Examining the Role of the University in Creating Jobs

This paper begins by setting out the rationale for why today’s university must be involved with job creation in terms of institutional mission and global competitiveness. We present a review of recent literature, from both sides of the Atlantic, regarding universities, technology and science parks and job creation. Measuring the impact of university actions is reviewed in terms of general criteria, impact of incubators, and where jobs are being created. A case study of Silicon Valley is reviewed as well as a discussion of roles that government might play. The paper concludes with the presentation of findings from the literature review and the lessons learned from them. Finally the authors advance a set of recommendations for universities as they address this increasingly important imperative. This paper should be of interest to university administrators seeking to refine or broaden third mission activities. Current Context and Global Competitiveness No less an astute observer of the contemporary scene than President Obama, in a September 8, 2011 speech to a joint session of Congress, highlighted the importance of jobs in the economy: Now, the American Jobs Act answers the urgent need to create jobs right away. But we can’t stop there. As I’ve argued since I ran for this office, we have to look beyond the immediate crisis and start building an economy that lasts into the future -an economy that creates good, middle-class jobs that pay well and offer security. We now live in a world where technology has made it possible for companies to take their business anywhere. If we want them to start here and stay here and hire here, we have to be able to out-build and out-educate and outinnovate every other country on Earth. Business leaders also have recognized the imperative of job creation for our economies. For example, writing in the July 2010 Business Week, former Intel CEO Andy Grove wrote on the necessity of ‘job-centric’ leadership and incentives to expand the US domestic economy: ... job creation must be the No. 1 objective of state economic policy. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal. The rapid development of the Asian economies provides numerous illustrations. In a thorough study of the industrial development of East Asia, Robert Wade of the London School of Economics found that these economies turned in precedent-shattering economic performances over the '70s and '80s in large part because of the effective involvement of the government in targeting the growth of manufacturing industries. Page 25600.2 The almost daily swings of the USA’s economy, and that of the balance of the world’s, forcefully demonstrates the complexities and connectedness of economics, politics and indeed the situation faced by our universities. Given rhetoric focused on jobs and the link to a nation’s sense of its well-being, it is more than prudent for universities to consider their role in job creation. In particular, university faculty and administrators dealing with science, engineering and technology programs must consider how they and their activity make and can make contributions to this critical imperative. A call to this end has come from President Obama as documented by Olson & Merrill: The enactment of the America COMPETES Act in 2006 (and its reauthorization in 2010), the increase in research expenditures under the 2009 American Recovery and Reinvestment Act (ARRA), and President Obama’s general emphasis on the contribution of science and technology to economic growth have all heightened interest in the role of scientific and engineering research in creating jobs, generating innovative technologies, spawning new industries, improving health, and producing other economic and societal benefits. (P.1) [24] It is worth taking an external view to obtain a ‘non-engineering/non-technological’ perspective. The World Economic Forum (www3.weforum.org) publishes a Global Competitiveness Report, which provides a snapshot of the competitiveness of the majority of the world’s national economies based on a global competitiveness index (GCI). The GCI is structured around twelve pillars covering the three themes of Basic Requirements, Efficiency Enhancers and Innovation and Sophistication factors. Basic Requirements include measures such as ethics, crime, laws, infrastructure, health, etc. Efficiency Enhancers include higher education and training and technological readiness. Innovation and Sophistication factors include innovation as a significant set of measures. This comprises capacity for innovation, quality of scientific research institutions, company spending on R&D, university-industry collaboration in R&D, government procurement of advanced technology products, availability of scientists and engineers, utility patents and intellectual property protection. The countries that consistently rank highly in the Global Competitiveness Report all have excellent higher education systems with a strong focus on technology and innovation. In 2011, the top ten ranked countries in order were Switzerland, Singapore, Sweden, Finland, United States, Germany, Netherlands, Denmark, Japan and the United Kingdom. Other notables include Israel (22), China (26) and Ireland (29). Barack Obama spoke to the issue of US innovation in his State of the Union Speech on 25 January 2011. In this speech he outlined his plan: ...to help the United States win the future by out-innovating, out-educating, and out-building our global competition....What America does better than anyone – is spark the creativity and imagination of our people. We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn't just change our lives. It's how we make a living. Our free enterprise system is what drives innovation. But because it's not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need. That's what planted the seeds for P ge 25600.3 the Internet. That's what helped make possible things like computer chips and GPS. Just think of all the good jobs – from manufacturing to retail – that have come from those breakthroughs. The GCI in 2011 placed the United States 6 in innovation, behind Switzerland (unemployment rate 3.1%), Sweden (unemployment rate 6.9%), Japan (unemployment rate 4.5%), Finland (unemployment rate 6.2%) and Germany (unemployment rate 6.6%). Purpose of this paper There is little argument about the value of higher education and its contributions to society. For example, Duderstadt in 2004 wrote that the “contemporary research university reaches into every aspect of modern society. It educates the graduates that sustain commerce, government, and professional practice; it performs the research and scholarship so essential to a knowledge-driven global economy; and it applies this knowledge to meet a diverse array of social needs including health care, economic development, and national security.” What the authors attempt to do in this paper is to examine one aspect of the value that universities contribute to society, i.e., how they contribute to job creation. We focus on job creation for two reasons. First, in both the United States and Ireland – unemployment is a current and pressing economic and social problem. Currently unemployment in Ireland is 14.3% (Eurostat 2011) and in the United States is 8.6% (US Bureau of Labor Statistics, 2011). Therefore it is appropriate to ask the question of organisations receiving public monies what role they can and should play to address such problems. Second, universities today generally accept their role as being much wider than teaching and research, and so engage in a range of ‘third mission’, i.e., engagement, activities. Much has been written of the necessity and benefits of university third mission activities with respect to economic development. But less has been written with respect to a key aspect of economic development – job creation – and this paper looks for evidence of sustainable job creation resulting from the activities of universities. Technology, economics, and politics are inexorably intertwined. This interaction has been recognized for some time as evidenced by Landau and Rosenberg, who, in their introduction to their 1986 work observed: We start from the premise that engineers and economists share a common interest in technology and technological change. They do, however, approach the subject from different vantage points, and the very differences in these vantage points have been intensified by the inevitable increase in specialization that has characterized industrial societies. (p. v-vi) The authors’ goal for this paper is to explore the literature and practice of job creation by the university. To this end, we will: • Examine the role of the university in job creation, • Analyze the literature addressing university job creation, • Present findings and critique some ‘sacred cows’ associated with the topic, and • Conceptualize a way forward. P ge 25600.4 In this way, the authors seek to continue the initiative of Landau and Rosenberg by bringing to the technology field some of the key literature from economists and others who have examined economic development and job creation. By doing so, we hope to develop “a better understanding of the conditions under which technological innovation can be made to function more effectively in the generation of economic growth” (p. v-vi) . Review of the Literature on Universities & Job Creation To establish a valid understanding of what is known about the link between universities and job creation, the authors conducted a systematic search of the literature using databases provided by Purdue University and the online resources of national and int