University-Industry Relationships and Spill-over Effects in the West Midlands: The Case of the ARLI Collaborative Research Project

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Dr Juliane Schwarz discusses the role initiatives can play in transferring knowledge from Universities to Industry, looking specifically at the ARLI programme.   

This blog is an introduction to the WMREDI project “University-Industry Relationships and Spillover Effects”. The project aims to increase our understanding of university knowledge commercialisation pathways building on existing research in the subject.

Mechanisms within and pathways towards university-industry relationships are necessarily highly diverse. The idea that knowledge created within university institutions and laboratories spills over as a natural and organic process and to the benefit of society as a whole or the region, in particular, have been discarded, e.g., in the knowledge spillover theory of entrepreneurship. There is no doubt that university-industry knowledge spillover occurs naturally. The best examples are graduates and post-graduates applying their training and knowledge gained during their studies in companies and institutions in the region, nationwide and internationally, either by secondments, internships or other recruitment processes. However, some research indicates that successful and bigger scale knowledge transfer, important for economic performance and growth, needs to be supported, nurtured and heavily invested in by both the universities themselves and public and private organisations.

Knowledge-transfer mechanisms

When talking about university-industry relationships, we often introduce the different roles of universities as an anchor, civic or entrepreneurial institution. All of these roles as related to the so-called ‘universities’ third mission’.

Apart from the increasing research on the social and regional engagement role of universities, recent research also stressed the critical role of universities in technological knowledge-transfer and commercialisation pathways. Examples of those are, technology transfer mechanism such as spin-offs, spin-outs, licencing, patenting, consultancy, publications and cooperative R&D agreements. An in-depth study, for example, analyses knowledge pathways and transfer within Med Tech, Rail, Energy and Quantum Tech at the University of Birmingham.

University initiatives supporting local businesses

To support these knowledge pathways and transfers, universities have developed initiatives aiming at supporting local businesses. These initiatives often receive funding from the private sector or supranational organisations, such as the European Commission under their Cohesion Policy Programmes. They differ in aims (demand or supply mechanisms), design (technical vouchers, consultancy), implementation and whether or not they are top-down and bottom-up.

One of these initiatives is the ARLI (Alternative Raw Materials with Low Impact) collaborative research programme. It is one of ten initiatives at the University of Birmingham that delivers bespoke support to SMEs in the West Midlands. These initiatives utilise the University’s expertise in microscopy, quantum technology, innovation, digital technology, medical technology and healthcare amongst others to facilitate economic development within the region free of charge.

ARLI is jointly funded by the ERDF (European Regional Development Fund) and the University of Birmingham. It offers advice and technical support to SMEs at no cost to them to develop innovative low-carbon products and processes for the three Local Enterprise Partnership areas (LEP) of Greater Birmingham and Solihull, Black Country and Coventry and Warwickshire. ARLI brings together academic know-how from the School of Civil and Mechanical Engineering to help SMEs with their raw and waste materials to become more energy efficient in their products and processes. They aim to identify waste streams or other materials that could be transformed into higher-value goods for construction and other manufacturing industry applications. The programme supported 94 companies between 2017 and 2020 and secured the second phase of funding from 2020 till 2023.

The focus of public support initiatives

It is argued that the focus of public support initiatives should be:

* Fixing system and market failures

* Supporting firms, sectors and places that are not easily supported

* Focusing on activities that can spur and spillover performance improvements to other local actors and institutions.

Public support initiatives should be focused on fixing system and market failures. In particular, business support initiatives should be aimed at supporting firms, sectors and places that are not easily supported by the private sector because of its unattractiveness of being risky, old or being active in uncommon sectors of activity. Additionally, successful business support initiatives are the ones that allow achieving a higher return by focusing on activities that can spur and spillover performance improvements to other local actors and institutions.

Fixing system and market failures

In terms of public support initiatives focusing on fixing system and market failures, ARLI’s main aim is to help businesses to fix problems in relation to material-efficient processes. It brings university expertise to challenges faced by SMEs within the West Midlands. Some of these problems are related to general trends around globalisation or automation. For example, due to the international increase in demand for raw materials for manufacturing processes and the consequence of the increase in costs, it is predicted that the extraction of raw materials will become unattractive.

Supporting firms, sectors and places that are not easily supported

A particularly important cornerstone of public support initiatives is the support of firms, sectors and places which are not easily supported. ARLI supports small companies with less than 250 employees, but also start-ups and sole traders. These companies are generally too small and their resources limited to actively seek out support. ARLI employs a business engagement manager who reaches out to companies and informs them about the availability of support, the kind of support and the no-cost obligations. SMEs need to come forward to present their challenges. By employing a business engagement manager, the threshold to seek and find help is reduced considerably.

As a result of being part of ARLI, participants reported to independent evaluators:

* Increase in turnover (potential increase turnover of the businesses supported is estimated to be circa £3m per annum post-project)

* Developed new products

* Introduced new products or processes to their firms

* Increased in their RD&I spending (estimated to be circa £805,000 increase by businesses involved in the scheme)

* Increased their number of employees (estimated direct and indirect employment created to be 107 jobs)

In addition, the support provided by ARLI has led to the development of a long-term relationship with the SMEs involved.

Focusing on activities that can spur and spillover performance improvements to other local actors and institutions.

Apart from the impact ARLI and similar initiatives have on participants, these programmes also offer benefits for the university and are generally strategically aligned with important political and socio-economic policies. As part of the University’s business engagement strategy, it supports businesses in the region and thus further establish the university role as a civic university or as an anchor institution in the area. Technology and knowledge transfer is improved as companies have access to expert and cutting-edge knowledge on the one hand, and academics can draw on the experience for research output and enhance their teaching with real-life applications on the other. As relationships to participating companies are established, the university’s understanding of the local industry and their role in the broader local entrepreneurial ecosystem increases. Besides, the companies join a growing network of local businesses which were supported by the University of Birmingham.

Many of these initiatives’ mission is not only to support the company’s development and their resilience but also to make them more sustainable and lower their carbon footprints. At the same time, they actively seek out and make university expertise available to businesses in the West Midlands. Thus they align with Greater Birmingham and Solihull LEP policy to increase investment in research and innovation by SMEs, improve how SMEs commercialise research and collaborate with research institutions. Issues raised in the Witty and Dowling Reviews of Business and University Research Collaboration are addressed as are strategies outlined by the Department of Business, Energy and Industrial Strategy, e.g., regarding the use of raw materials, the Climate Change Act and the European Green Deal.

ARLI supports small companies with less than 50 employees, but also start-ups and sole traders.
The importance of university-industry initiatives to strengthen resilience and support post-COVID economic recovery

In the State of the Relationship Report 2020 by the National Centre for University and Businesses (NCUB), the authors describe how strong collaborations between business and university has grown pre-pandemic. Interactions between universities and SMEs increased by 11.9% from 2017 to 2018. The COVID-19 crisis, however, seemed to have reversed that trend in 2020. Whereas university-business collaborations involved in tackling the health crisis, especially the development of a vaccine, and supporting the NHS by developing medical equipment and PPE saw highly innovative ways of university and business collaborations, other forms of collaboration were falling. There was, for example, a dramatic decline in engagement with the aerospace and automotive manufacturing sector, the creative industries, with non-biomedical R&D, scientific and technical services.

All of the authors in the report stress the importance of the relationship between universities and businesses for a post-COVID economic recovery and building resilience for the future. They emphasise the need for further investment in the area to support:

* The UK labour market by ensuring that graduates gain skills needed for the post-pandemic recovery

* Businesses to survive and become more resilient by more informed and effective decision making

* Digitalisation of the economy with remote working and online shopping

* R&D supporting Industrial Strategy

* Green technology

* Entrepreneurship also as part of improving youth unemployment

* Inclusive growth

* The capacity and capability for each UK region

* Levelling-up and increasing opportunity of people in all UK regions

* Knowledge-sharing and digital technology

The author would like to thank Marifé Zudaire and her colleagues at ARLI for their helpful input and advice.

This blog was written by Dr Juliane Schwarz, Research Fellow, City-REDI and WM REDI.

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.

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