Doing well by doing good: A study of university-industry interactions, innovationess and firm performance in sustainability-oriented Australian SMEs
Introduction
Increased concerns about excessive resource consumption, environmental degradation together with social inequity have led to calls for a transition toward a more sustainable economy and society (Adams et al., 2015). Against this background, the role of innovation - defined as ‘the successful exploitation of new ideas’ (DIT 1998) - in helping enterprises become more sustainable has received increased attention in the academic literature (Adams et al., 2015, Hansen and Klewitz, 2012, Klewitz, 2015). Sustainability-oriented innovation (SOI) involves making intentional changes to an organisation's philosophy and values, and to its products, processes or practices, in order to create and realize social, environmental and economic value (Adams et al., 2015). SOI describes a ‘direction’ or journey (Adams et al., 2015, Klewitz and Hansen, 2014), which involves the deliberate management of economic, social, and ecological aspects (Hansen et al., 2009, Paech, 2007) so that they become integrated into the design of new products, processes, and organisational structures (Rennings, 2000).
Although small and medium-sized enterprises (SMEs) – defined as enterprises comprising < 200 employees (Department of Innovation Industry Science and Research, 2011) – are increasingly recognised as central contributors to sustainable development, research has mainly focused on large organisations (Bos-Brouwers, 2010, Hansen and Klewitz, 2012) with little research into SOI in SMEs. This is despite the fact that SMEs play a major role economically, accounting for the majority of firms in most economies, including Australia's (ABS, 2015), and thus are, as a group, essential to sustainable development (Hansen and Klewitz, 2012). Empirical work that does exist on SMEs tends to focus on environmental issues (i.e., eco-innovation) rather than on the broader SOI concept (Adams et al., 2015, Klewitz and Hansen, 2014). Thus, more systematic research on SOI in SMEs is needed (Adams et al., 2015, Hansen and Klewitz, 2012, Klewitz and Hansen, 2014), particularly in terms of how SOI can be achieved in SMEs (Adams et al., 2015).
Bos-Brouwers (2010) note that a distinguishing feature of SMEs is their inability to internalise all elements of the innovation process (Maillat, 1990) due to a lack of resources (e.g., time, knowledge, personnel and financial capital) or liability of smallness. As a consequence, it is difficult for SMEs to allocate the requisite resources to SOIs, which are much more resource intensive than conventional innovations (Hansen and Klewitz, 2012). The multidimensional nature of SOI means that the development of SOIs in SMEs is complex, typically requiring knowledge and skills that are quite distant to, and distinct from, an enterprise's existing knowledge base (Perl-Vorbach et al., 2014). For example, more radical SOIs typically require novel ideas, new information and resources exchanged in knowledge flows that are more distant to the enterprise's own environment (Klewitz and Hansen, 2014). This knowledge is often diverse and widely distributed (Clarke and Roome, 1999, Wagner, 2009, Wagner and Llerena, 2008). This fact, together with SMEs' resource constraints, incentivise SMEs to open up the innovation process and cooperate in order to overcome their resource limitations (Freel, 2005, Hansen and Klewitz, 2012).
While cooperation with a range of external actors is assumed to increase the capacity of SMEs for SOIs (Hansen and Klewitz, 2012, Harms and Klewitz, 2013, Klewitz, 2015, Perl-Vorbach et al., 2014), there is a dearth of empirical studies which explore the role that HEIs and related research institutes play in this process, despite the fact that these institutions can provide new knowledge that smaller enterprises could not typically generate based on their own capabilities (Hansen and Klewitz, 2012, Huggins, 2010). Research that does exist tends to be conceptual in nature (Hansen and Klewitz, 2012, Harms and Klewitz, 2013, Klewitz and Hansen, 2014, Perl-Vorbach et al., 2014), qualitative, or case studies based on narrow networks initiated and/or maintained by third party actors or intermediaries; (Bigliardi et al., 2012, Klewitz, 2015), leading to calls for quantitative research (Klewitz and Hansen, 2014), and more generally, research into the types and sources of knowledge beneficial for SOI in SMEs (Hansen and Klewitz, 2012, Perl-Vorbach et al., 2014).
The purpose of this research is to begin to address this gap by examining the contribution of knowledge flows from HEIs and related research institutes to the innovation output and firm performance on SOI in SMEs. Although knowledge flows or transfer can occur through a range of actors, we focus on knowledge transfer between HEIs and related research institutes and SMEs, given universities have long been considered as key sources of knowledge in knowledge-based societies (Etzkowitz and Zhou, 2006) and more recently, as a knowledge source for SOI in SMEs (De Marchi, 2012, Hansen and Klewitz, 2012). Research on networks and open science indicates the increasing importance of sourcing knowledge from external organisations in general and from universities in particular (Cohen et al., 2002, Hansen and Klewitz, 2012, Perkmann et al., 2011, Perkmann and Walsh, 2007, Powell and Grodal, 2005); however empirical evidence of the impact of direct links between universities and firms is weak and inconsistent (Bekkers and Freitas, 2008, Dornbusch and Neuhäusler, 2015), including in the SOI SME context (Klewitz, 2015). Fernández-Esquinas et al. (2015) note that the difficulty in translating scientific results into the market is well established, raising important questions with respect to how to maximise benefits from HEIs and related research institutes (hereafter, for simplicity we use the term HEIs to incorporate HEIs and related research institutes) for skills and development (OECD, 2007), especially in peripheral regions in which the industrial fabric is composed of many SMEs with low absorptive capacity (Fernández-Esquinas et al., 2015).
We investigate whether the various pathways that constitute university–firm interactions have a differential impact on innovation output and firm performance on SOI in SMEs. In line with prior research (Corral de Zubielqui et al., 2015, Hansen and Klewitz, 2012, Perkmann and Walsh, 2007) we use the term HEI–industry links to describe the various ways in which publicly funded research may potentially benefit industry, and which comprise what is commonly referred to as knowledge/technology transfer links that include the use of scientific publications and university-generated intellectual property (IP) (e.g., patenting, licensing, commercialisation) and human mobility mechanisms aimed at transferring skills (e.g., graduate recruitment and postgraduate education/vocational training of employees). These links are generally considered to have low relational involvement or engagement since they do not necessarily require relationships between universities and industry users (Perkmann and Walsh, 2007). In contrast, HEI–industry relationships refer to situations where individuals and/or groups from academia and industry work together on specific projects and produce common outputs and are characterised by high relational involvement. Examples include research partnerships (e.g., collaborative or sponsored research) and research services (e.g., academic consulting, contract research and use of research facilities) (see Table 1). We define innovation outcomes or innovativeness1 as the range of innovation types (i.e., product, process, organisational and/or marketing) that might reasonably be expected in an enterprise (Adams et al., 2006). Jay and Gerand (2015) note that the premise that underlies SOI is that all four types of innovation will be required in order to significantly move toward sustainable development.
In doing so, the research contributes to the existing literature in three important ways. First, it provides an improved understanding of different HEI knowledge access pathways for innovation purposes in SOI in SMEs, by examining the extent to which SOIs SMEs utilise HEIs' generic links and relationships, and their influence on innovation outcomes. To date, there is a dearth of empirical studies that examine the specific pathways through which knowledge flows from HEIs in SOI in SMEs, and the differential impact, if any, that HEI links and relationships have on SOI in SMEs. We contribute to filling this gap.
Second, an improved understanding of the link between knowledge flows from HEIs to SOI SMEs also contributes to the debate about the so-called third role of universities, by examining the relative contribution of knowledge/technology transfer links that include the use of scientific publications, university-generated IP and human mobility mechanisms allied to their educational programs vis-a-vis broader knowledge-based linkages via research linkages with firms.
Finally, by empirically examining the business performance (benefits) of knowledge transfer activities aimed at innovation in the context of SOI in SMEs, we add to the business case for sustainability (Schaltegger and Wagner, 2006).
The remainder of the paper is organised as follows. Section 2 presents a brief overview of the National Innovation Systems (NIS) and Triple Helix Model (THM) which is the backdrop against which university–industry interactions occur. This is followed by presentation of the conceptual framework that forms the basis for the development of the research questions. Section 4 describes the data. Section 5 discusses the empirical results and Section 6 presents the conclusions.
Section snippets
Theoretical background
During the 1990s a group of researchers established that the differences in growth between countries or regions are connected with the innovation activities that these countries or regions undertake and this became known as NIS. For NIS, these interactions between actors are essential (Freeman, 2002). Lundvall (2007) defined NIS as a system that includes ‘… elements that link innovation and economic performance’ (Lundvall, 2007, p. 99). He also identified two main aspects of NIS: resources and
Conceptual model
In this section, we present the conceptual framework that depicts the relationships between SMEs, knowledge flows from HEIs generic links and relationships, innovativeness, and firm performance in SOI in SMEs (Fig. 1). The key elements in this figure help us to answer the research question: to what extent, and how, do knowledge flows from HEI links and relationships affect innovation outcomes and firm performance in the context of SOI in SMEs?
Sample
The study used a self-administered questionnaire conducted via the internet to survey SME owners/managers in Australia. At the end of 2014 an (email) invitation to participate in the survey was sent to SME owners/managers with a link to the survey. A total of 7121 invitations were distributed from a commercial database, however 643 businesses were not reachable for a variety of reasons (e.g., bounced emails).
The research used four techniques to increase the response rate: (1) a pilot study was
Analysis
The data is analysed in two steps. First, a brief descriptive analysis is presented. Second, multivariate analysis is used to test the relationships between HEIs – industry generic links and relationships, innovativeness and firm performance. We used structural equation modelling (SEM) to analyse the measurement and structural models. SEM is a multivariate statistical technique which allows dependent variables for one regression to become independent variables in the next (Hair et al., 2005).
Discussion and conclusion
This study set out to investigate the extent to which, and effect of, university-firm interactions on innovativeness and firm performance on SOI in SMEs. We find that overall, enterprises are most likely to access knowledge through HEI generic links, with between one third and half of enterprises utilising human resource transfer, scientific publications, and informally sourcing ideas from HEIs. While one third of enterprises engage in research partnerships, one quarter or less of SOI SMEs
Acknowledgement
The authors acknowledge the support from the University of Adelaide which made this research possible. Specially, they are appreciate the support from Adelaide Research Innovation.
Jane Jones is a senior lecturer at the Flinders Business School, Flinders University. Her research interests include human resource development and innovation, particularly in smaller enterprises, and corporatisation of healthcare organisations.
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Jane Jones is a senior lecturer at the Flinders Business School, Flinders University. Her research interests include human resource development and innovation, particularly in smaller enterprises, and corporatisation of healthcare organisations.
Graciela Corral de Zubielqui is a lecturer of the postgraduate Project Management and Innovation area in the Entrepreneurship, Commercialisation and Innovation Centre, The University of Adelaide. Her research interests include innovation, knowledge transfer, collaboration activities between government, industry and university, SMEs performance and impact on regional economic development.