettled there. In the 1980s, a number of positivechanges occurred. In the first place, the region’sendogenous knowledge basis was broadenedconsiderably. The University of Nice was ex-panded, while schools of engineering, specialisedin ICT, were established. Over time, all the majorFrench research institutions had a presence in thepark. All of this resulted in a generous localsupply of highly-trained talent and in an in-creased interaction between research and indus-try, via the students.

A second positive factor was the arrival ofcompanies offering specialised services to estab-lished high-tech firms. A final positive evolutionwas the creation of spin-off companies out of themost important research institutions, and thecreation of SMEs. Both groups were interested inmaking use of the research potential in the area.However, the growth of Sophia Antipolis was stilloverly dependent on the R&D departments oflarge companies and not on the endogenousinteractions and initiatives resulting from them.

Only at the beginning of the 1990s, with thecrisis in the computer industry, did this situationchange drastically. The large firms had to tightentheir belts and started to farm out some activities.With the well-developed local knowledge basis,there was an opportunity to deal with this

situation locally, resulting in the establishmentof new companies, both ‘new’ start-ups and spin-offs from larger firms. When these larger firmswere reorganised, many of their employeeswanted to stay on living in the region. Theylooked for new employment opportunities, lead-ing to the creation of new companies. Largeconcerns such as IBM and Texas Instrumentsrealised the necessity of collaborative ventures inorder to cope with the crisis. Professionalassociations and clubs were set up in the region.Large and small enterprises started to worktogether, sharing resources, which ultimatelystimulated endogenous growth.

In contrast, activities in which no endogenousgrowth or diffusion of knowledge was createdand no local collaboration was undertaken, as inhealth sciences, have seen little success in SophiaAntipolis, despite the fact that a local market forsuch activities does in fact exist. The presentsuccess of Sophia Antipolis is thus due to thepresence of the set of factors previously describedin this article, which in this case came into beingsequentially, rather than the multiplex, multi-factorial environment encountered in SiliconValley.

At present, the Sophia Antipolis region offers acritical mass of knowledge and industrial activity.Established companies as well as research institu-tions and universities have at their disposal thecompetencies crucial to develop and to grow inthe areas of natural and health sciences and ICT.Public educational and research institutions havedeveloped in such a way that they can meet therequirements of (large) companies. Collabora-tions and partnerships between public institutionsand companies have led not only to excellentresults for industry, but also the educational andresearch programmes have as a result beenvalidated and improved, much to the benefit ofthe international reputation of these pro-grammes. The international character of thecompanies and their employees has tended toencourage this process.

The presence of two international schools hasalso contributed to this situation. The attractiveenvironment and the quality of life in the Southof France represent additional environmentalfactors that have led to the success of SophiaAntipolis. This environment has made it possibleto attract high quality personnel, who are enticedby both the working and living standards. The



region has an infrastructure able to supportinternational cultural, scientific and politicalevents. The advanced telecommunications infra-structure and the proximity of the Nice airportmake it possible for companies to work inter-nationally. Finally, the broad spectrum of ser-vices and relations between firms on the site alsoconstitute an important success factor. Serviceand consulting firms, hotels and other facilitiesprovide the necessary support system for busi-nesses. Perhaps even more important are themany socio-professional associations, discussiongroups and clubs, where business people can meetthe partners they need for starting and success-fully developing their activities. This dynamic ofendogenous growth has, however, only takenplace over the last ten years. All the necessaryingredients were in fact present before this, but ashock to the business economy was needed inorder to unleash the culture shock that legiti-mated and stimulated ‘entrepreneurship’.

Leuven

As early as the 1970s, a liaison office was createdat the Katholieke Universiteit Leuven – KULeuven R&D – geared to transferring scientificand technological knowledge to society-at-largeand to the business world in particular. In orderto support this transfer, many initiatives wereundertaken and several instruments were devel-oped. This evolution was – and is – supported bya university policy, one of the core elements ofwhich is also the concept of the ‘enterpreneurialuniversity’.

K.U. Leuven R&D consists of a multidisci-plinary staff of legal experts, economists andengineers/scientists, as well as specialised admin-istrative and financial personnel. They offeradvisory (legal, financial, technical), coordinat-ing, administrative and information support inthe areas of:

� Innovation advice and technology mediation.Innovation advisors help companies and uni-versity researchers to frame the possibilities ofa potential collaboration. On an individualbasis, they attempt to coordinate the needs ofthe industry with what the university has tooffer. Once this coordination has been workedout, support is also offered for starting anddeveloping the collaboration. Based on the

university’s many international and regionalcontacts, its role in technology mediationextends far beyond local boundaries.

� Information exchange and training. This isdone through industrial collaborative pro-grammes and ‘‘on campus’’ or ‘‘residential’’training programmes.

� Contracts for consultancy, research and devel-opment, in connection with new products,production techniques and technologies. Thiscomprehends fundamental research, feasibilityand prototype studies, experiments and the useof equipment. Confidentiality, rights of own-ership, a realistic business plan and respect forthe objectives of all the partners form the basisof a successful collaboration.

� An active patenting and licensing policy. Thisobjective is pursued with regard to the resultsof the university’s research in order to generatefunds for further scientific research and tocreate the necessary conditions for its success-ful commercialisation by the business world.Licensing and sublicensing agreements areregularly concluded with Belgian and foreigncompanies. The strategy, which aims to exploitthe research, involved the creation of a patentfund in order to facilitate and encourage thegeneral accessibility to patenting for the resultsof innovative research.

� The creation of new, research-oriented andinnovative companies. This is stimulated byoffering advice and support to entrepreneurs,and offering them access to risk capital throughthe Innovatiefonds Gemma-Frisius I&II (since15/10/1997 with a first fund, since 3/7/2002with a second fund). This venture fund wascreated by K.U. Leuven in partnership withtwo major financial conglomerates: Fortisgroup and KBC group. The Gemma-FrisiusFund I has financed the launch of 15 spin-offs.Gemma Frisius II has already invested in twonew initiatives since the summer of 2002. Thisbrings the total number of spin-offs from theK.U. Leuven to 51 by mid 2002. Accommoda-tion and management support are availablefrom the Innovatie- en Incubatiecentrum,which, with its location on the campus,stimulates close cooperation between the uni-verity laboratories and the research units. Thesuccess of a number of spin-offs enjoyinginternational renown is the result of thetechnology transfer policy which has developed



over the years and serves as a role model fornew initiatives.

� The creation of business activities for nationaland international research-intensive firms in thescience park. New, innovative firms, spin-offsfrom universities and research institutions, andR&D departments of existing firms can takeadvantage of the science park’s location, closeto the K.U. Leuven and IMEC, the Inter-university Center for Micro-Electronics. Thiscreates a stimulating environment for thetransfer of knowledge and technology betweeninternationally renowned researchers and en-trepreneurs. K.U. Leuven R&D and IMECcreated Leuven.Inc in 1999, in which the localbusiness environment, professional advisorsand the university are undertaking a numberof joint initiatives aimed at increasing thedevelopment of the region. The ambition ofthis project, supported by the university,IMEC, the local spin-off entrepreneurs, andthe municipal and provincial governments, isto increase prosperity through endogenous andexogenous creativity and through the growthof knowledge-intensive companies in the re-gion. Besides providing the necessary infra-structure, the project aims at stimulatingactively the exchange of ideas and the creationof networks (both formal and informal). Thisnetworking is of vital importance for attractingand supporting new firms and spin-offs.

To this end the multidisciplinary team at K.U.Leuven R&D is involved with the followingactivities:

� Encouraging entrepreneurship. In cooperationwith the Faculty of Economic and AppliedEconomic Science, courses on entrepreneurshipare offered to researchers and students, regard-less of their specialisation. Entrepreneurship isalso continually stimulated through internaland external publications and presentations ofsuccess stories.

� Elaborating a business plan. Researchers aretaken step-by-step through the process leading‘from idea to company’ with the aid of internaland, if necessary, external advisors. Consider-ing the highly innovative character of theproducts and services offered, the elaborationof a business plan is a complex and highly

individual undertaking for any spin-off project.

� Seeking sources of financing and industrialpartners. K.U. Leuven R&D and the Gemma-Frisius Fonds (together with the two financialpartners) are able to contribute to a business’sstarting capital. Through an extensive nationaland international network of relations, themultidisciplinary team, together with the foun-ders, considers whether participation by othercommercial partners can offer value added. Ifnecessary, contacts can of course be establishedwith external sources of investment and ven-ture capital.

� Protecting intellectual property. Protectingone’s own knowledge is a very importantelement in the successful start and growth ofa company. Elaborating an effective patentstrategy and defining collaborative and licen-sing agreements are essential in this regard.

� Supporting company set-up. The formulationof statutes, as well as shareholders agreements,and remuneration policies, are important ele-ments of the advice offered.

� Supporting company management. Adviceconcerning strategic decision-making in thearea of international growth is facilitated byparticipation on the boards of directors, con-tacts with K.U. Leuven R&D advisors and,through involvement with the Gemma Frisius-Fonds and its financial partners, the presenceof external, independent board members.

� Providing infrastructure. In collaboration withK.U. Leuven R&D, the Innovation andIncubation Center and the science parks, asuitable infrastructure is available for eachspin-off. The Innovation and Incubation Cen-ter of the K.U. Leuven offers premises andservices for use by research-oriented andinnovative start-ups, allowing them to concen-trate on their core activities. Besides generalinfrastructure such as meeting rooms, a cafe-teria and a car park, the center providesservices such as the advice of an experiencedmanager, secretarial support and financialmanagement support. K.U. Leuven has at itsdisposal a science park in Haasrode (120 ha),where many high-tech firms are located,including the university’s own spin-offs, suchas LMS, ICOS Vision Systems and Materialise,but also important international firms such asHeraeus and ITCL (Philips). In total, over 5000people work there. In the near future, theArenberg and Termunck science parks will be



made available, offering an additional surfacearea of more than 50 ha.

The growing culture of entrepreneurship at theK.U. Leuven has already resulted in 51 spin-offsover a period of 20 years, some of which arehighly active on the international scene. Theircombined turnover at the end of 2000 was BEF15billion, with a workforce of more than 2000.

5. High-tech venturing: some finalconsiderations concerning regionaldynamics

In order to continue to stimulate a region’seconomic growth based on knowledge-intensiveentrepreneurship, the technology portfolio of theregion must maintain a balance between routinetechnological activities (which are often orientedtowards process innovation and incremental de-velopment as the technology’s life cycle matures)and non-routine technological activities (which areoften oriented towards products and more funda-mental development). The local knowledge centers– in particular universities and research institutes –can play a major role in this process. Thoseknowledge centres are more solidly embedded inthe local and supra-regional context than are theyoung start-ups. This embeddedness can assumeboth structural and non-structural forms. Table 3presents a survey of the mechanisms that knowl-edge centers can adopt in order to supportsustainable technology transfer and its economicapplication on both local and supra-regionallevels. Of crucial importance is the exploration ofnew domains of knowledge – often not yet

routinized – and the subsequent spread of thatknowledge among the actors in the region.

It is precisely because of this duality thatknowledge centres should occupy a central placeand a fundamental role in any regional innova-tion network; such institutions are indeed bestable to give visible support to the dual challengeof local and global knowledge development. Ifthis dual task fails to be a priority in regionalinnovation policy, then the region can fall prey tothe threats inherent in the growth-stagnation-decline model which characterises the technolo-gical life cycle. A region’s adoption of a‘dominant technology model’ leads inevitably tolimitations in terms of diversity and thus to apossible ‘lock-in’ phenomenon into the dominanttechnological knowledge basis present in theregion. This existing knowledge base is generallygeared towards efficiency improvements, and canover the longer term lead to ‘less’ innovation. Inorder to counterbalance this dominant logicinherent in ‘technological trajectories’, we under-line the pivotal role played by knowledge centreswhen they pursue non-routine research activitiesand when they emphasise their role in a supra-regional context. Every regional innovation net-work thus clearly requires knowledge centres thatare both regionally active and internationallycompetitive.

6. Conclusion: ingredients for a policyaimed at stimulating regional high-techventuring

It will be clear from the above analyses that high-tech venturing, and in particular the development

Table 3. Knowledge centers and supra-regional dynamics

Emphasis on local developmentand embeddedness

Emphasis on supra-regional developmentand embeddedness

Structural arrangements Incubators R&D collaborationsResearch parks Affiliation programmesSpin-offs LicensesEducation and training Consortiums

Non-structural Labour markets for Consulting and professional advicearrangements researchers and technologists Publications

Seminars SeminarsProfessional associations Professional associationsLocal networking International networking



of a policy to encourage it, is a complex process,implying a multitude of elements, instrumentsand actors. Moreover, the development of aregional venturing process implies a long-termapproach: the seeds of today’s Silicon Valleyphenomenon were sown before the Second WorldWar; Germany spent some 30 years developing a(lasting) dynamic in this area; and the examples inLeuven and Cambridge also illustrate how theirfoundations were laid in the 1970s and how theeffects that are now visible imply a genesis ofseveral decades.

The dynamics of high-tech venturing presup-pose active roles for government, the businesscommunity and the available knowledge centres.If governments can take supporting measuresin the interest of a favourable climate, amore ‘entrepreneurial’ attitude is demandedof the knowledge centres and the firms them-selves.

As has become clear, the presence ofknowledge centres in a region is a primarypre-condition for developing high-tech ventures.Both companies and knowledge centres cantogether provide the necessary critical mass ofknowledge and experience. In this respect it isimportant that a broad spectrum of competenciesbe available. Innovative entrepreneurship impliesa process of cross-fertilisation, involving adiversity of knowledge domains. This conclusionforms the clearest substantiation for theimportance of physical proximity: the creationof new entrepreneurial combinations involvesinteractions.

The ability to generate this dynamic assumesthat the various actors make their expertisevisible and accessible. Companies must be pre-pared to collaborate, while knowledge centresneed to play the role of ‘enterpreneurial uni-versities’.

In this regard, the importance of supportiveinstruments cannot be stressed enough. Liaisonoffices, built on crucial expertise and networkingcapabilities, stimulate the interaction and thecollaboration between the different actors. Be-sides these supportive instruments, an essentialrole is played by the ‘project champions’ and‘sponsors’. Both within the liaison offices and inthe business, academic and governmental com-munities there must exist strong, motivatedpivotal figures who are driving forces in thehigh-tech developments in the region and who

have extensive know-how and networks at theirdisposal.

In addition, it must not be forgotten thatinnovative or high-tech entrepreneurship calls forsolid management expertise. An entrepreneurialattitude and high-tech know-how need to becomplemented by skills in professional manage-ment. When dealing with new technology, thoseskills quickly gain an international dimension.The presence of both knowledge centres (uni-versities/polytechnics with a curriculum orientedtowards business economics and law) and estab-lished enterprises is an important facilitator inthis regard.

When it comes to financing, the presence ofventure capital is essential. On the one hand thistakes the form of risk-capital with all that thisimplies: in particular, both the provision ofcapital and the support – strategic/commercial/organisational – for the development of abalanced and sustainable business. On the otherhand, the accessibility of well-functioning finan-cial markets is also important. The presence ofsuch markets – Nasdaq and Nasdaq Europe –geared towards technological growth-firms iscrucial for generating a dynamic in the ‘early/first-stage investments’.

Finally, a number of socio-cultural elementsare equally relevant. Regional cultures charac-terised by openness, informal networks andinteractions, a willingness to take risks facilitateinnovative entrepreneurship. This ‘culture’ is ofcourse partly developed through concrete projectsand accomplishments. Complementary to this,the general quality of life should not be under-estimated when attracting, international, humancapital.

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Notes

1. For an illustration see also Galbraith and De

Noble (1992).

2. Besides a grant for the purchase of material

(US$100), this consisted chiefly of access to the

laboratories at Stanford, in exchange for a 50%

share in any patents that might be developed.

3. In this connecton, Lehrer (2000) refers to the

relevance of other ways of working together than

the dominant German ‘authority model’. He goes

on to note that ‘in America, if you are an

entrepreneur with a new idea and you lose

people’s money in your venture, they’ll ask you

if you’ve got another idea. In Germany they call

the District Attorney’. (op.cit., p. 100).



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