L I B R A R Y H O U S E

ESSENTIAL INTELLIGENCE

An Analysis of UK University Technology

and Knowledge Transfer Activities

w w w. l i b r a r y h o u s e . n e t
 About Library House

About Library House

Library House is a data and research company that delivers comprehensive, essential intelligence on the companies of
tomorrow.

The research and consulting department at Library House has strong expertise in the analysis of the activities, performance
and impact of research organisations, universities, innovation-based companies and clusters. We understand how
universities, funding organisations, and industry interact through knowledge exchange and technology transfer activities
and how this is embedded in policy framework. Our approach is to provide evidence-based insights and analysis in the
innovation landscape. We are familiar with the state of research in all fields of innovation, data collection methods and
the latest activities at both a national and international level, ensuring the delivery of comprehensive solutions for a
broad number of both public and private sector clients. Underlying these strengths is a solid-driven analysis based on
a proprietary dataset including extensive information on over 13,000 innovation-based companies across Europe.

Library House’s essential intelligence is accessible via our proprietary databases, daily and weekly intelligence alerts,
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Library House’s data and research services create competitive advantage for clients in the investment, corporate,
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The Authors
Martin Holi
Roger Franklin PhD
Ed Hugo
Jens Lapinski PhD

For more information about the contents of this report please contact:

martin.holi@libraryhouse.net

The Library House Ltd

Kett House
Station Road
Cambridge
CB1 2JX
United Kingdom

This report was produced in December 2006 to April 2007 and published in November 2007.

Library House is grateful for the support provided by the Gatsby Charitable Foundation.

i w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

Library House Track Record

Since the company was founded five years ago, Library House has assembled a world–class team of analysts, consultants
and researchers who have produced internationally respected reports. Based on our work, the Library House research
and consulting department is now widely regarded as an authority on analysing innovations and the related knowledge
and technology transfer. Library House’s consulting and research services are the premier source of evidence-based
analysis on innovation management, innovation policy, and innovation-based companies. Examples of publicly available
reports are:

• The Cambridge Cluster Report – The 2007 report (‘Looking Inwards, Reaching Outwards’) was sponsored by
BDO Stoy Hayward and Pure Resourcing Solutions.

• The UK Venture Backed Report – 2007 (‘Funding Growth in a Changing World’) and 2006 (‘Beyond The
Chasm’). These reports were sponsored by UBS and is Library House’s benchmark annual publication on the
UK Venture Capital Industry.

• Venture Capital, Innovation and IT - June 2007 (‘Driving Forward the Knowledge Based Economy’).
This pan-European report on activity in the software sector was sponsored by Microsoft and publicly-launched
by Microsoft’s Chief Strategy Officer.

• In March 2007 we published the ‘Spinning out quality: University spin-out companies in the UK’ briefing.
We compared the efficiency of technology transfer across several top universities in the UK and US and
analysed which university-level mechanisms have been able to deliver the highest efficiencies.

• ‘The Impact of the University of Cambridge on the UK Economy and Society’ (published June 2006).
In this study the University of Cambridge was benchmarked against leading UK and US universities. Additionally,
the impact of the university’s expenditures on regional and national levels was assessed.

• In November 2005, we published a report with the British Venture Capital Association (BVCA) entitled ‘Creating
Success from University Spin-outs’.

• Finally, this report (‘An Analysis of UK University Technology and Knowledge Transfer Activities’) contributed to
Lord Sainsbury of Turville’s Review of Government’s Science and Innovation Policies – ‘The Race to the Top’ -
that was published in October 2007.

Additionally Library House delivered valuable bespoke research projects for governmental and non-governmental
departments, Regional Development Agencies, venture capital investors, business angels, universities and a range of
clients from SMEs to multinational corporates.

ii
 Contents

Contents
About Library House����������������������������������������� i
Library House Track Record���������������������������� ii
Foreword by Lord Sainsbury��������������������������� iv
Executive Summary������������������������������������������1
Income Structure of Universities ��������������������������� 1
Collaboration with Industry������������������������������������� 1
Patents and Licensing Income������������������������������� 1
Spin-Outs��������������������������������������������������������������� 1
High-Tech Clusters around Universities����������������� 1
Clusters����������������������������������������������������������19
Why are Clusters important? ������������������������������� 19
High-Tech Clusters����������������������������������������������� 19
Analysis of High-Tech Clusters����������������������������� 21
University Clusters������������������������������������������21
Clusters and Research Quality����������������������������� 24
Investors��������������������������������������������������������������� 24
IPOs��������������������������������������������������������������������� 24
Attractiveness of High-Tech Clusters������������������� 25

Introduction������������������������������������������������������2 Conclusions����������������������������������������������������25
Universities as Centres of Excellence ������������������� 2 References ����������������������������������������������������26
Knowledge Transfer����������������������������������������������� 2 Appendix –Analysis of Potential High-Tech
Clusters ����������������������������������������������������������������� 2 Regions����������������������������������������������������������27
Aims of this Analysis���������������������������������������������� 3 Cambridge����������������������������������������������������������� 28
Methodology����������������������������������������������������3 Newcastle������������������������������������������������������������� 28
University Economic Impact Matrix����������������������� 3 Belfast������������������������������������������������������������������� 28
Quantity, Quality and Efficiency of Research��������� 4 Dundee����������������������������������������������������������������� 29
Data Collection������������������������������������������������4 Conclusions of Appendix ������������������������������31
Interviews��������������������������������������������������������������� 4
Universities������������������������������������������������������������� 4
Analysis������������������������������������������������������������5
Ranking of Universities������������������������������������������� 5
Input into UK Universities��������������������������������������� 5
UK Industrial Income��������������������������������������������� 7
Academic Research Input of UK Universities ������� 9
Technology Transfer��������������������������������������������� 13
Licensing ������������������������������������������������������������� 13
Spin-Outs������������������������������������������������������������� 13
Efficiency in Spinning Out Companies����������������� 14
A UK/US Comparison of University Spin-Outs:
Poor Quality in the UK? ��������������������������������������� 15
Impact of Research Quality��������������������������������� 18

iii w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

Foreword by Lord Sainsbury

In the recent review that I produced for the Government of its science and innovation policies (The Race to the Top),
I highlighted the key role played by universities, and I very much welcome the publication of “An Analysis of UK
University Technology and Knowledge Transfer Activities” by Library House.

This is the first time such a comprehensive study of this type has been conducted and its primary purpose is to help
everyone interested in the UK’s innovation performance to understand the important contribution UK universities make
to the UK economy in terms of knowledge transfer.

In the past we had to guess how effective universities were at engaging and interacting with the business community,
and how much they contribute to regional economic development. Any activity in the field of knowledge and technology
transfer is very difficult to evaluate and I would like to thank Library House for taking the bold step of delivering an
analysis of it.

The results are very encouraging: the analysis shows clearly that important high-tech clusters are growing up around
many of our universities. There is undoubtedly, however, more that can be done to encourage the growth of these
clusters, and I hope that this excellent evidence-based study will lead to an open discussion among universities,
RDA’s, the Government and the business community about how they can give further support to the knowledge and
technology transfer activities of universities, and in the process further advance the innovation performance of the UK
economy

I also look forward to seeing more work from Library House in this field.

Lord Sainsbury

iv

Executive Summary
In this report we analysed the input, output and impact of the 20
UK universities selected for this study (Table 3). Additionally we
analysed the structure of the regions around these universities.
This comprehensive analysis included all areas of research and
commercialisation activities universities are involved in. We
benchmarked the universities from a quantitative, qualitative
and efficiency perspective and used indicators to evaluate
the innovation competence chain. The following statements
summarise our findings.
Income Structure of Universities
The total annual research income (2004/2005) of all UK
universities is nearly £4.2bn; the research income of the
20 selected universities is nearly £2.3bn. Compared to other
industrial companies, universities can be regarded as one
of the ‘industries’ which has been exceptionally successful in
transforming income into economic impact.
Collaboration with Industry
Industrial funding is subordinated to other sources of funding for
universities. In total, UK universities only receive £243m from
the top 850 UK most R&D active companies (DTI Scoreboard) of
the £20bn spent on R&D.
All senior university management interviewed displayed a highly
friendly and open attitude towards interaction with industry.
However, in our experience, the attitude of academics towards
industry is more varied.
All universities interact in proportion to their income with
industry. There is no correlation whatsoever between the quality
of research being conducted at a university and the extent of the
industrial interaction of that university. All universities appear to
have a similar level of industry interaction, regardless of the
quality of the research being conducted.
However, the type of interaction differs. High quality research
universities have a higher propensity to interact with large
companies, whilst lower quality research universities focus more
on the SME market.
In general, more interaction between universities and SMEs is
required. The Small Business Service Agency of the DTI counted
over 97,000 SME businesses with over 20 employees in the UK.
This means that no more than 1% of all SMEs contributed to
the industrial income of UK universities. All universities and
SMEs should be encouraged to become more interested in
collaborations with each other.
Collaborations with SMEs mostly require directly applicable
results which involve a large part of knowledge transfer. This
type of knowledge transfer between universities and companies
takes places across the whole range of the university sector and
is not focused on a small number of top research universities.
Industrial funding is mainly available from two industry sectors;
pharmaceuticals and engineering. Therefore, any analysis of
industrial income has to be seen in the context of a university’s
research focus.
1 w w w. l i b r a r y h o u s e . n e t
Executive Summary
SMEs present manifold opportunities for all kind of research
activities and the foundations for any future collaborative
activities are in place.
Patents and Licensing Income
The number of patents filed by universities is declining. This
could indicate that the technology transfer offices of universities
have developed a better understanding as to which ideas are
worth patenting or that there is simply less research outcome
to be patented.
The analysis of licensing income shows that several universities
currently do not generate enough income to cover the costs of
their patenting activities.
Any analysis of efficiency in patenting has to take into account
the many difficulties related to these measures. For example,
the related impact measure ‘licensing income’ is influenced by
the time that is needed to transfer a patent into licensing income
and the fact that high licensing income is mostly related to a few
or a single very successful licensing agreement.
Finally, our analysis of licensing income shows that a focused
knowledge and technology transfer strategy may enable
universities to deliver more efficient results.
Spin-Outs
High quality research universities (in terms of a high RAE-ratio)
spin out the majority of high quality spin-out companies (as
defined by their ability to attract external funding). Even when
lower quality research universities have efficient technology
transfer operations, their lack of research output (i.e. publications,
patents) means that they struggle to spin out a large number of
quality companies.
This means that technology transfer is predominantly carried
out by the high quality research universities and to a far lesser
extent by all other universities.
High-Tech Clusters around Universities
Innovation-based companies tend to locate near the country’s
top research universities.
R&D companies tend to locate near clusters of innovation-based
companies (either one is dependent on the other or they both
choose to locate near centres of research excellence).
The impact that this has on the region depends on the extent of
other economical activity in that region.
The University of Cambridge is co-located with the largest
number of venture-backed companies in the UK and has the
largest percentage of these companies within its postcode
district.
The University of Oxford and Imperial College are co-located
with a significant number of innovation-based companies, but
they are less important to the local economy as a result of
significant other activity in their regions.
An Analysis of UK University Technology and Knowledge Transfer Activities
There is no correlation between the number of R&D companies
and the total number of other, non-R&D companies, in the same
area. This means that having many companies in any one area/
city, does not result in the presence of many R&D companies.
However, there is a positive proportional relationship between
the number of R&D companies in the vicinity of a university and
the number of post-graduate students. This seems to indicate
that the number of post-graduate students has a positive impact
on the number of local R&D companies. This is true for all
universities, regardless of their quality of research.
More importantly, there is an exponential relationship between
the quality of research being conducted at a university and both
the number of R&D companies and venture-backed companies
around these universities. This means that high quality research
universities have a disproportionately larger effect on cluster
formation than lower quality research universities.
Overall, this means that high-tech/innovation clusters especially
form around large research universities that conduct high
quality research. This is regardless of the total size of the city
surrounding this university (e.g. Cambridge Cluster).
All our analyses show that R&D and venture-backed companies
locate around high quality research to a far greater extent than
around lower quality research universities.
Introduction
UK universities enjoy an excellent reputation for the quality of
their research and teaching but it is an open question as to how
well universities transfer their intellectual output into economic
impact.
In the past, several reports have been produced presenting
UK universities as centres of innovation and economic growth.
In 2003, a comprehensive analysis carried out by the Lambert
Review of Business-University Collaboration clearly demonstrated
the importance of universities to the economy. A more detailed
view on the technology transfer process, which included an
analysis of all UK university spin-out companies, was provided
by the two reports ‘Creating Success from University Spin-Outs’
(BVCA and Library House; 2005) and the ‘UK University Spin-Out
Report 2007’ (Library House; 2007).
Universities as Centres of Excellence
The UK government and public organisations are aware that
world-class research has an important impact on the regional,
national and international economy. To maximise this impact
several programmes have been initiated to promote knowledge
and technology transfer.
Alongside the UK’s research organisations, universities are the main
source of high quality research. The work of academics, students
and staff is part of the raw material required for innovation.
Universities facilitate this output through different knowledge and
technology transfer processes into a commercial environment.
In turn, these commercial organisations turn innovations into
economic growth. This economic growth then creates an impact
on an individual, financial, economic and social level.
2
Knowledge Transfer
University knowledge and technology transfer is the process
by which universities distribute knowledge and technologies.
This knowledge is distributed through a range of channels
to a variety of recipients, both internal and external. Internal
recipients comprise academics, staff and students, whereas
external recipients include any individuals and organisations
such as corporations, SMEs and non-commercial organisations.
The most important channels of knowledge transfer are:
• Publishing and presenting at conferences
• Teaching on an undergraduate, graduate or executive level
• Consulting and collaborative research with external
organisations such as corporates, SMEs and non-commercial
organisations
• Licensing of intellectual property owned by the university
• Venturing of technology through spin-out companies
that depend on licenses or assignment of technology for
initiation, from a university.
The knowledge gain enables the recipients to create a
competitive advantage through new or improved products or
processes. However, universities also have an impact on the
knowledge of the recipient organisations and their performance
(Argote & Ingram; 2000) and this enables these organisations to
obtain higher profits and create additional jobs. Especially in this
context, SMEs are a major part of the UK’s base of innovation
and they are very important for economic growth.
University technology transfer faces the challenge that tacit
information and know-how is deeply embedded in the members
of the university and its internal processes. This embedded
knowledge is difficult to exploit and to commercialise. (Nonaka
& Takeuchi; 1995). As a result, the recipient individual
or organisation demonstrates a change of knowledge or
performance (Argote & Ingram; 2000). Knowledge transfer is
a complex process that includes several steps from initiation to
integration (Szulanski; 2000 & 1996) and can involve several
different mechanisms.
University technology transfer in particular is the process that
encompasses all activities associated with the identification,
documentation, evaluation, protection, marketing and licensing
of technology and intellectual property management.
Clusters
As an additional result of knowledge and technology transfer
activities, universities can create an environment (a micro-
cluster) into which innovation-based companies tend to move.
The reason for this is that, beside the internal knowledge that
companies hold, their successful development depends on
their ability to incorporate external knowledge. This knowledge
could be acquired from within the own company, other
companies, hiring skilled people, access to finance, analysis of
competitors, collaborative and other formal or informal ways of
knowledge exchange. Therefore companies seek proximity to

other organisations from which they can generate knowledge
spillovers.
Due to the scientific nature of universities, organisations,
especially R&D-intensive ones, will seek to locate close to
universities. Near to universities they will find a research and
knowledge base and other R&D-oriented or innovation-based
companies. If this process reaches a critical mass the basis for a
potential high-tech cluster can be met.
Organisations choose to locate near to universities for several
reasons:
• Proximity to technology creation (Galbraith; 1990)
• Proximity to strategic partners (Mahajan & Peterson; 1979)
• Neighbourhood effect (Brown; 1981)
• Better contacts and easier communication (Czepiel; 1974 /
Ghoshal & Bartlett; 1988)
• To benefit from innovation diffusion (Rothwell; 1978).
In general, organisations that adopt knowledge are more
productive and have a higher survival rate than their counterparts
(Argote et al.; 1990).
Aims of this Analysis
Our analysis delivers insights into the UK science base around
universities and how it is locally structured. The first step
was to analyse the output of universities in terms of quantity,
efficiency and quality. The next step was to focus on examining
the relationship between a university’s quality, and the size
and location of innovation-based businesses nearby. For each
university, there is a question about whether this type of micro-
cluster has already been created or whether there is potential
for it to happen. In response, we have developed indicators to
analyse and benchmark the innovation base of these regions.
Regions around universities have to be differentiated by their
economic visibility and activities in their regions and the
corresponding implications for the knowledge and technology
transfer process have to be shown.
Our analysis has not covered all aspects of cluster formation
and processes within a cluster, but it is the first comprehensive
data-based analysis of UK universities based on indicators of
innovation.
This report also builds on the DTI assessment of ‘Business
Clusters in the UK’. According to the invitation to tender the
main objective of this assessment was to “draw up a detailed
systematic inventory of existing clusters across all sectors of the
UK economy”. The intention was to identify what clusters exist
and to map them on a nationwide basis while at the same time
detailing their geographical distribution region by region (DTI;
2001, p. 12).
In this report, we focus on the relationship between universities
and the local economic region. Our main interest is to identify
universities and regions with existing clusters and the universities
and regions that have the capability to form clusters in the future.
3 w w w. l i b r a r y h o u s e . n e t
Methodology
In this analysis we do not focus on a certain cluster topology.
Instead, we present data about the structure of universities and
their surrounding regions that enable stakeholders to arrive at
conclusions.
The results presented in this report will contribute to several
questions asked in the report ‘Science and innovation: working
towards a ten-year investment framework’ published by HM
Treasury, DTI & Department for Education and Skills (March
2004). Our report addresses the questions asked in the section
‘Summary of Consultation Questions’ in this report, especially
those ones related to the ‘Management of the Science Base’
and the ‘Knowledge Transfer and the Lambert Review’. (HM
Treasury; 2004, p. 47-48).
The evaluation of knowledge and technology transfer combined
with an analysis of the surrounding regions helps the government
to ensure the UK’s success in wealth creation and scientific
policy-making. Our findings will enable all stakeholders to
improve the support for universities and many other R&D-based
organisations.
Methodology
University Economic Impact Matrix
The evaluation of universities is based on the ‘University Economic
Impact Matrix’ developed by Dr. Kevin Cullen of the University of
Glasgow and Library House (Table 1). This matrix enables us to
quantify all significant and measurable factors. Additionally we
have identified and assessed the necessary sources of data. The
areas of economic impact are:
• Academic Research
• Collaborative Research with Industry
• Consultancy
• Licensing
• Venturing
• Supporting Outreach Activities
Not included in this report are questions related to the ‘Impact of
Teaching’, ‘Societal Impacts’ and secondary economic effects of
research, for example jobs in supplier companies and spending
of academic researchers. Nor is a larger analysis of the UK-wide
economic impact of the university included in this study.
Through these activities, researchers transform public and private
money into knowledge and technologies. Universities receive
public money in the form of funding from Research Councils and
HEFCE, and private money from industrial organisations, SMEs
and non-commercial organisations.
Depending on the area of activities, researchers can create
different outputs. Examples of outputs include publications,
patents, collaborations, spin-outs or consulting projects. How
academics prioritise these areas of activity depends on how they
are incentivised and on the strategy of the university.
An Analysis of UK University Technology and Knowledge Transfer Activities

Collaborative Supporting
Academic
Area Research with Licensing Venturing Consultancy outreach
Research
Industry activities
Combined input (total expenditure excluding tuition) from HESA
Input Total research
University’s research (# publications, patents, citations)
income
Conferences
organised for:
# publications # contracts - SMEs / industrial
Output # licences # spin-outs # contracts
# patents partners
- Academics
- Business
# Employees Consultancy representation on
Industrial income Licensing income
Impact Revenue income University board
Interviews: Interviews:
(clustering # citations External Investment Interviews:
Vice-Chancellors Vice-Chancellors
effect) raised Vice-Chancellors
Head of TTOs Head of TTOs
Exit Values Head of TTOs

Table 1 – University economic impact matrix

Quantity, Quality and Efficiency of • Patents

Research • Number of citations

The output and the related impact can be analysed in terms
of quantity (e.g. numbers of publications, collaborations and
spin-outs), quality (e.g. citations per publication, income from
collaborations and external investment raised by spin-outs) and
efficiency (e.g. research income spend per publication, patent or
external venture capital investment raised).
The volume of activity is equal to the total output from the
activity, for example the total number of publications is one
output of research activity.
• Total number of licenses and licensing income
• University spin-out companies
In general, our analysis covers the period from 2001 to 2006. In
some cases, data was only available for a more limited period,
for example the most recent data from the Higher Education
Business and Community Interaction Survey (HEBCIS) is from
2003-2004.

An analysis of the quality of an activity simply determines the Interviews

average quality of a university’s output in each area. A qualitative Additionally we conducted interviews with university
analysis could also be applied to other activities, for example management, technology transfer offices, Regional Development
licensing income per patent. Agencies, experts on science & technology parks and investors
(Table 2).
Neither an analysis of volume nor quality reveals how efficient
a university is at converting its financial inputs into outputs and Targeted Interviewed N.A.
impacts. Efficiency analyses are based on calculating ratios of
outputs to inputs/impacts as defined by the ‘University Economic Vice-Chancellors 20 17 3
Impact Matrix’. Technology Transfer Offices 20 18 2
Regional Development Agencies 9 4 5
An efficiency analysis is a function of the output of the financial
inputs into the activity, for example the total research income as Table 2 – Overview of interviews conducted
converted into outputs by academics. In general, efficiencies can
be expressed as a percentage of the best performing university. The interviews were conducted in February and March 2007.
This university can be said to exhibit a practical maximum
efficiency of the universities analysed.
Universities
Data Collection Twenty universities were selected for the analysis (Table 3).
These universities account for over 50 % (£2.28bn) of the total
An evaluation of the innovation base of UK universities and research income of all UK universities (£4.24bn) in 2004/2005.
regions requires data from a number of sources especially
quantitative indicators on universities’ output and performance. The selected universities reflect the full range of university
Some of the required data points include: activities from high ranked research universities to third stream
focussed institutions.
• Financials

• Publications

4
 Analysis

University
Queen's University Belfast
University of Bristol
University of Cambridge
University of Cardiff
University of Cranfield
University of Dundee
University of Edinburgh
University of Heriot-Watt
University of Hertfordshire
Imperial College
University of Lancaster
University of Liverpool
University of Manchester
University of Newcastle
University of Nottingham
University of Oxford
University of Southampton
University of Surrey
University College London
University of York

Table 3 – The 20 selected universities and their location in the UK

Analysis of different ways to assess universities. However, most of the

measures used are widely accepted in the field of scientometrics.
The three above mentioned rankings can be used to draw a
Ranking of Universities preliminary table of the research quality of the twenty universities.
An initial grouping of universities by performance in these rankings
There are many different ranking tables available for the initial
is displayed in Table 4.
assessment of universities. One of the most popular rankings is
the ‘Academic Ranking of World Universities’ (ARWU) from the
Shanghai Jiao Tong University (http://ed.sjtu.edu.cn/ranking.
htm). The ARWU Ranking is based on metrics assessing alumni, Input into UK Universities
awards, highly cited researchers, publications in the journals
‘Nature’ and ‘Science’, science citation index and the size of the Overall Income of Universities
universities.
The UK has a complex system to finance Higher Education
Institutes. The money is directly and indirectly distributed by
The Times Higher Education Supplement (THES) publishes
different governmental and non-governmental organisations.
a ranking which is available online (http://www.thes.co.uk/
Additionally sub-organisations are involved, before the money
worldrankings/). The Times Higher World University Ranking
reaches the universities. The main organisations involved are:
uses metrics based on the perspectives of insiders and outsiders
on universities, for example peer review, recruiter review,
• UK Funding Councils (HEFCE in England)
internationalisation and different additional ratios.
• UK Research Councils (MRC, BBSRC etc)
Currently, the most important national research ranking for
universities is the ‘Research Assessment Exercise 2001’ (RAE • Regional Development Agencies (England)
2001) conducted by the different funding bodies within the UK
(http://www.rae.ac.uk/). Submissions to the RAE Ranking are • Industry and other commercial organisations (including contract
assessed by a panel. We calculated the ratio of departments and collaborative research, licensing and consultancy)
that achieved a 5 or 5* ranking to the number of departments
submitting to the RAE. The ratio is a number between 0 and 1, • Non-commercial organisations, for example charities like
where one equals the maximum possible score (high research the Wellcome Trust and Cancer Research UK
quality). • EU Research Programs
The number of published rankings reflects the great variety • Other Governmental Departments

5 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

ARWU 2006 Times 2006

University RAE-Ratio 2001
Ranking Ranking
University of Cambridge 0.94 2 2
University of Oxford 0.91 10 3
Imperial College 0.91 23 9
University College London 0.83 26 25
University of Manchester 0.80 50 40
University of Bristol 0.78 62 64
University of Edinburgh 0.57 52 33
University of Nottingham 0.62 79 85
University of Cardiff 0.86 151-200 141
University of York 0.78 201-300 124
University of Southampton 0.71 151-200 141
University of Newcastle 0.56 151-200 133
University of Liverpool 0.47 102-150 139
University of Lancaster 0.54 201-300 0
Queen's University Belfast 0.40 201-300 0
University of Dundee 0.36 201-300 0
University of Surrey 0.53 401-500 0
University of Cranfield 0.00 0 140
Heriot-Watt University 0.24 0 0
University of Hertfordshire 0.05 0 0

Table 4 – Universities and their performance in different rankings

(Sources: RAE 2001, Times Higher World University Ranking 2006 and the Shanghai Jiao Tong University AWRU 2006)

Industrial Income
University of Cambridge
University of Manchester Research Income (ex-Ind)
University of Oxford
University College London Licensing income
Imperial College
University of Edinburgh Other income (including tuition)
University of Nottingham
University of Cardiff
University of Southampton
Institution

University of Newcastle
University of Bristol
University of Liverpool
Queen's University Belfast
University of Surrey
University of Dundee
University of York
University of Hertfordshire
University of Cranfield
University of Lancaster
Heriot-Watt University
00
0

00

00

00

00

00

00

0,0
0,0

0,0

0,0

0,0

0,0

0,0

70
10

20

30

40

50

60

Amount (£000s)

Figure 1 – Overview of universities income (Sources: University Annual Reports, HESA and HEBCIS)

6
 Analysis

Research Income
Research Licensing Other Income
University Total Income Industrial Income (Ex-
Total Income (including tuition)
Income industrial
income)
University of Cambridge 694,624 270,739 20,332 250,407 2,184 421,701
University of Manchester 539,982 191,491 7,851 183,640 260 348,231
University of Oxford 530,171 263,218 8,476 254,742 1,661 265,292
University College London 516,274 248,880 7,050 241,830 1,783 265,611
Imperial College 458,522 248,342 20,428 227,914 2,176 208,004
University of Edinburgh 401,015 153,766 4,909 148,857 1,022 246,227
University of Nottingham 320,286 92,673 10,916 81,757 1,087 226,526
University of Cardiff 314,735 100,730 6,103 94,627 411 213,594
University of Southampton 287,435 113,830 6,844 106,986 417 173,188
University of Newcastle 276,099 83,072 3,427 79,645 302 192,725
University of Bristol 262,077 99,313 6,266 93,047 269 162,495
University of Liverpool 244,742 84,442 4,219 80,223 133 160,167
Queen's University Belfast 209,634 69,845 2,357 67,488 100 139,689
University of Surrey 167,961 43,099 2,182 40,917 81 124,781
University of Dundee 154,936 56,659 3,903 52,756 1,050 97,227
University of York 150,992 53,962 1,581 52,381 56 96,974
University of Hertfordshire 138,573 5,995 311 5,684 29 132,549
University of Lancaster 125,194 34,431 731 33,700 15 90,748
University of Cranfield 135,473 44,757 15,000 29,757 191 90,716
Heriot-Watt University 94,636 24,689 3,951 20,738 2,461 67,486
Total 20 Universities: 6,023,361 2,283,933 136,837 2,147,096 15,688 3,723,931
Percentage of Total Income: 37.92% 2.27% 35.65% 0.26% 61.82%
Total all UK Universities: 17,993,162 4,242,291 243,405 3,998,886 30,951 13,719,920
Percentage of Total Income: 23.58% 1.35% 22.22% 0.17% 76.25%

Table 5 – Income of universities in £000s (Sources: University Annual Reports, HESA and HEBCIS)

The income a university receives can be split into different types Figure 1 presents a graphical overview of the universities income
of income: by source.

• Total income – The sum of all income a university received

in a certain year.
• Research income – All income earned to be used in research
activity. This includes income from research councils,
industrial income and other research income.
• Industrial income – The part of the research income
universities received from UK industry, commercial and
public corporations.
• Research income (ex-UK industry) – Research income
excluding industrial income form UK industry, commercial
and public corporations.
• Licensing income – Income from licensing agreements
signed with external organisations.
• Other income – All other income, primarily income related
to tuition.
According to the HESA data all UK universities had an aggregate
turnover of over £17.9bn in 2004/2005 (Table 5).
UK Industrial Income
In general, industrial income reflects a university’s ability to
attract commercial organisations for collaborative research and
consulting projects. An analysis of the domestic industrial income
should provide an insight into the importance and structure of
this source of income.
Figure 2 ranks the universities by the ratio of industrial income
versus total research income they receive.
The University of Cranfield generates 33.5% of its overall
research income from industrial sources. For the second ranked
University Heriot-Watt this figure drops down to 16% and the
third ranked University of Nottingham is the last university with a
two digit-percentage figure (11.8%). The average for all twenty
universities is 5.99%.
It is challenging to identify the factors influencing the size
of the industrial income the university received. Some of the

7 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

Industrial Income Other Research Income

100
% of Total Research Income

80

60

40

20

rk

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st
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tle
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University

Figure 2 – Percentage of industrial income of total research income (Source: University Annual Reports & HEBCIS)

interviewees suggested that academics view research income
generated through collaboration with industry or contract
research as a ‘lower’ or ‘inferior’ form of research. This could
mean that universities with an excellent research reputation
or higher research income are less interested in generating
industrial income.
We were therefore interested in finding out whether the
proportion of research income derived from industry varied
according to the quality of the research establishment.
Do better research universities aspire to attract a greater
percentage of their research income from industrial sources or
do they seek to avoid industrial funding because they can easily
attract public money?
of all UK universities. The average percentage of industrial income
for all UK universities is 7.3%, and is 1% below the average of
our study sample. Our study sample with 20 universities includes
most of the large research-based universities. This could indicate
that the leading research universities, which already receive a
high research income, also attract more industrial income due
to their excellent reputation, even if they do not see industrial
income as a welcome source of income.
In a final analysis we classified every UK university that
participated in the RAE 2001 into one of ten groups based on
the ranking they achieved in that exercise. The percentage of
research income derived from industrial sources was obtained
from the HESA data for each university and averaged for each
group.

For a more comprehensive view we analysed the research income The universities with a RAE-Ratio between 0.0 and 0.3 seem

Figure 3 – RAE-Ratio versus percentage of industrial income for all UK universities (Source: HESA and RAE 2001)

8
 Analysis

to have a relatively higher percentage of industrial income. In
contrast, universities with an RAE-Ratio above 0.4 seem to have
an industrial income slightly below the average.
A statistical analysis shows that there is no significant difference
between the amount of industrial income attracted by a
university (as a percentage of its research income) and its RAE
ranking. This suggests that the more prestigious UK research
universities do not (or do not seek to) derive a greater proportion
of their research incomes from industry compared to their less
prestigious counterparts (Figure 4).
Every future analysis has to take into account that the potential
industrial research income universities could generate has
two main origins: The bioscience & pharmaceuticals industry
and aerospace & defence industry. UK universities depend on
generating the majority of their industrial income from the
decisions of a few very large companies, e.g. GlaxoSmithkline,
AstraZeneca and Pfizer, which account for more than 70% of
total R&D expenditure in the UK. In comparison, the United
States has a more diversified industrial research base.
Figures 4 and 5 correlate to the sources from which UK
universities received their industrial income. Nearly 40% of total
UK university industry income is targeted at the medicine and
life science sector.
Academic Research Input of UK
Universities
Publications
The major output of academic research are publications.
Normally the term ‘publications’ covers a wide area of different
types of output. For this study we have used publications and
world patents as a proxy for research output.
The total number of citations accrued was collected for the period
2001-2006. Recent years have lower citation numbers because
papers typically receive an increasing number of citations over
time. The search terms used to collect these data were identical
to those used to collect the number of publications.
Collaborations
We collected the data on collaborations from the HEBCIS ‘data
by institution’ spreadsheet available on the HEFCE website.
The HEBCIS data offer a detailed overview on the different
income from large companies, SMEs and non-commercial
organisations (Table 9).
In total the 20 universities generated a total value of £2m from 7,675
collaborations.
The 20 universities generated over 60% of the value
through collaborations with large corporations, followed
by 32% from non-commercial organisations. The value of
collaborations with SMEs only counts for about 8% of the total
value generated by these universities.
In terms of number of projects, the picture is similar. Large
companies count for the majority of projects (65%), followed by
non-commercial (32%) organisations and SMEs (13%).
But this also means that the average value of a project with a SME
is, in comparison to the value of projects with large companies
and non-commercial organisations, higher than many would
expect. The ratio between the average values of one SME project
40
35

The number of publications can be regarded as a proxy for

30
the quantity of research produced by the university. To add an
% UK Industry Income

impact dimension, publications can be assessed by the number

of citations they receive (Tables 7 and 8). 25

20

100 Aerospace
15
90
Automotive
80
10
70 Chemicals

60 Electronics 5
% Total

50
Pharma
40 0
IT Hardware
30
s
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IT
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IT Software
tu

20
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Other
Ma

m
&

te

Ot
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ge
al

Ma

0
ts

dic

na
Ar
Me

Ma
UK

US

Figure 4 – Industrial R&D expenditues in the UK and the US Figure 5 – Distribution of industrial income for UK universities
(Source: DTI and FedStats) (Source: HESA)

9 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

Number of Publications
University 2001 2002 2003 2004 2005 2006 Total
Queen's University Belfast 2,604 2,595 2,803 2,892 2,989 2,730 16,613
University of Bristol 2,544 2,737 2,723 2,804 2,932 2,832 16,572
University of Cambridge 5,315 5,425 5,688 6,006 5,851 5,706 33,991
University of Cardiff 705 693 640 672 1,508 1,867 6,085
University of Cranfield 339 329 372 441 457 454 2,392
University of Dundee 1,074 1,036 1,054 1,116 1,066 996 6,342
University of Edinburgh 2,603 2,664 2,736 3,042 3,147 2,918 17,110
University of Heriot-Watt 452 436 437 364 463 437 2,589
University of Hertfordshire 229 215 264 175 260 305 1,448
Imperial College 3,874 4,247 4,430 4,981 4,999 4,753 27,284
University of Lancaster 724 712 682 820 793 919 4,650
University of Liverpool 2,116 2,072 2,250 2,342 2,313 2,317 13,410
University of Manchester 3,370 3,531 3,624 3,828 4,302 4,356 23,011
University of Newcastle 2,209 2,393 2,510 2,563 2,711 2,593 14,979
University of Nottingham 2,202 2,177 2,266 2,277 2,467 2,431 13,820
University of Oxford 5,313 5,498 5,286 5,797 5,790 5,751 33,435
University of Southampton 2,145 2,271 2,327 2,395 2,488 2,357 13,983
University of Surrey 911 895 883 985 970 897 5,541
University College London 3,805 3,934 4,017 4,371 4,853 4,755 25,735
University of York 1,876 1,847 1,838 2,061 2,278 2,247 12,147
Year's total: 46,411 47,709 48,833 51,936 54,642* 53,627* 291,137
Year's increase — 2.80 2.36 6.35 5.21 N.A. —

Table 7 – Number of publications from 2001- 2006 (* Figures for these years are still increasing)

Number of Citations
University 2001 2002 2003 2004 2005 2006 Total
Queen's University Belfast 23,526 22,036 17,951 12,099 6,915 1,213 83,740
University of Bristol 29,718 26,732 19,915 14,235 7,725 1,277 99,602
University of Cambridge 86,279 73,525 56,842 41,238 21,506 4,417 283,807
University of Cardiff 7,365 7,016 4,029 3,155 3,302 950 25,817
University of Cranfield 1,839 2,051 1,418 1,136 653 121 7,218
University of Dundee 15,335 13,738 10,715 7,599 4,260 689 52,336
University of Edinburgh 35,319 34,653 25,355 17,567 9,977 1,702 124,573
University of Heriot-Watt 2,303 2,169 1,973 1,144 425 119 8,133
University of Hertfordshire 1,704 1,947 2,197 739 803 292 7,682
Imperial College 57,761 54,699 46,527 31,384 15,659 2,903 208,933
University of Lancaster 6,407 4,566 3,789 3,219 1,553 489 20,023
University of Liverpool 21,571 18,688 14,131 10,907 5,716 1,158 72,171
University of Manchester 35,937 30,089 25,710 18,857 9,968 2,298 122,859
University of Newcastle 21,012 20,598 15,458 11,530 6,083 1,204 75,885
University of Nottingham 20,879 17,881 13,624 9,682 5,624 863 68,553
University of Oxford 84,036 72,948 49,998 38,266 20,910 4,323 270,481
University of Southampton 23,143 20,688 16,449 10,345 5,173 965 76,763
University of Surrey 6,007 5,362 4,015 3,086 1,442 285 20,197
University College London 56,940 46,623 36,031 27,002 14,302 2,632 183,530
University of York 16,897 15,500 10,733 8,852 5,323 1,301 58,606
Year's total: 555,979 493,511 378,863 274,046 149,324* 31,207* 1,870,909

Table 8 – Citations the 20 universities received from 2001-2006 (* Figures for these years are still increasing)

10
 Analysis

Collaborative Research Contracts

Value Value with Non-
# with Value with Large # with Non-
Total Value # with with Commercial
University Large Companies Commercial
(£000s) SMEs SMEs Organisations
Companies (£000s) Organisations
(£000s) (£000s)
Imperial College 47,300 1 11 931 31,929 496 15,360
University College London 28,109 65 822 438 10,797 427 16,490
University of Oxford 22,356 180 1,700 330 19,000 372 1,656
University of Cambridge 19,099 82 2,710 466 16,389 – –
University of Southampton 18,573 174 2,446 292 5,394 313 10,733
University of Bristol 16,326 37 2,689 196 4,697 324 8,940
University of Newcastle 14,814 26 1,039 69 4,125 – 9,650
University of Dundee 13,764 36 413 189 7,048 274 6,303
University of Cranfield 13,412 62 1,056 132 12,356 – –
University of Nottingham 11,280 45 1,192 334 8,844 47 1,244
University of Surrey 9,859 1 10 93 4,300 26 5,549
University of Manchester 8,478 38 983 150 3,749 68 3,746
University of Edinburgh 6,028 40 710 8 5,318 – –
University of Liverpool 5,475 88 1,086 242 4,389 – –
Queen's University Belfast 4,904 69 1,594 59 2,097 26 1,213
University of Cardiff 4,749 19 326 196 4,423 – –
University of Heriot-Watt 3,776 – – – 3,776 – –
University of York 2,348 6 95 60 2,253 – –
University of Lancaster 1,626 15 152 100 1,047 29 427
University of Hertfordshire 116 3 97 1 19 – –
Total 252,392 987 19,131 4,286 151,950 2,402 81,311

Table 9 – Number and value of collaborations SMEs, large companies and non-commercial organisations (Source: HEBCIS)

Average Value of Contract

Average Value of Contract Average Value of Contract
University (£000s) with Non-
(£000s) with SME (£000s) with Large Companies
Commercisal Organisations
Queen's University Belfast 23.10 35.54 46.65
University of Bristol 72.68 23.96 27.59
University of Cambridge 33.05 35.17 N/A
University of Cardiff 17.16 22.57 N/A
University of Cranfield 17.03 93.61 N/A
University of Dundee 11.47 37.29 23.00
University of Edinburgh 17.75 664.75 N/A
University of Heriot-Watt N/A N/A N/A
University of Hertfordshire 32.33 19.00 N/A
Imperial College 11.00 34.30 30.97
University of Lancaster 10.13 10.47 14.72
University of Liverpool 12.34 18.14 N/A
University of Manchester 25.87 24.99 55.09
University of Newcastle 39.96 59.78 N/A
University of Nottingham 26.49 26.48 26.47
University of Oxford 9.44 57.58 4.45
University of Southampton 14.06 18.47 34.29
University of Surrey 10.00 46.24 213.42
University College London 12.65 24.65 38.62
University of York 15.83 37.55 N/A

Table 10 – Average value of the contracts with SMEs, large companies and non-commercial organisations (Source: HEBCIS)

11 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

Total Value Average Value of

Number (#)
(£000s) Contract (£000s)
SMEs 987 19,131 19.38
Large Companies 4,286 151,950 35.45
Non-Commercial Organisations 2,402 81,311 33.85
Total 7,675 252,392 32.88

Table 11 – Total number, total value and average value of collaborations (Source: HEBCIS)

(£19.38k) to the average value of one project with a large
company (£35.45k) is 1.83 (Table 11).
Patents
Patent publications are considered as an alternative
output of research activity with a commercial focus.
Therefore, patents are simply another form of publication and
are included in the output analysis of the research activities.
We have used world patents in this analysis because this
designation indicates that the university places a high value on
the material being published.
Patents were collected from the European Patent Database
(eponline). Searches were for the university as an applicant, the
year of publication and a world patent designation. Data was
collected for the years 2001-2006 inclusive (Table 12).
Variations between data obtained from the EPO and UKPO
Esp@cenet service have been observed. On closer
examination these differences appear to be the result of
typographical errors. The search terms used were carefully
chosen to ensure that all relevant patents were collected.
The data collection was focused on world patents. We have
to assume that some universities may prefer to file non-world
patents primarily on a national level. Therefore these patents
would not be included in our analysis. Patent publication policy
varies widely between universities and may not be reflective of
research output or even of commercially applicable research
output. From this perspective there is no additional value in
analysing the efficiency of patent publications.
Table 13 summaries the output of academic research for the 20
universities.

Number of World Patents

Universitiy 2001 2002 2003 2004 2005 2006 Total
Queen's University Belfast 3 13 8 8 13 10 55
University of Bristol 26 27 15 16 6 4 94
University of Cambridge 20 36 33 47 45 38 219
University of Cardiff 13 4 12 11 9 14 63
University of Cranfield 5 5 7 6 7 9 39
University of Dundee 5 12 13 9 8 6 53
University of Edinburgh 7 10 12 8 10 16 63
University of Heriot-Watt 0 4 1 5 9 6 25
University of Hertfordshire 1 2 2 0 1 0 6
Imperial College 32 42 35 41 35 27 212
University of Lancaster 0 0 1 5 2 1 9
University of Liverpool 6 3 10 12 6 5 42
University of Manchester 22 10 15 12 15 9 83
University of Newcastle 2 1 4 1 9 6 23
University of Nottingham 20 7 19 12 13 7 78
University of Oxford 53 61 64 52 39 32 301
University of Southampton 11 12 18 15 21 8 85
University of Surrey 7 6 8 13 6 6 46
University College London 28 32 27 17 10 6 120
University of York 5 4 9 8 17 8 51
Year's total: 266 291 313 298 281 218 —
Year's increase — 9.40 7.56 -4.79 -5.70 -22.42* —

Table 12 – Overview of world patents filed by the 20 universities (* Figure for 2006 is still increasing. Source: European Patent Database)

12
 Analysis

University Publications Citations Cits/Pubs Patents

University of Bristol 16,572 99,602 6.01 94
University of Cambridge 33,991 283,807 8.35 219
University of Cardiff 6,085 25,817 4.24 63
University of Cranfield 2,392 7,218 3.02 39
University of Dundee 6,342 52,336 8.25 53
University of Edinburgh 17,110 124,573 7.28 63
University of Heriot-Watt 2,589 8,133 3.14 25
University of Hertfordshire 1,448 7,682 5.31 6
Imperial College 27,284 208,933 7.66 212
University of Lancaster 4,650 20,023 4.31 9
University of Liverpool 13,410 72,171 5.38 42
University of Manchester 23,011 122,859 5.34 83
University of Newcastle 14,979 75,885 5.07 23
University of Nottingham 13,820 68,553 4.96 78
University of Oxford 33,435 270,481 8.09 301
Queen's University Belfast 16,613 83,740 5.04 55
University of Southampton 13,983 76,763 5.49 85
University of Surrey 5,541 20,197 3.65 46
University College London 25,735 183,530 7.13 120
University of York 12,147 58,606 4.82 51
Total: 291,137 1,870,909 — 1,667
Average: 14,557 93,545 6.43 83.35

Table 13 – Summary of research performance

Technology Transfer Licensing

A Technology Transfer Office (TTO) is a university team, office
or department, or private or public company, that undertakes
all activities associated with the identification, documentation,
evaluation, protection, marketing and licensing of technology
and intellectual property.
Most technology transfer initiatives started in the late 1990s or
at the beginning of this century.
The license income received by each of the UK comparator
universities was analysed for the academic year 2003/2004.
A measure to analyse the efficiency of converting knowledge
into licensing income can be obtained by dividing the licensing
income by the number of publications for each university and
expressing the ratio as a percentage of the top performing
university (Figure 5).

Over the last few years, universities have developed different Heriot Watt University was excluded from this analysis due to its
approaches to transforming academic research into applied high ‘license income’ from selling educational materials.
technology.

The strategy of TTOs is embedded in the overall research Spin-Outs

strategy of the universities.
Spin-out companies (including the amount of external investment
attracted) from each university were identified from Library
University technology transfer is, in general, organised in one of
House VenturePedia database and Technology Transfer Office
the following ways (Table 14):
(TTO) websites.

In addition, the incorporation date of each company was

Organisational Form Number obtained either from VenturePedia, Companies House or other
Team within a University Department 8 sources.
Wholly Owned Limited Company 5
Data was incomplete in the sense that not all venture capital or
Department within the University 3 other deals are disclosed and those that are disclosed often do
Public Limited Company 1 not disclose the amount of the investment. To control for this in
our analysis, the percentage of deals with undisclosed amounts
Table 14 – Organisational form of the Technology Transfer Offices was calculated for each UK university.
(Source: Library House, March 2007) (n=17)

13 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

Licensing Avg. number of Avg. Income per

Total University Licensing
University Income of Total World Patents World Patent
Income (£000s) Income (£000s)
Income (%) (2001-2006) (£000s)
Queen's University Belfast 209,634 100 0.05% 9 10.91
University of Bristol 262,077 269 0.10% 16 17.17
University of Cambridge 694,624 2,184 0.31% 37 59.84
University of Cardiff 314,735 411 0.13% 11 39.14
University of Cranfield 135,735 191 0.14% 7 29.38
University of Dundee 154,936 1,050 0.68% 9 118.87
University of Edinburgh 401,015 1,022 0.25% 11 97.33
University of Heriot-Watt 94,636 2,461 2.60% 4 590.64
University of Hertfordshire 138,573 29 0.02% 1 29.00
Imperial College 458,522 2,176 0.47% 35 61.58
University of Lancaster 125,194 15 0.01% 2 10.00
University of Liverpool 244,742 133 0.05% 7 19.00
University of Manchester 539,982 260 0.05% 14 18.80
University of Newcastle 276,099 302 0.11% 4 78.78
University of Nottingham 320,286 1,087 0.34% 13 83.62
University of Oxford 530,171 1,661 0.31% 50 33.11
University of Southampton 287,435 417 0.15% 14 29.44
University of Surrey 167,961 81 0.05% 8 10.57
University College London 516,274 1,783 0.35% 20 89.15
University of York 150,992 56 0.04% 9 6.59
Total / Average: 6,023,36 15,688 0.26% 278 56.47

Table 15 – Overview of licensing income (Sources: European Patent Database and HEBCIS)

VenturePedia includes data on revenue and number of

employees. This data was aggregated with similar data available
100 from Companies House filings. In addition, companies about
which VenturePedia had limited information were contacted in
90 order to establish the employee number and revenue figures.

80 The number of spin-outs acquired or floated was collected

from VenturePedia and other sources (company websites).
Relative to Top Performer

70 Acquisition values and market capitalisations were collected,

where possible, from VenturePedia, company websites and the
60 London Stock Exchange.

50

40
Efficiency in Spinning Out Companies
The assumption behind this efficiency analysis is that research
30 income represents the major input into a university’s research
activities. The major output from research is publications.
20 Additionally technology transfer aims to facilitate the conversion
of the knowledge generated by research into economic impact
10 through the formation of spin-out companies.

0 The efficiency of this process can be measured by comparing

external investment attracted by spin-out companies (a proxy
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Only spin-outs formed after January 1st 2001 were included in

So

the analysis to reduce bias in favour of those universities with

older technology transfer operations.
Figure 6 – Ratio of licensing income to number of publications
(Source: HEBCIS)

14
 Analysis

Average Total
Total
Institutional value of
No. Venture- Institutional Total No. of No.
Funding per Public Market Cap companies
University Spin-Out backed Funding Institutional Companies
venture- Companies (05/03/01) at
Companies spin-outs Received Deals Acquired
backed acquisition
(£000s)
company (£000s)
Queen's University 6 5 7,547 1,509 9 0 – 0 –
Belfast
University of Bristol 17 10 20,635 2,064 22 0 – 0 –
University of 30 20 110,290 5,515 61 0 – 1 30,000 (e)
Cambridge
University of Cardiff 6 6 1,672 279 11 0 – 0 –
University of Cranfield 2 1 546 546 1 0 – 0 –
University of Dundee 6 1 575 575 1 1 20,562 0 –
University of 26 15 14,040 936 21 0 – 0 –
Edinburgh
Heriot-Watt University 10 2 3,165 1,583 5 0 – 1 undisclosed
University of 1 0 0 N/A 0 0 – 0 –
Hertfordshire
Imperial College 29 19 39,250 2,066 32 1 132,436 1 8,000
University of 1 0 0 N/A 0 0 – 0 –
Lancaster
University of 3 1 350 350 1 0 – 0 –
Liverpool
University of 14 7 4,708 673 12 0 – 1 undisclosed
Manchester
University of 11 4 17,010 4,253 9 0 – 0 –
Newcastle
University of 9 4 2,340 585 5 0 – 0 –
Nottingham
University of Oxford 24 18 41,505 2,306 36 1 54,739 0 –
University of 11 9 22,290 2,477 16 2 61,256 1 undisclosed
Southampton
University of Surrey 9 4 695 174 6 0 – 0 –
University College 9 6 25,580 4,263 6 0 – 2 undisclosed
London
University of York 9 5 1,270 254 7 0 – 1 4,800
Total 233 137 313,468 2,288 261 5 268,993 8 —

Table 16 – Overview of spin-outs activity (Sources: Library House and London Stock Exchange)

In Figure 7, the total investment attracted by a university’s spinout
companies (formed between 2001 and 2006) is compared to the
research output of the university (number of publications over
the same period). The ratio is expressed as a percentage of the
top performing university for clarity.
each spin-out company. The sum of these numbers for each
university was divided by the number of publications generated
and the ratio expressed as a percentage of the best performing
university. The mean is the average of these values for each
university across investment and employment measures.

Figure 8 compares the total investment attracted by a university’s

spin-out companies (formed between 2001 and 2006) with the
total research income a university receives. The ratio is expressed
as a percentage of the top performing university for clarity.
The universities are ranked (from left to right) in terms of their
performance in the analysis in Figure 7. Hence universities
performing worse than their neighbours in this analysis may have
efficient technology transfer operations but are less efficient at
converting research income into publications.
In a third analysis (Figure 9), we analysed the efficiency of
transferring knowledge into venturing. The venturing output is
defined as the number of employees and amount of external
investment attracted. This information was collected for
A UK/US Comparison of University
Spin-Outs: Poor Quality in the UK?
(This chapter was originally published in the Library House
Report: ‘Spinning out quality: University spin-out companies in
the UK, 2007’).
Many stakeholders in the field of technology transfer have
suggested that UK spin-outs are of poor quality when compared
to their US counterparts. The key question is how one arrives
at the conclusion that the UK spin-out portfolio is ‘poor quality’.
Poor quality compared to what? There are few other countries
which have significant activity in this area and so can serve as
fair comparators. What is actually meant when critics say the

15 w w w. l i b r a r y h o u s e . n e t
 Relative to Top Performer
Relative to Top Performer
C

0
10
20
30
40
50
60
70
80
90
100
So amb
ut
ha ridg

0
10
20
30
40
50
60
70
80
90
100
Ca m e
m I pt
br He mp on
idg rio eria
So e t l
ut Cr Wat
ha an t
m fie
pt
on l
He Ne Oxfo d
rio wc rd
t-W as
at B tle
t Ed rist
inb ol
Ne
wc ur
as gh
tle U
Ma Dun CL
Im nc de
pe he e
ria Qu s
l ee Su ter
ns rr
Qu Be ey
ee lfa
ns

attracted (Source: Library House)

Ca st
rd
No iff
Su tti Yor
rre ng k
y La ha
He nc m
Ox rtf as
or ter
for
d d
Liv shir
er e
Br po

Figure 7 – Ratio between research output and spin-outs investment

ist ol
ol
Ed
inb

16
ur
gh
Ma
nc Relative to Top Performer
he
ste
r
Liv C
0
10
20
30
40
50
60
70
80
90
100

er So amb
po ut
ol ha ridg
m e
An Analysis of UK University Technology and Knowledge Transfer Activities

Cr
an I pt
fie He mp on
ld rio eria
t l
Cr Wa
an tt

Investment
UC fie
L Ox ld
for
Du Ne B r i s d
nd wc t o
He ee
rtf Ed ast l
or inb le
ds ur
hir gh
e U
D
Ma un CL

Figure 9 – Efficiency in transferring public knowledge into spin-outs (Source: Library House)
Yo nc de
he e
rk Qu s

Employment
ee S ter
ns urr
Ca Be ey
rd lfa
iff
No Ca st
tti rd
ng No if
ha Y f
m He ttin ork
Mean
La rtf gh
or am
nc
as La dshi
te nc re
r Liv aste
er r
po
ol
Figure 8 – Ratio between financial input into academic research and
spin-outs investement attracted (Source: HEBCIS and Library House)
 Analysis

100
World Rank: 3 2 23 10 175 26 17 62 52 176 50 16 225

300 90

80
250

Relative to Top Performer

70
Investment Attracted (£m)

200 60

50
150

40

100
30

20
50

10
0
0
e

st
gh
on
e

on
d

hin L

sin
r
d

ol

tle
ste
idg

eg

UC
for

for

lfa
ist

ur
pt

gt

st
gh
as

on
d
on

on

si n
hin r
l
d

inb l
t le
ria
oll

ste
idg
an

he
br

Ox

UC
for
Be
inb

for
m

Br

lfa
ist
wc

ur
pt

gt
isc

as
lC

on
m

pe
ha
St

nc

an

he
br

Ox
Ed

Be
m

Br
as

Ne
Ca

wc
W

isc
ria

Im
ut

Ma

ha
St

nc
W

Ed

as
So

Ne
Ca
pe

W
ut

Ma

W
Im

So
Figure 10 – External Investment per University (Source: Library House) Figure 11 – Venturing Efficiency (Source: Library House)

portfolio is poor quality is that it is worse than in the US. It is
our opinion that this value judgement derives from a perception
based knowledge of a few very successful spin-out companies
formed from US universities. It is of course true that Stanford
and Harvard have spun out truly world beating companies such
as Google and Sun Microsystems and have been associated with
other companies like Yahoo (a graduate start-up from Stanford).
However, in order to fairly compare the US and UK spin-out
portfolios a broader and more quantitative analysis is required.
To do this we selected three top US universities for study and
compared their spin-out portfolios with a cross section of UK
universities. In the US we chose:
• Stanford University – historically recognised to have
produced the world’s top spin-out companies and located
at the heart of Silicon Valley the world’s most active venture
capital market.
• University of Wisconsin at Madison – the world’s 16th best
research university according to the Shanghai Ranking
system and with a technology transfer operation dating
back to 1925.
• University of Washington, Seattle – the world’s 17th best
research university and located in a state which receives
over four times as much venture capital finance per head
as the UK and their UK counterparts since 2001. We then
determined the amount of external investment each of
these companies attracted as a proxy for quality.
Following this data collection we calculated the aggregate
external investment that the spin-out companies of each
university collectively attracted. In addition we calculated the
average amount of external investment each spinout company
received.
As shown in Figure 10, although Stanford University spin-outs
attracted the most funding, most of the UK universities studied
performed better by this measure than both Washington and
Wisconsin.
This suggests that, in terms of how spin-out companies are
viewed by investors, the UK spin-out portfolio is not of a generally
poor quality. Instead, UK universities are generating companies
of a quality substantially higher than would be expected from
their worldwide research ranking. Perhaps the most striking
example of this is Southampton University which comes third
in this analysis despite being ranked over 100 places lower
than both Washington and Wisconsin in the Shanghai Jiao Tong
Ranking system. At the high end, it is interesting to note that
Cambridge University spin-out companies managed to attract
over half the aggregate investment of Stanford spin-outs. Given
that Stanford is classically seen as the world’s most prolific source
of innovation-based companies and is located in a state which
receives over eight times as much venture capital per head as
the UK, this is a significant achievement. These data suggest
that UK universities are exceptionally efficient at commercialising
their research- at least by the venturing mechanism.
The efficiency of technology transfer- derived from the ratio of
external investment in spin-out companies to research output
(number of publications)- was determined for each of the three
US universities selected and a cross section of UK universities.
The results of this analysis (Figure 11) shows that UK universities
are in general more efficient than two of the three selected
US universities in venturing activity- in other words they are
more effective at converting their basic research into investable
ventures. Overall, our analysis refutes the suggestion that the
UK spin-out portfolio is poor quality- even in comparison to
the US. It also suggests that UK universities are generally very
efficient at converting research into spin-out companies.

17 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

Value with SMEs Value with SMEs

Value with Large Companies Value with Large Companies

35,000 35,000

30,000 30,000

Total Value of Collaborations

Total Value of Collaborations

25,000 25,000

20,000 20,000

15,000 15,000

10,000 10,000

5,000 5,000

0 0

3 4 5 6 7 8 9 0.0 0.2 0.4 0.6 0.8 1.0

Mean Citations per Publication RAE Ratio

Figure 12 – Correlation between publication quality and industrial Figure 13 – Correlation between industry collaboration and RAE ratio
collaboration income (Source: HESA) (Source: HESA)

Impact of Research Quality

To give a measure of the university’s quality, we determined the In both cases we see that the universities with a higher research
average number of citations per publication (Figures 12 and 14) quality (in terms of the proxies used) attract more income from
and the RAE-ratio for each institution (Figures 13 and 15). This large corporations (Figures 12 and 13) and that their spin-outs
proxy for research quality was plotted against the total value of receive more capital (Figures 14 and 15). In contrast, the other
collaborations (by type) and the aggregate external investment universities with lower research quality collaborate more with
in spin-out companies. SMEs.

160,000 160,000
Aggregate External Investment in Spin-Out Companies
Aggregate External Investment in Spin-Out Companies

140,000 140,000

120,000 120,000

100,000 100,000

80,000 80,000

60,000 60,000

40,000 40,000

20,000 20,000

0 0

3 4 5 6 7 8 9 0.0 0.2 0.4 0.6 0.8 1.0

Mean Citations per Publication RAE Ratio

Figure 14 – Correlation between publication quality and investment in Figure 15 – Correlation between investment and RAE ratio in spin-outs
spin-outs (Source: Library House) (Source: Library House)

18
 Clusters

% of VC- VC- %-Spin- % of VC-

% VC-
Total % R&D Venture- backed Backed Outs of backed
R&D backed
University FPC3 Number of Comp. of Backed Comp. of Spin- all VC- Comp. of
Comp. Comp. of
Companies all Comp. Comp. all R&D Outs in Backed all R&D
all Comp.
Comp. Cluster Comp. Comp.
Belfast BT 5,406 46 0.85% 43 0.80% 93.48% 12 27.91% 25.29%
Bristol BS 23,053 140 0.61% 40 0.17% 28.57% 10 25.00% 48.22%
Cambridge CB 9,239 293 3.17% 160 1.73% 54.61% 30 18.75% 39.32%
Cardiff CF 15,299 111 0.73% 36 0.24% 32.43% 8 22.22% 21.43%
Cranfield MK 13,072 88 0.67% 11 0.08% 12.50% 1 9.09% 65.69%
Dundee DD 3,692 31 0.84% 14 0.38% 45.16% 3 21.43% 26.58%
Edinburgh & HW EH 15,602 145 0.93% 82 0.53% 56.55% 19 23.17% 17.76%
Hertfordshire AL 9,375 27 0.29% 6 0.06% 22.22% 0 0.00% 43.45%
Imperial SW 34,863 197 0.57% 115 0.33% 58.38% 20 17.39% 13.27%
Lancaster LA 6,967 37 0.53% 1 0.01% 2.70% 0 0.00% 25.23%
Liverpool L 21,732 79 0.36% 24 0.11% 30.38% 3 12.50% 28.70%
Manchester M 24,745 117 0.47% 54 0.22% 46.15% 8 14.81% 23.70%
Newcastle NE 16,005 108 0.67% 36 0.22% 33.33% 5 13.89% 11.36%
Nottingham NG 20,628 107 0.52% 24 0.12% 22.43% 5 20.83% 16.67%
Oxford OX 15,518 270 1.74% 91 0.59% 33.70% 27 29.67% 44.37%
Southampton SO 16,907 113 0.67% 25 0.15% 22.12% 10 40.00% 22.22%
Surrey GU 71,347 174 0.24% 48 0.07% 27.59% 4 8.33% 67.39%
UCL WC 16,016 102 0.64% 73 0.46% 71.57% 6 8.22% 2.70%
York YO 10,925 66 0.60% 19 0.17% 28.79% 8 42.11% 35.48%
Total 350,391 2,251 0.64% 902 0.26% 40.07% 179 19.84% 32.12%

Table 17 – VC-backed and R&D companies around universities based on a postcode analysis (Sources: Library House and FAME)

Clusters role of knowledge and related spillovers (e.g. Keppler; 2000). A

Why are Clusters important?
Alfred Marshall (Marshall; 1920) stated that clusters are important
because they provide access to a local pool of specialised labour,
allow the sharing of investment into infrastructure, and make it
easier for companies and individuals to generate and share new
ideas.
According to Michael E. Porter (Porter; 1990) clusters offer
several advantages for the economic development of a region:
• Increased productivity within the cluster
• Increased innovation (new and better ways of production
and distribution of new or better products and services)
• The creation of more businesses
cluster’s spatial proximity (Bathelt et al.; 2002) enables easier
interactions among the stakeholders within the cluster. These
interactions result in more interactions, trust, easy observations
and learning. Therefore a cluster is a region with enough
resources and competences to reach a critical threshold and
develop a key position, which leads to a sustainable competitive
advantage for the whole cluster.
New cluster theories are switching focus from industrial-based
measures (supply chains, costs advantages, number of jobs)
to knowledge-based measures (Bathelt et al.; 2002) where
knowledge is seen as the main factor in creating economic
benefits. The theory of clusters is related to the concept of
‘Regional Innovation Systems’ (Cooke et al., 2004). As such, there
is a stronger focus on innovation and on the way the research
system and the regulations for immaterial property rights are
organised from the regional innovation systems perspective
rather than the cluster perspective (Saxenian; 1996).

Clusters are very important for industries that need access

to R&D, university research and skilled labour (Audretsch &
Feldman; 1996). They are strong and competitive regions of
innovation which create a rise in productivity. So in general a
cluster is a geographic concentration of companies with strong
linkages to financial, funding, governmental and academic
institutions and to each other, embedded in an infrastructure
(Bekar et al.; 2002).
Additionally many studies have been published analysing the
High-Tech Clusters
High-tech clusters are regions regarded as the spots where
innovations happen. Many high-tech industries are located in these
clusters and these companies generate a significant innovative
output. These high-tech clusters are regularly formed in regions
where knowledge can be transferred from one link on the cluster
competence chain to the next. In high-tech clusters a specific mix
of companies, services and organisations can be found:

19 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

180
Cambridge
160
Number of Venture-Backed Companies

140

120

100 Oxford
Edinburgh & Heriot Watt
80
Reading
Manchester
60 Guildford
Coventry Bristol Birmingham
Queens Belfast
40 Newcastle Cardiff Sheffield
Nottingham Liverpool Leeds
Southampton Leicester
20 York Cranfield
Dundee Bradford
Lancaster Stoke-on-Trent
Derby
0 Hertfordshire Dudley

100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000

Number of Residents per City

Figure 16 – Comparison between city size and number of venture-backed companies (Source: Library House)

300
Cambridge

Oxford

250
Number of R&D Companies

Reading
200

Guildford Coventry
Edinburgh & Heriot Watt Birmingham
150 Sheffield
Bristol
Leicester Manchester
Southampton
Newcastle Cardiff
100 Nottingham
Cranfield Liverpool
Leeds
York Derby
50 Lancaster Queens Belfast Bradford
Dundee Stoke-on-Trent
Dudley
Hertfordshire
0

100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000

Number of Residents per City

Figure 17 – Comparison between city size and number of R&D companies (Source: Library House)

20
 University Clusters

# of 'top
Total value of # of IPO
100 fastest
# of acq acq VB comps Undisclosed 'innovative'
Postcode growing
University VB comps at acquistion trade sale comps
Sector companies
(2001-2006) (where known) amounts (2001-
by revenue'
(£000s) 2006)
in PC sector
Belfast BT 3 49,280 1 0 1
Bristol BS 3 6,120 2 2 1
Cambridge CB 20 706,030 9 15 11
Cardiff CF 3 1,200 2 2 1
Cranfield MK 1 0 1 1 0
Dundee DD 2 32,277 1 2 1
Edinburgh & HW EH 5 3,150 4 4 2
Hertfordshire AL 0 – – 0 0
Imperial College SW 4 217,350 1 3 3
Lancaster LA 0 – – 0 2
Liverpool L 0 – – 0 0
Manchester M 2 2,650 1 4 2
Newcastle NE 0 – – 2 3
Nottingham NG 0 – – 0 1
Oxford OX 8 53,229 4 8 7
Southampton SO 0 – – 2 2
Surrey GU 3 11,856 2 12 3
York YO 1 0 1 2 0
UCL WC 2 0 2 9 1
Total 57 1,083,142 31 68 41

Table 18 – Cluster analysis of innovative companies (Source: Library House)

• Basic research infrastructure
• R&D-based companies and innovation-based companies
• Supply of risk capital
The cluster competence chain clearly demonstrates that
universities are a very important factor in the formation of clusters.
Additionally, companies benefit from the local infrastructure,
access to an excellent labour market with educated and well
trained specialists and therefore lower skilled staff search costs,
access to a pool of service providers and supporting activities,
and the creation of technology spillover which leads to economics
of agglomeration. For these effects to take place, clusters also
need research institutes, service providers, including consulting,
market research and testing services, and financing support,
including venture capitalists and business angels.
Analysis of High-Tech Clusters
The economic goal for regions should be a high and rising
standard of living. This depends upon creating a high-quality
business environment that fosters innovation and rising
productivity. Strong and competitive clusters are a critical
component of a good business environment and are the driving
force behind regional innovation and rising productivity. The
prosperity of a high-tech region depends on the productivity of
its industries. Productivity does not depend on the industries a
region competes in, but on how it competes.
In our first analysis of clusters we studied the relationship between
the sizes of UK cities (residents) and number of venture-backed
companies. This was done to investigate any possible influence
of city size on the analysis. The graph does not display London,
to improve the clarity of the graph (Figure 16).
There is no relationship between the size of UK cities and the
number of companies that received venture capital or the number
of R&D companies located nearby. For example, the smaller
cities of Cambridge, Oxford, Reading and Guildford include over
30% of all venture backed companies in this sub-sample.
We analysed the same picture for the size of the cities and the
number of R&D companies (Figure 17).
University Clusters
Universities are one of the driving forces behind innovation
in clusters. Universities can promote innovation and
entrepreneurship not only by spinning out companies but also by
creating an environment (micro-cluster) into which innovation-
based companies want to move. There is a question around
where this kind of micro-cluster has already been created and
where the potential exists to do so in the future.
We have analysed clusters around universities using both a
narrow and wider geographic focus. For the narrow analysis we
selected a specific postcode and for the wider analysis we used

21 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities University Clusters

300
Cambridge

Oxford

250
Number of R&D Companies

Reading
200

Guildford
Coventry Birmingham
150 Edinburgh & Heriot Watt
Bristol
Sheffield
Leicester Southampton Manchester
Cardiff
Nottingham
100 Newcastle
Cranfield
Liverpool
York Leeds
Derby
50 Stoke-on-Trent Queens Belfast
Lancaster
Hertfordshire Dundee
Dudley
Bradford
0

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

Number of Post-Graduate Researchers

Figure 18 – Comparison between number of post-graduate researchers and R&D companies (Sources: FAME and HESA)

whole postcodes areas, for example CB for Cambridge or NG for
Nottingham. Edinburgh and Heriot-Watt were regarded as one
microcluster.
As proxies for high-tech cluster formation, we analysed the
locations of the following types of organisations:
1. Innovation-based companies in terms of:
• R&D companies (R&D companies are defined by Library
House in this analysis based on the 2003 United Kingdom
Standard Industrial Classification Codes and own analysis)
results reflect the attractiveness of the location to companies
without a formal relationship with the university.
Most of the R&D companies were located in the regions of
Cambridge (293), Oxford (270), Imperial (197) and Surrey
(174). The highest density of R&D companies was found in the
regions of Cambridge (3.17%), Oxford (1.74%) and Edinburgh
and Heriot Watt (0.93%). In all other regions the percentage
was below 0.1%.
Additionally we analysed the more qualitative aspects of the
venture-backed companies located near the universities.

• Venture-backed companies According to this analysis the innovation-based companies

located in regions around top-ranked universities:
• Spin-out companies

• Fast growing companies • Number of R&D companies:

• Acquired venture-backed companies
• Initial public offerings of innovative companies
2. Supply of risk capital as the number of venture capital
investors located in the region.
We sought to assess the number of innovation-based companies
located near to the universities under study. We took R&D,
venture-backed and spin-out companies as a reasonable proxy
for innovation-based companies and determined the number of
these within the same postcode area as each university. We
removed from the results those companies that are direct spin-
out companies of each university. This was done so that the
University of Cambridge (293), University of Oxford (270),
Imperial College (197) and University of Surrey (174)
• Number of venture-backed companies:
University of Cambridge (160), Imperial College (115),
University of Oxford (91) and University of Edinburgh &
Heriot Watt (82)
• Number of IPOs from innovative companies between the
years 2001-2006 with the same postcode like:
Cambridge (15), Surrey (12), University College London (9)
and Oxford (8)
Figures 18, 19 and 20 indicate a strong relationship between

22
 300
Cambridge

Oxford
250
Number of R&D Companies

Reading
200 Imperial

Surrey

150 Birmingham
Bristol
Edinburgh & Heriot Watt Sheffield
Newcastle Manchester
Leicester
Cardiff
100 Southampton UCL
Nottingham
Liverpool
Plymouth Leeds York
50 Bradford Queens Belfast
Lancaster
Hertfordshire Dundee
Kingston upon Hull (Hull)
0

0.0 0.2 0.4 0.6 0.8 1.0

RAE Ratio

Figure 19 – Number of R&D companies in a cluster plotted against the RAE ratio of the cluster’s university
(Source: Library House and RAE)

180

160 Cambridge
Number of Venture-Backed Companies

140

120
Imperial

100
Oxford
80 Edinburgh & Heriot Watt
UCL

60 Reading
Manchester
Surrey
Queens Belfast
40 Birmingham Bristol
Liverpool Newcastle Cardiff
Sheffield
Leicester Leeds
20 Nottingham Southampton York
Dundee
Plymouth Kingston upon Hull (Hull) Lancaster
Bradford
0 Hertfordshire

0.0 0.2 0.4 0.6 0.8 1.0

RAE Ratio

Figure 20 – Number of venture-backed companies in a cluster plotted against the RAE ratio of the cluster’s university (Source: FAME)

23 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

the research base of a region and number of innovation-based

Postcode Area Region Number of Offices
companies located in this region.
W London 39
Therefore we compared an additional aspect of the research EC London 33
base (number of PhD-researchers) with the number of R&D SW London 24
companies located in a region. Also this analysis supports the
argument that a strong research base seems to be an essential WC London 16
precondition for a high-tech cluster (Figure 16). CB Cambridge 8
EH Edinburgh 6

Clusters and Research Quality LS Leeds 4

OX Oxford 4
We determined the RAE-ratio for each institution. This value
BT Belfast 3
was plotted against the number of venture-backed and R&D
companies in each institution’s postcode district (excluding G Glasgow 3
direct spin-out companies). Innovation-based companies appear
to co-locate with high quality research universities (Figures 17 Table 19 – Headquarters of venture capital investors in the UK
and 18). (Source: Library House)

from the London Stock Exchange Statistics service. The data

Investors
Investors prefer to be located near the companies they invested
in (Table 19). Therefore the headquarters of venture capital
investors should be seen as a proxy for regions where attractive
investment possibilities might occur.
IPOs
provided includes all IPOs since 2001. To reduce this list down
to the most innovative companies, Library House first evaluated
the companies based on their market sectors. Companies were
classified automatically as ‘innovative’ if they operated in the
semiconductor, pharmaceutical, or biotechnology sectors. After
this, the remaining companies were screened by Library House
individually to determine if they should be included in this set.
A total of 158 companies were classified as innovative with 68
falling within the postcode areas relevant to this project.

Table 20 shows the number of ‘innovative’ IPOs that took place Analysis on the number of innovative IPOs on the London Stock
between the years 2001-2006 on the London Stock Exchange Exchange (main market and AIM) shows that the majority of
in the covered postcode areas. Data on IPOs was obtained these IPOs happen in and around London and in the south east,

Total Market Cap

University PC Sector Total # IPOs # on Aim # on Main Market
(£m)
Belfast BT 0 – – –
Bristol BS 2 77.82 2 0
Cambridge CB 15 1,464.13 14 1
Cardiff CF 2 114.98 2 0
Cranfield MK 1 10.27 1 0
Dundee DD 2 34.33 2 0
Edinburgh / Heriot Watt EH 4 455.33 2 2
Hertfordshire AL 0 – – –
Imperial College SW 3 120.42 3 0
Lancaster LA 0 – – –
Liverpool L 0 – – –
Manchester M 4 380.58 3 1
Newcastle NE 2 35.02 2 0
Nottingham NG 0 – – –
Oxford OX 8 382.07 7 1
Southampton SO 2 75.81 2 0
Surrey GU 12 1,625.92 11 1
York YO 2 58.15 2 0
UCL WC 9 346.47 9 0
Totals 68 5,181.30 62 6

Table 20 – Number of IPOs in each postcode area and market capital of these companies
(Note: The total amounts of each column take into account the fact that Heriot Watt and Edinburgh are located in the same postcode area)

24
 University Clusters

although when looking at the total and average market cap of these industrial partners are from the pharmaceutical and
figures Scotland does particularly well (Figure 21). This is mainly engineering sectors. Although there was no correlation found
due to the relatively few companies that have completed an IPO between the research quality of a university and the extent of
in Scotland having a very large market cap between them. industrial interaction of that university, it was indicated that high
quality research universities have a higher tendency to interact
with large companies, whilst lower quality research universities
Attractiveness of High-Tech Clusters focus more on the SME market.
Beside the attractiveness a cluster already has for the companies Our analysis showed that the number of patents filed by
located within, there also might be several reasons why universities is declining and that several universities don’t
companies relocate into a cluster. Table 21 presents the most receive enough licensing income to cover the costs of patenting
attractive regions for spin-outs to move away from their origin activities. It also indicated that a more focused knowledge &
to another region. technology transfer strategy in universities may generate more
licensing income.
# Of Companies
Region Postcode Moved Into Area From
Other Universities High quality research universities spin out the majority of
high quality spin-out companies (as defined by their ability to
Cambridge CB 15
attract external funding). This means that technology transfer
Oxford OX 8 is predominantly carried out by the high quality research
Surrey GU 4 universities and to a far lesser extent by all other universities.
Reading RG 4
In our study on clusters we found that high-tech / innovation
Table 21 – Regions spin-out companies relocated to clusters especially form around large research universities that
(Source: Library House) conduct high quality research. This is regardless of the total size
of the city surrounding this university (e.g. Cambridge Cluster).
All our analyses show that R&D and venture-backed companies
Conclusions locate around high quality research to a far greater extent than
Universities drive innovation through various knowledge & around lower quality research universities.
technology transfer channels. In this report we analysed
these knowledge and technology transfer processes for 20 UK In general, UK Universities deliver remarkable returns in terms
universities. of output and impact. From Library House 2007 Spin-Out report
and our report of the impact of the University of Cambridge
In the academic year 2004/2005 the 20 analysed universities we know that many UK universities perform competitive on an
had an aggregate research income of £2.3bn, of which only international level.
a small fraction came from industrial partners. The majority

Figure 21 – Map showing the total market cap of IPO-companies per region (Source: London Stock Exchange)

25 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

References Library House (2007): Spinning Out Quality: University Spin-Out

Argote, L. & Ingram, P. (2000): Knowledge Transfer: A Basis for
Competitive Advantage in Firms. Organizational Behavior and
Human Decision Processes, Vol. 82, No. 1, May, p. 150-169.
Argote, L., Beckman, S. L., & Epple, D. (1990): The Persistence
and Transfer of Learning in Industrial Settings. Management
Science, Vol. 36, No.2, February, p. 140–154.
Audretsch, D. & Feldman, M. (1996): R&D Spillovers and the
Geography of Innovation and Production. The American
Economic Review, Vol. 86, No. 3, p. 630-640.
Companies in the UK, Report, Cambridge.
Mahajan, V., & Peterson, R. A. (1979): Sage University Series
on Quantitative Applications in the Social Sciences: Models for
Innovation Diffusion. Beverly Hills, CA: Sage.
Marshall, A. (1920): Principles of Economics, London:
Macmillan and Co. Ltd., 8th edition, online available:
http://www.econlib.org/library/Marshall/marP.html
Nonaka, I. and Takeuchi, H. (1995): The Knowledge Creating
Company, New York: Oxford University Press.

Bathelt, H. & Malmberg, A. &r Maskell, P. (2002): Clusters and
Knowledge: Local Buzz, Global Pipelines and the Process of
Knowledge Creation. DRUID Working Papers, No. 02-12,
Aalborg University.
Bekar, Clifford & Lipsey, Richard G. (2002): Clusters and
Economic Policy. ISUMA (Canadian Journal of Policy
Research), Vol. 3, No. 1, Spring, available under:
http://www.isuma.net/v03n01/bekar/bekar_e.pdf
Porter, M. (1990): The Competitive Advantage of Nations. New
York: Free Press.
Research Assessment Exercise 2001, results online available:
http://www.hero.ac.uk/rae/
Rothwell, R. (1978): Small and Medium Sized Manufacturing
Firms and Technological Innovation. Management Decision,
Vol. 16, No. 1, p. 362-370.

Brown, L. A. (1981): Innovation diffusion: A New Perspective.
New York: Methuen.
Cooke, P., Heidenreich, M. & Braczyk, H.-J. (eds, 2004). Regional
Innovation Systems. The Role of Governances in a Globalized
World. Second edition. London: Routledge.
Czepiel, J. A., (1974): Word-of-Mouth Processes in the Diffusion
of a Major Technological Innovation. Journal of Marketing
Research, Vol. 11, No. 2, May, p. 172-80.
DTI (2001): Business Clusters in the UK – A First Assessment,
February 2001, available under: http://www.dti.gov.uk/
regional/clusters/clusters-assessment/page17380.html
Saxenian, A. (1996): Regional advantage: Culture and
Competition in Silicon Valley and Route 128: Harvard University
Press.
Szulanski, G. (1996): Exploring Internal Stickiness: Impediments
to the Transfer of Best Practice within the Firm. Strategic
Management Journal, Vol. 17, Special Issue, Winter, p. 27-43.
Szulanski, G. (2000): The Process of Knowledge Transfer: A
Diachronic Analysis of Stickiness. Organizational Behavior and
Human Decision Processes, Vol. 82, No. 1, p. 9-27.

DVCA and Library House (2005): Creating Success from

University Spin-Outs, Report, Cambridge.

Galbraith, C. S. (1990): Transferring Core Manufacturing

Technologies in High-Technology Firms. California Management
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Ghoshal, S. & Bartlett, C. A. (1988): Creation, Adoption and

Diffusion of Innovations by Subsidiaries of Multinational
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HM Treasury, DTI & Department for Education and Skills

(2004): Science and Innovation: Working Towards a Ten-
Year Investment Framework, March 2004, available online:
http://www.hm-treasury.gov.uk/media/F1761/science_406.pdf

Klepper, S. (2000): Firm Capabilities and Industry Evolution:

The Case of the U.S. Automobile Industry. Working
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http://www.druid.dk/uploads/tx_picturedb/ds2001-211.pdf

Lambert, R. (2003): Lambert Review of Business-University

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legislation/lambert/consult_lambert_index.cfm

26
 Appendix

Appendix – Analysis of Potential High- 100

Information Technology
Tech Regions Healthcare & Life Science
Some regions in the UK are well-known for a climate that
Industrial
stimulates innovative and entrepreneurial behaviour. These
regions are mostly found around universities or research 80 Communications
organisations with world-class research capabilities. These
centres of excellence attract innovation-based companies that Services & Retail
benefit from proximity and spillover effects. Famous examples
Chemicals & Materials
of high-tech regions are the clusters around Cambridge, Oxford

Percentage of Companies
and London. These have been studied and covered in detail Energy
by many previous reports, for example, Library House's 2006 60
Cambridge Cluster Report 'The Supercluster Question'. Other

But beside these well-known clusters many other regions are

now actively trying to create high-tech regions around their
universities. In discussions with stakeholders all cross the UK, 40
including University Vice-Chancellors, Heads of Technology
Transfer Offices and the Management of Regional Development
Agencies, we found that they were trying to emulate the
conditions that allowed micro-clusters to form. But in general
all stakeholders are mostly aware that they won't be able to
replicate the degree of success seen in the comprehensive 20
clusters of Cambridge, London or Oxford.

Instead we found different reasons and strategies by which

other UK universities are involved in creating micro-clusters that
attract innovation-based companies. 0

Besides the leading clusters, several other regions have created Figure 1 – Percentage breakdown of Cambridge Cluster
a beneficial climate for innovation-based companies. In this companies by sector 2006 (Source: Library House)
document we present three regions - among many other regions
• Spin-out companies
within the UK - which seem to be attractive for innovation-based
companies.
The average percentage of venture-backed companies to total
companies in the whole of the UK is about 0.12% (Table 1). All
We chose to look at Newcastle, Dundee and Belfast, and included
four UK regions are above the UK average, suggesting at least
Cambridge for comparison purposes. These four regions were
an accumulation of innovative companies is occurring in these
selected as they all contain a university that was included in our
areas. Although it must be noted that Cambridge has a much
main report.
higher percentage of venture-backed companies than all of the
other areas.
To determine the potential for high-tech cluster formation, we
used some of the proxies developed earlier in the main report.
The UK distribution of investors, and therefore the UK average,
For the analysis of innovative regions we included the following
is heavily skewed towards London and Cambridge but it can
types of organisations:
be seen that Newcastle and Belfast both have a good level
of investors present in the region. The University of Dundee
• R&D-based companies
benefits from the proximity of investors located in the regions
around Edinburgh and Glasgow.
• Venture-backed companies

% of VC- VC-
% VC- %-Spin-
Total Venture- backed Backed
R&D % R&D Comp. backed Outs of all
University FPC3 Number Backed Comp. of Spin-
Comp. of all Comp. Comp. of VC-Backed
of Comp. Comp. all R&D Outs in
all Comp. Comp.
Comp. Cluster
Belfast BT 5,406 46 0.85% 43 0.80% 93.48% 12 27.91%
Cambridge CB 9,239 293 3.17% 160 1.73% 54.61% 30 18.75%
Dundee DD 3,692 31 0.84% 14 0.38% 45.16% 3 21.43%

Newcastle NE 16,005 108 0.67% 36 0.22% 33.33% 5 13.89%

20 Universities'
350,391 2,251 0.64% 902 0.26% 40.07% 179 19.84%
Total / Average

Table 1 – Collated cluster data

27 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

100

90

80

70
Relative to Top Performer

60

50

40

30

20

10

0
e
e

gh

ol
ee

st
iff

on
L
m

r
l

rk

r
ol
tle
ld

ria

ste
hir

te
idg
UC

rre
for

po

lfa
rd
fie

ha

ist

Yo
nd

ur

pt

as

as
pe

ds
Ca

he
br

Ox

er
Su

Be
inb
an

m
ng
Du

Br
wc

nc
Im

or
m

Liv
ha

nc
Cr

tti

Ed

ns

La
Ne

rtf
Ca

ut

Ma
No

ee
He
So

Qu
Figure 2 – Licensing income per publication (Figure 5 in the main report)

Cambridge In terms of the 13 active investors into UK companies based

in the Newcastle area identified by Library House, two of them
are VC/PE firms, five are corporates, two are public sector
Cambridge is the most well known Cluster in the UK and has
organisations, one is a public sector backed fund, one is a trust
been studied comprehensively. The Cluster and the University of
and two are classified as other institutional investors. The two
Cambridge consistently top the majority of graphs, tables and
active VC/PE firms based in the Newcastle area are Northern
rankings that measure the efficiency or quality of any aspect
Venture Managers and NEL Fund Managers. The public sector
of the university or Cluster. The Cluster has a wide variety of
backed fund, NStar, currently runs two funds, a proof of concept
technology companies in it and has been through both the
fund to finance the development of early stage technologies into
'dotcom' and the 'biotech' booms of the early 2000s. The
attractive prospects for further investment, and a co-investment
current cluster companies span many sectors with biotech and
fund to promote the development of high growth innovative
IT companies accounting for around 60% of the total number of
businesses in the region and to encourage co-investment from
companies (Figure 1).
other public and private sector investors.

Newcastle Belfast
Newcastle has benefited from funding distribution towards the
Belfast has a lot of the characteristics of a geographical cluster
historically less prosperous areas of England, particularly those
due to its position as the capital and biggest city in Northern
in the north.
Ireland. Although Belfast is mostly not among the most efficient
universities in converting publications to licensing income,
Increased investment in the Newcastle area has brought
patents to licensing income, or publications to industrial income,
greater prosperity to the region. The university and the Regional
it does have a lot of interaction with SMEs with 69 contracts
Development Agency are now actively trying to create a high-
reported in the 2003/04 HEBCIS data. Although this suggests
tech region around the university. The top line figures in Table 1
that the University of Belfast does have problems attracting
do suggest that there is some clustering of innovative companies
large companies to interact with, Belfast places 5th out of the
occurring, with the percentage of venture-backed and the
20 universities covered in this project, in terms of the number
percentage of R&D companies to total companies both exceeding
of SME contracts. Belfast also has a relatively high number of
the national average. The percentage of R&D companies to total
venture-backed spin-outs which suggests that quality spin-outs
companies is particularly high, which suggests that the area
are being formed at the university or being attracted to the area.
is proving an attractive place for R&D companies to conduct
While Queen’s University Belfast may not receive a large amount
operations.
of money in contract income, due to the smaller nature of SME

28
 Appendix

Licensing Avg. number of Avg. Income per

Total University Licensing
University Income of Total World Patents World Patent
Income (£000s) Income (£000s)
Income (%) (2001-2006) (£000s)
Queen's University Belfast 209,634 100 0.05% 9 10.91
University of Bristol 262,077 269 0.10% 16 17.17
University of Cambridge 694,624 2,184 0.31% 37 59.84
University of Cardiff 314,735 411 0.13% 11 39.14
University of Cranfield 135,735 191 0.14% 7 29.38
University of Dundee 154,936 1,050 0.68% 9 118.87
University of Edinburgh 401,015 1,022 0.25% 11 97.33
University of Heriot-Watt 94,636 2,461 2.60% 4 590.64
University of Hertfordshire 138,573 29 0.02% 1 29.00
Imperial College 458,522 2,176 0.47% 35 61.58
University of Lancaster 125,194 15 0.01% 2 10.00
University of Liverpool 244,742 133 0.05% 7 19.00
University of Manchester 539,982 260 0.05% 14 18.80
University of Newcastle 276,099 302 0.11% 4 78.78
University of Nottingham 320,286 1,087 0.34% 13 83.62
University of Oxford 530,171 1,661 0.31% 50 33.11
University of Southampton 287,435 417 0.15% 14 29.44
University of Surrey 167,961 81 0.05% 8 10.57
University College London 516,274 1,783 0.35% 20 89.15
University of York 150,992 56 0.04% 9 6.59
Total / Average: 6,023,36 15,688 0.26% 278 56.47

Table 2 – Overview of licensing income (Sources: European Patent Database and HEBCIS) (Table 15 in the main report)

contracts, it does have a large volume of business interaction.
This suggests that good knowledge transfer activities of the
university are contributing to the economic development of the
region as a whole.
Dundee
There are early indications that an innovative region for
Biosciences is beginning to form in Dundee. The 'BioDundee'
(http://www.biodundee.co.uk) region is a collection of companies
based within a 3 km radius. Table 1 shows that Dundee already
has the highest percentage of R&D companies compared with
the other potential clusters included in this report. In terms of
the percentage of venture capital backed companies to total
companies, even though it is far above the national average,
it is the lowest of the potential clusters except Newcastle. This
suggests that the University of Dundee and the area as a whole
has a high propensity for R&D collaboration but the university
is not spinning out as many companies that attract external
funding as other universities do.
We believe that for an innovative region to form, a number
of different conditions have to be present. These include the
presence of a good research base, a large number of R&D
companies, fast growing companies, spin-outs and start-ups,
access to finance and the ability to attract external innovative
companies into the area.
Figure 2 shows that, out of the 20 universities in this project
Dundee is the best at converting publications into licensing
income. (Note: We excluded Heriot-Watt, also a very efficient
university from the analysis, due to it using a broader definition
of licensing income).
Table 2 shows that the University of Dundee has both a very high
licensing income and income per patent ratio compared with the
other 19 universities covered in this project. This suggests that
the University of Dundee is particularly proficient in patenting
inventions that have a high financial value. Additionally, previous
analysis in this project has shown that the University of Dundee
also had the highest citation to publication ratio. The data
presented suggests that the University of Dundee is very good
at producing high-quality commercially useful research.
Figure 3 shows that the University of Dundee is very good at
converting publications into industrial income with only four
universities in our sample performing better.
Table 3 shows that Dundee collaborates heavily with
large companies and non-commercial organisations and is
outperforming the majority of its peers. The number of contracts
it has with non-commercial organisations puts the university in
the same league as Imperial, Oxford and UCL. The amount of
funding Dundee receives from non-commercial organisations has
also increased heavily since this data was published with funding
from The Wellcome Trust and Cancer Research UK alone in 2006
reaching £12.5m. Dundee ranks 8th out of 18 universities for
the amount of money received from the Wellcome Trust and 6th
out of 22 universities for the amount of money received from
Cancer Research UK. The fact that Dundee ranks in the top few

29 w w w. l i b r a r y h o u s e . n e t
An Analysis of UK University Technology and Knowledge Transfer Activities

university recipients of money from these two life-science based

Industrial Income / Publication (£)

0.7
organisations confirms Dundee's proficiency in life-sciences
research. 0.6

The area of Dundee lacks investors, having the least amount 0.5
of investors in the area of any of the other potential clusters. 0.4
However, this may be mitigated by the proximity of Edinburgh,
which has a relatively high number of investors, and the ability of 0.3
these investors to invest into companies located in the Dundee
0.2
area. As the Dundee Cluster, and Scotland as a whole, continues
developing economically we may well see more investors locating 0.1
in these areas. Looking at the investors present in Edinburgh
in more detail it is obvious that there is considerable interest 0.0
in biotech investment opportunities so this bodes well for the

e
ee

idg

ag
future development of Dundee's bio-region.

nd

er
br
Du

Av
m
Ca
of
So in conclusion, the University of Dundee has a good research

ty

of
rsi
base, good collaboration with industry but a disproportionately

ty
ive

rsi
low number of venture-backed companies and spin-outs. This

Un

ive
may be due to the University actively encouraging licensing

agreements over spin-outs or the lack of nearby investors.
The model in Figure 4 indicates that the University of Dundee is
very good at the first two stages of the research lifecycle (basic
research and the diffusion of this research).
The data suggests that Dundee is in a good position to transform
its research in mature applications which could form the basis
for future university spin-outs and start-ups.
Un
Figure 3 – Industrial income per publication of Dundee, Cambridge and
the average of the 20 universities
In addition, the University of Dundee has the chance to increase
its consulting income using the newly gained reputation in the
field of life sciences.

# with Value with # with Non- Value with Non-

Total # with Value with
University Large Large Commercial Commercial
Value SMEs SMEs
Companies Companies Organisations Organisations
Imperial College 47,300 1 11 931 31,929 496 15,360
University College London 28,109 65 822 438 10,797 427 16,490
University of Oxford 22,356 180 1,700 330 19,000 372 1,656
University of Cambridge 19,099 82 2,710 466 16,389 – –
University of Southampton 18,573 174 2,446 292 5,394 313 10,733
University of Bristol 16,326 37 2,689 196 4,697 324 8,940
University of Newcastle 14,814 26 1,039 69 4,125 – 9,650
University of Dundee 13,764 36 413 189 7,048 274 6,303
University of Cranfield 13,412 62 1,056 132 12,356 – –
University of Nottingham 11,280 45 1,192 334 8,844 47 1,244
University of Surrey 9,859 1 10 93 4,300 26 5,549
University of Manchester 8,478 38 983 150 3,749 68 3,746
University of Edinburgh 6,028 40 710 8 5,318 – –
University of Liverpool 5,475 88 1,086 242 4,389 – –
Queen's University Belfast 4,904 69 1,594 59 2,097 26 1,213
University of Cardiff 4,749 19 326 196 4,423 – –
University of Heriot-Watt 3,776 – – – 3,776 – –
University of York 2,348 6 95 60 2,253 – –
University of Lancaster 1,626 15 152 100 1,047 29 427
University of Hertfordshire 116 3 97 1 19 – –
Total 252,392 987 19,131 4,286 151,950 2,402 81,311

Table 3 – Table of contract research figures, showing Dundee outperforming its peer group universities (Source: HEBCIS)
(Table 9 in the main report)

30
 Appendix

Figure 4 – Diffusion of research

Conclusions of Appendix
Although three main high-tech clusters exist in the UK (London,
Cambridge and Oxford), other areas are showing signs of
potential cluster growth. In this section we analysed potential
cluster formation around the Universities of Newcastle, Belfast
and Dundee.
It is questionable as to whether these areas will be able to achieve
the scale of a cluster, but they will undoubtedly contribute to the
regional economy and to the UK as a whole, and do so in ever
increasing levels in the future.

31 w w w. l i b r a r y h o u s e . n e t