DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS (THE KNOWLEDGE TRANSFER FROM UNIVERSITY)

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DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS  (THE KNOWLEDGE TRANSFER FROM UNIVERSITY)

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UNIVERSITY OF ECONOMICS IN BRATISLAVA FACULTY OF NATIONAL ECONOMY BACHELOR THESIS 2008 Peter Chovaňák UNIVERSITY OF ECONOMICS IN BRATISLAVA FACULTY OF NATIONAL ECONOMY DEPARTMENT OF PUBLIC ADMINISTRATION AND REGIONAL DEVELOPMENT BACHELOR THESIS DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS (THE KNOWLEDGE TRANSFER FROM UNIVERSITY) Bratislava Author: Peter Chovaňák Bachelor thesis consultant: Ing Štefan Rehák, PhD 2008 DECLARATION I, hereby declare that I have written this thesis alone and that I enclosed in reference all relevant resources I have used while working on this thesis In Bratislava, 30.4 2008 Peter Chovaňák ACKNOWLEDGEMENTS I would like to thank my consultant Ing Štefan Rehák, PhD., for assisting me in writing this bachelor thesis I am grateful to his thoughtful comments and valuable suggestions which were of great help in preparing the final version of the text In Bratislava, 30.4 2008 Peter Chovaňák Abstract Name: Peter Chovaňák Title: Development of the knowledge economy in regions (The Knowledge Transfer from University) Bachelor work University of Economics in Bratislava Faculty of National Economy Department of public administration and regional development Bachelor work consultant: Ing Štefan Rehák, PhD Bratislava, 30.4.2008 Number of pages: 58 The Knowledge Economy is involved in many theoretical and practical approaches to the functioning of economy in regions Introducing such approaches and looking at their using and functioning in reality is offered as a starting point for later application of thoughts from them that should go towards regional development and that can in many ways lead to the economic growth and development We introduce the knowledge economy in general and then explain its regional dimension Our impact is on the university and its role in regional development We emphasize the importance of creating knowledge and its transfer from university to industries and we describe several tools of such transfers In the last part of the work we give The University of Oxford as an example of successful using of knowledge transfer that support development of the knowledge economy in its region Our aim is not giving new solutions that should support development of the knowledge economy in regions but we want to identify those existing that can become very useful for further research and development in regions or at university and that can people benefit from Key words: regional development, knowledge, knowledge transfer, university, The University of Oxford Table of Content INTRODUCTION CONCEPT OF THE KNOWLEDGE ECONOMY 1.1 KNOWLEDGE AGE 1.2 KNOWLEDGE ECONOMY AS NEW ECONOMY 10 1.2.1 Learning organisations, networks and global competition 11 1.2.2 Flexible organisations 12 1.2.3 Policies to support knowledge .12 1.3 REGIONS AND KNOWLEDGE DEVELOPMENT 13 1.3.1 The new regional comparative/competitive advantages .13 1.3.2 New Models of Regional Development 15 1.3.3 Globalisation versus Regions 22 REGIONAL DEVELOPMENT AND UNIVERSITY 23 2.1 KNOWLEDGE TRANSFER AND UNIVERSITY .25 2.1.1 From Technology Transfer to Knowledge Transfer 26 2.2 TYPOLOGY OF INDUSTRY-SCIENCE RELATIONS 29 TRANSFER OF KNOWLEDGE AT THE UNIVERSITY OF OXFORD .38 3.1 REGION OF OXFORD – OXFORDSHIRE 38 3.2 FACTS ABOUT THE UNIVERSITY OF OXFORD 39 3.2.1 University of Oxford in county of Oxfordshire 41 3.3 WAYS OF THE KNOWLEDGE TRANSFER FROM THE UNIVERSITY OF OXFORD……………… 42 3.3.1 ISIS Innovation Ltd 42 3.3.2 Other ways of knowledge transfer from the University of Oxford 45 CONCLUSION 49 REFERENCES 51 INTRODUCTION The knowledge economy is becoming well known to many people But sometimes the way how it works is not understood sufficiently If it is so, it is something like riding horse Somebody will seat us on the horse, we can ride and everything is right Suddenly, there is a problem We want to stop or change the direction but we not know how It is almost impossible without knowing how to it And when we imagine what we have to do, if we would like to be professional riders Development of the knowledge economy in regions is based on the principles of the knowledge economy in general but it has got also some specifics - spatial, infrastructural, geographical, and economic There are also regional players which have their own role We are thinking primarily of university and its ability to become the “catalyser” of development in region trough creating and transferring the knowledge The aim of our work is to explain theoretical and practical functioning of the knowledge economy in regions We would like to introduce the role of university in the regional knowledge development We look at the university as a place where the knowledge originate from and as a place where knowledge can flow from and then can be utilize further Transfer of knowledge is central for this thesis View of main principles and tools of the knowledge transfer we consider important because it can help (economists, scientists, firms, government etc.) to make decisions and concrete steps towards the regions’ development The development will take place in regions that will be built on the knowledge economy bases There will be flow of the knowledge and industry science relations will help to develop the regions (meaning quantity and quality of the development as well) The way how the thesis is compiled is based on working with many resources that offer various views on the issue Some authors of these resources already have done certain kind of summarizing of thoughts that have proved good We not want to make up new thoughts or theories We try to explain those who are already in the world We try to offer them to reader as a challenge to study and act more according to them and to put them into practice in his own region, university or firm To understand the regional dimension of the knowledge economy we introduce the knowledge economy in general and then we try to apply its fundamentals on regions The first chapter speaks about the knowledge economy as new economy and there are introduced possibilities of regional development in the context of the knowledge economy We offer several theories of such development for better understanding and knowing the problems that they think out The second chapter is about university as an important player of the region and its impacts on regional development We describe different kind of industry science relations that help to transfer knowledge from university There is showed how such industry science relations function at The University of Oxford and how does they help to the development of the university and its region in the third chapter CONCEPT OF THE KNOWLEDGE ECONOMY 1.1 KNOWLEDGE AGE “We are living through a period of profound change and transformation of the shape of society and its economic bases The nature of production, trade, employment and work in the coming decades will be very different from what it is today.” (FORFAS in HOUGHTON and SHEEHAN, 2000, p.1) “In an agricultural economy land is the key resource In industrial economy natural resources, such as coal and iron ore and labour are the main resources A knowledge economy is one in which knowledge is the key resource One in which the generating and using of knowledge have started to play the predominant part in the creation of wealth It is not just about pushing back the frontiers of knowledge; it is also about the more effective use of all types of knowledge in all manner of economic activity It is not a new idea that knowledge plays an important role in the economy, nor is it a new fact All economies, however simple are based on knowledge, need to know how, for example, to farm, to mine and to build; and this use of knowledge have been increasing since the Industrial Revolution But the degree of incorporation of knowledge and information into economic activity is now so great that it is inducing quite profound structural and qualitative changes in the operation of the economy and transforming the basis of competitive advantage The rising knowledge intensity of the world economy and our increasing ability to distribute that knowledge has increased its value to all participants in the economic system.”(HOUGHTON and SHEEHAN, 2000, p.1) COATES and WARWICK (1999, p.11-14) identify four important influences which are acting to increase the pace of change in economies throughout the world towards the more knowledge based: revolutionary changes in information and communications technology more rapid scientific and technological advance competition becoming more global changes in income, tastes and lifestyle ( rising incomes tastes have led to greater emphasis on quality and design, on convenience services and on cultural and recreational activities, and a shift in attitudes to sustainable development) 1.2 KNOWLEDGE ECONOMY AS NEW ECONOMY Knowledge economy has some significant features, different from the industrial economy we have known for most of the last 200 years.“Knowledge has fundamentally different characteristics from ordinary commodities and these differences have crucial implications for the way a knowledge economy must be organised” (STIGLITZ in VAITILINGAM, 1997, p.5) Front costs associated with the production of traditional goods such as a car or house may not necessarily be high, each item is still costly to produce On the other hand, front development costs (in the case of innovation, ideas and information) can be high, but the reproduction and transmission costs are low “When traditional inputs are added to the stock of economic resources, the economy grows according to traditional production function “recipes” For example, more labour can increase GDP by an amount that depends on current labour productivity, or more steel can increase production of autos, housing or tools by predictable amounts according to the current state of the arts While new knowledge will generally increase the economy's potential output, the quantity and quality of its impact are not known in advance There is no production function, no input-output “recipe” that tells, even approximately, the effect of a “unit” of knowledge on economic performance“(OECD, 1996, p.30) There should be drawn a basic difference between knowledge and information, as well Knowledge, in whatever field, empowers its possessors with the capacity for intellectual or physical action So what we mean by knowledge is fundamentally a matter of cognitive capability Information, on the other hand, takes the form of structured and formatted data that remain passive and inert until they are used by people who need to interpret and process them The full meaning of this difference becomes clear when one looks into the conditions of the reproduction of knowledge and information While the cost of replicating information amounts to no more than the price of making copies, reproducing knowledge is far more expensive process because some, indeed many, cognitive capabilities are not easy to articulate explicitly or to transfer to others (OECD, 2004, p.18) There are elements that therefore remain “tacit”: “we know more than we can say” (POLONAY in OECD, 2004, p.18) In spite of this fact information (information and communication technologies) lays the foundations of the knowledge economy Of course, we have to consider other elements of 10 development of region is no just about University, but about other regional player as well, because there are still problem with housing, inadequate infrastructure, skills shortages and social exclusion in Oxfordshire Anyway in the plan called Economic Development Strategy Oxfordshire 2006-2016 that Oxfordshire Economic Partnership has prepared, the University of Oxford play still important role in the future development of region University has built many networks and has gained many contacts for the last years In some of them the role of the Oxford University is essential In some of them it is not so and its role is not so important any more The same it is with the firms that have come from the Oxford University We think the important view on the impact of Oxford University in regional economy of Oxfordshire gives us NEVILLE (see 3.1) when he looks at the development and regional advantages of Oxfordshire We can say that many of the advantages that he introduces are linked just with activity of the Oxford University 3.3 WAYS OF THE KNOWLEDGE TRANSFER FROM THE UNIVERSITY OF OXFORD Oxford University has built strong relationships with the business world and the level of interaction with the local, national and international business community is growing each year University developed a vibrant 'market place' which brings together inventors, researchers, venture capitalists, business angels and entrepreneurs To this university uses couple of channel 3.3.1 ISIS Innovation Ltd Isis Innovation Ltd is the University of Oxford’s wholly owned technology transfer company Isis was founded in 1988, and has pioneered the successful commercial exploitation of academic research and invention Isis manages the University’s intellectual property portfolio, working with University researchers on identifying, protecting and marketing technologies through licensing, spin-out company formation, consulting and material sales Isis is now the most successful university technology transfer company in the UK, filing, on average, one new patent per week 42 It seeks to license technologies to companies to develop and sell technology-based products Licensees are sought from all technology and business sectors on an international basis Table 4: ISIS Innovation 2000 - 2007 Source: ISIS Innovation Ltd: Presentation [online] 2007 [2008-04-20] Available on: Isis Enterprise (division of Isis Innovation Ltd.) Isis Enterprise offers consulting expertise and advice in technology transfer to clients across public and private sectors Technology transfer includes the management of intellectual property and its transfer from university or corporate research to commercialisation Isis Enterprise offers a range of products promoting successful technology transfer: • Support and advice for research organisations building up their own technology transfer activities • Project specific advice, from disclosure to deal, license, spin-out and start-up 43 • Hosting and workshop programmes to suit client requirements, delivered at your offices or our Oxford location • Technology transfer audits – assessing systems and activities, identifying actions to develop future technology transfer activities Oxford University consulting (division of Isis Innovation Ltd.) Oxford University consulting offers access to the University's unique consultancy and departmental services across the breadth and depth of the University's expert knowledge The group, provides direct, cost-effective consultancy, and customises and manages each project to realise a company's business goals Areas of expertise include problem solving, data analysis, and expert evaluation, due diligence, and management and business development Oxford Innovation Society (division of Isis Innovation Ltd.) The Oxford Innovation Society enables businesses from all sectors to have a window on Oxford science and technology Corporate members receive benefits including: 30 days' advance notification of all patent applications marketed by Isis, invitations to thrice-yearly meeting & dinners, customised research presentations and seminars, newsletters and intellectual property portfolios Most importantly, however, members develop an advantageous working relationship with Isis that allows them to gain access to Oxford research, as well as a variety of local businesses and services Companies pay an annual fee of £6,800 for membership Isis Angels Network This is a not-for-profit company limited by guarantee that provides a vehicle for the introduction of private individuals and companies with potential interest in investing in spinout companies from the University of Oxford Angels Network membership is currently free, and open to both investment professionals and private investors Membership entitles you to receive: • Business proposals circulated by Isis on behalf of spin-out companies looking for funding 44 • Invitations to our regular Investment Meetings, at which both early-stage and established spin-out companies present their funding opportunities Isis Spinners Each year Isis arranges a number of events that bring the CEOs of the University’s spin-out companies together to share experiences, challenges and solutions Spin-out Companies More than 60 Oxford’s spin-out companies have been formed since 1959 Table 5: Transfer of Intellectual Property by ISIS Innovation Ltd Source: ISIS Innovation Ltd: Presentation [online] 2007 [2008-04-20] Available on: 3.3.2 Other ways of knowledge transfer from the University of Oxford Begbroke Science Park offers space for emerging science and technology companies to grow in a safe and enables talented young researchers to translate academic innovation into commercial reality 45 The vision of this science park is “to create and sustain an environment in which the interaction of Research, Business and Learning constantly produce new synergies – and to translate these synergies into innovations to meet today’s industrial challenges Research - currently working in five major interdisciplinary areas: Industrial Materials and Manufacturing Aerospace and Automotive Nanotechnology Environmental Technology IT & Communications Engineering Business – from the birth of a new idea, through start-up, to medium or long-term developments for established businesses Begbroke offers to spin-out and start-up companies working from inside and outside the University a home in incubation facilities with practical start-up help New enterprises can work with novel technologies and can benefit from unique networking opportunities, laboratory facilities and, perhaps most importantly, access to ongoing academic research The most important part of the Begbroke Science Park is the Centre for Innovation and Enterprise The centre has a mixture of ground and first floor offices and wet and dry laboratory spaces in a variety of sizes, and has been designed for maximum flexibility in use The innovative use of service risers means that specialist facilities can be installed easily and cost-effectively as companies request them Facilities include a professional reception, meeting room, kitchen and common area The Centre Manager is based within the centre and is on to help you settle in All rooms have structured cabling to enable computers and telephones to be networked easily with a state of the art telephone system and high speed internet connection Meeting room facilities can be used free of charge The Science Park also has a number of meeting rooms and conference facilities, some of which are free to site tenants These are equipped with a full range of audio-visual equipment, teleconferencing facilities as well as data and voice connection points The subsidised on-site restaurant offers hot and cold 46 meals and can also offer hospitality for meetings, from working lunches to hot and cold buffets Many other on-site services are also available Learning - Begbroke is committed to offering learning tools, workshops, seminars and accredited courses to the widest possible range of users, from schoolchildren and the general public to business people and specialist researchers The focus is especially on nanotechnology and climate change Oxford Business Alumni was launched in 1998 and now has almost 2,000 members, who benefit from access to a worldwide network of members, current students, and the Business Alumni website of news and resource links Key benefits of Oxford Business Alumni (OBA) membership include: • Access to a worldwide network of members through the OBA members’ directory; international chapters and professional interest networks • Access to a dedicated alumni website • An email account and forwarding facility • Regular mailings of ‘Business at Oxford’ and Alumni News • Access to Said Business School (integral part of Oxford University) facilities (subject to conditions) • Invitations to academic, social and networking events Oxford Science Park Oxford's first science park, the Oxford Science Park, opened in 1991 More than 430,000 sq ft of office and laboratory space has been completed to date A further phase of development is currently underway and will extend the total development to approximately 700,000 sq ft Case Studies There are activities of individual Oxford academics or those with spin-offs based on University research in science and technology 47 Venturefest is the international event celebrating enterprise and innovation and promoting the commercialisation of new technology 48 CONCLUSION The aim of our work was to explain theoretical and practical functioning of the knowledge economy in regions To achieve this we have introduced knowledge economy in general and then we have applied its principles on region and one of its main part (in our case) university that is the place where (just in the knowledge economy) knowledge come from and where are transferred to the environment from We wanted the theoretical base that was used, to become like a challenge and to offer chance for right response We always have potential future development of region in mind The example of The Oxford University should serve as an impulse for further thinking, developing and preparing of new ways of knowledge transfer from university to other regions This should happen without abstraction from concrete structure and conditions in regions that we will possibly think about in the future We could not avoid some of the main conditions of positive university influences on region as we have shown them in the table “Myth and Reality of University Impacts” University can bring development e.g in technological maturity of region On the other hand this development can bring some negatives and problems (e.g pollution) That has happened in Silicon Valley as well We cannot imagine the knowledge economy without “tacit knowledge - knowledge that are more than information, are not easily transported and that require people There is also one thing that we have noticed and has impact on university It is the mobility of people Universities try to retain knowledge that are embodied e.g in researchers near the university There are some chances how to provide against brain-drain just through various tools of knowledge transfer that we have introduced in this work Different kind of knowledge transfer should help to retain and bring direct financial or other advantages (attraction) that can lead to the development of the territory near the university (region) University can act as leader in developing of region and can be the main “catalyser“ of development for government, businesses, research institutions etc University forces them to be active Of course, it is better if everyone wants to support the development and when there is a co-operation among them The thing we would like to emphasize and that stay in our mind after writing this work is a view on education and research that is not only boring reality Education and research cannot exist just for themselves Students not have to study at the university like in some 49 incubator that they will leave after some years of study and go to another world – world of business There can be co-operation and building of knowledge based community in region during the studies We know that no every university can obtain such a big impact like one of the most known university in the world “Stanford” or in our case The University of Oxford Firms that started near the university have not always been big and international companies It does not mean they cannot bring crucial advance to people and society just in region Moreover, where the possibility of university to impact on region has ended, there is possibility for other subjects to develop what university has started 50 REFERENCES BENNEWORTH, Paul, CHARLES, David “University spin-off policies and economic development in less successful regions: learning from two decades of policy practice” 2004 29 p BRAMWELL, Allison, WOLFE, David A Universities and Regional Economic Development: The Entrepreneurial University of Waterloo 2005 43p BRENNENRAEDTS, Reginald, et al The different channels of university-industry knowledge transfer: Empirical evidence from Biomedical Engineering Eindhoven University of Technology, 2006 18 p BUČEK, Milan, et al Regionálny rozvoj: novšie teoretické koncepcie Bratislava : Ekonóm, 2006 269 p ISBN 80-225-2151-5 COATES, David, WARWICK, Ken in DTI, 1999, Economics of the Knowledge Driven Economy, Conference Proceedings, Department of Trade and Industry, London CROWELL, Mark Knowledge Knowledge Transfer and Economic Development : The role of the engaged university in the twenty-first century University of North Karolina, 217 - 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Title: Development of the knowledge economy in regions (The Knowledge Transfer from University) Bachelor work University of Economics in Bratislava Faculty of National Economy Department of public...UNIVERSITY OF ECONOMICS IN BRATISLAVA FACULTY OF NATIONAL ECONOMY DEPARTMENT OF PUBLIC ADMINISTRATION AND REGIONAL DEVELOPMENT BACHELOR THESIS DEVELOPMENT OF THE KNOWLEDGE ECONOMY IN REGIONS (THE KNOWLEDGE

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