Paradigm shift in Local Economic Development: Serving Knowledge-Based Business

Creating the right environment in which to establish a partnership between universities and businesses\nrequires a detailed understanding of the needs, culture and practices of the organisations involved and of the process itself. At one time the view of this relationship was that universities would develop technology that would pass to the private sector for exploitation. This view has changed substantially over the last 20 years and what has emerged is that there are two sides to the process which reflects a supply of technology and skills from\nuniversities and a demand side which comes from business which have to be integrated to create an effective environment for innovation. The environment at this interface is critical because of number of factors that include: a change of culture between the university environment and business; a change of funding from grant supported to either loan or equity finance, the transfer of risk from a university to a company and the exposure to the market of technology that has to prove that there is a demand for it rather than being something that just works. In 2002 the Lambert Review looked at the relationship between universities and industry and concluded that the supply side of the equation was successful; however, the demand side for technology from business needed to be strengthened. Despite the clear message to industry for the need to invest more in R&D and operate in a more innovative way the issue still remains to be resolved in the European context. However, it is also clear from some pan European work that there has to be an appropriate environment if this process of innovation is going to be encouraged and the relationship between industry and universities alone is in itself insufficient to create an innovative environment that has the potential to create a strong and vibrant economy that is able to compete. It is suggested that to create a more innovative society in Europe there needs to be a strategy to create a market for innovative goods and services, focussed resources, new financial structures and mobility of people, money and organisations. Together these constitute a paradigm shift going well beyond the narrow domain of R&D and innovation policy. This degree of change requires a pact for research and innovation to drive the agenda to create and environment that will support innovation and this requires a huge act of will and commitment from political, business and social leaders. This paper highlights some of these issues and looks at how the UK university sector is responding to this and what kinds of encouragement there is at a national level to improve the performance of universities  industry links.