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Chapter 9

Role of Universities as Knowledge Creators


in a National Innovation System: An Open
Innovation Paradigm
Rani Shahwan and Tabish Zaman

Abstract
The purpose of this chapter is to illustrate the role of higher education
establishments in Middle Eastern countries specifically Saudi Arabia. The
contributions of higher education establishments are particularly significant
in relation to regional and national innovation system, which have been
earmarked as engine for growth of the local economy across the region. Our
study has chartered the dynamic nature of higher education in the region and
their networking capabilities in order to be recognized as key stakeholders of
the emerging economy. The study is informed by theoretical dimensions of
“open innovation” and how the framework can accommodate the dynamic
nature of higher education establishments in order to provide further
impetus to ambitious projects such as Vision 2030 in Saudi Arabia. Our
study is limited by further empirical evidence but has implication for the
region in offering new insights around the evolving conceptualization of
entrepreneurial universities and national innovation system.

Keywords: National innovation system; open innovation; entrepreneurial


university; Vision 2030; Saudi Arabia; triple helix model

Introduction
The academic and policymaking circles in developing economies are keen to
promote the idea of national and regional innovation systems to facilitate eco-
nomic and social growth. Traditionally, advanced economies of the Western
world have been at the center of such discussions, but recently, there has been a
paradigm shift in how government and intuitions, especially across Asian and
Middle Eastern countries, are recognizing the value of national and regional

Industry Clusters and Innovation in the Arab World, 259–280


Copyright © 2023 Rani Shahwan and Tabish Zaman
Published under exclusive licence by Emerald Publishing Limited
doi:10.1108/978-1-80262-871-520231012
260 Rani Shahwan and Tabish Zaman

innovation systems. Given the established theoretical connection between eco-


nomic growth and the emergence of different types of the national innovation
system (NIS), the literature is still relatively scant in how value is created and
what roles do institutions play in charting out their respective contributions. The
notion is particularly important as traditional industrial economies aim to tran-
sition toward a knowledge-based economy, which the Organisation for Economic
Co-operation and Development (OECD) underpins as the one in which pro-
duction, use, and distribution of knowledge and information are instrumental to
the process of economic growth (Sagiyeva, Zhuparova, Ruzanov, Doszhan, &
Askerov, 2018). Scholars have long established the importance of knowledge in
deriving value and driving productivity. Besides recognizing that link, scholars
have also focused on information technology, learning, and the accelerated pace
of technical and scientific advancement as key facilitators of an ideal
knowledge-based economy (Carayannis, Ferreira, Jalali, & Ferreira, 2018).
Against that backdrop, when considering the role of various institutional
agents in the economic growth of a nation, as knowledge creators, universities are
pivotal in not only training young minds but also as transmitters of culture for
economic revival and growth (Savrul, 2017). The centrality of this argument
becomes even more pertinent when considering the renewed structure of the
national and regional innovation systems. The literature irrespective of the
discipline is alleged to have downplayed the role of education establishment when
it comes to NIS (Prokopenko & Omelyanenko, 2018). However, with the growing
emergence of NIS and regional innovation systems, it is rather important to
emphasize why universities should be perceived beyond just knowledge creators
and regarded as serious contributors to the economic engine of the nation. To
this, the concept of the entrepreneurial university has been given considerable
attention. As early as 1980s, the idea of a university being entrepreneurial was
introduced – such a discussion was linked to how higher education institutes could
be possibly linked to broader social and economic change within the economy
(Klofsten et al., 2019).
Leading on to that, the concept of the entrepreneurial university has been used
to formulate strategic planning within and outside the higher education estab-
lishment (Dalmarco, Hulsink, & Blois, 2018). Such intuitions are often at the
forefront of activities and are regarded as efficient about their contributions to
commercializing scientific knowledge or through the development of business
incubators and technology parks (Etzkowitz, 2002). Traditionally, academic
research results are often regarded as the university’s role as innovators (Kuhl-
mann & Shapira, 2006). Beyond research and education, universities have
established themselves as knowledge centers working in parallel to start-ups and
recognized public and private firms in regional innovation networks to enhance
the commercialization of research results and above all formulate new business
models (Qiao & Yang, 2015).
At a macrolevel, this chapter aims to illustrate the changing role of universities
and their increasing importance to the regional innovation system and NIS. We
offer a theoretical framework and an insight into how the universities can be
understood to offer strategic guidance at the national and regional level when
An Open Innovation Paradigm 261

transitioning their economic interests. Specifically, this chapter is attempting to


bridge a gap in our understanding of the entrepreneurial universities. Given the
evolving nature of such institutions, there is an urgent need to define its structural
definition, which can then be aligned to the creative initiatives of the government.
At the microlevel, this chapter also establishes universities as an important
element of the national and regional innovation system. Maintaining the core
theme of our discussion, the chapter has identified several gaps in the literature.
We have worked to identify the role of universities as higher education not in a
traditional sense but in the emerging economy, wherein changes from a policy
perspective is looking to shape the future of the nation. From a context
perspective, our research plugs the gap, wherein this chapter aims to establish
Middle Eastern universities as key players when considering the implementation
of large policy intervention.
However, at both the micro- and macrolevel, for us to understand the role of
universities, we need to elucidate the concept of the NIS, which has been discussed
very frequently in the literature with several definitions around. According to
Freeman, Freeman, and Freeman (1987), for instance, NIS is defined as the
network of institutions in both public and private sectors whose activities and
interactions initiate, import, modify, and diffuse new technologies. Some 30 years
ago when the concept of NIS mainstreamed into the literature, it was expected
that notion of NIS will offer valuable lens to analyze complexity of interactive
dynamics of actors, institutions, and companies that determine a country’s
innovative performance (Yongabo & Göransson, 2022). Scholars such as Chris-
topher Freeman, Freeman, and Freeman, (1987) and Richard Nelson (1993) are
generally credited with illustrating the knowledge-generating system of NIS.
Scholars have also categorized both narrow and broader conceptualization of
NIS. Typically, a broad conceptualization of NIS includes all interrelated insti-
tutional actors responsible for creating and diffusing innovation, while the narrow
definitions focus on specific institutions such as the universities, public bodies, or
research and development (R&D) wing of commercial organizations exploiting
innovation singularly (Chung, 2002). On the other hand, narrow definition of NIS
exposes the role of institutions searching and exploring technological innovations
including R&D departments, universities, and public institutes. Such an under-
standing of NIS underscores the importance of conducive institutional and
interactive learning, which is where entrepreneurial universities come into play
(Lundvall, 1988, 1992). Such a concept of NIS has also given rise to classification
of institutional actors as knowledge producers and users. Using the narrower
concept of NIS, we focus firmly on universities and their in-house activities.

Conceptual Background – National Innovation System


Since the late 1900s, the concept of NIS has gained considerable traction espe-
cially for pursuing technological change (Freeman, Freeman, & Freeman, 1987;
Lundvall, 2011; Nelson, 1993). Technological change has often been referred to as
the “indispensable foundation” of the long-term economic progress of an
262 Rani Shahwan and Tabish Zaman

economy. NIS concepts and their emergence especially within the industrialized
countries can be attributed to the work of Lundvall (2007), but NIS can be viewed
as an interactive system of various stakeholders – institutions, private and public
firms, universities, and government agencies (Fig. 9.1). These bodies are in sync to
harness science and technology within the economic borders of their respective
economy. Often the interactions between these constituents are technical but can
also be commercial, legal, and social as long as the goal of the association is
linked to the development, protection, financing, and regulation of novel science
and technology (Niosi, Saviotti, Bellon, & Crow, 1993).
The concept of NIS centralizes innovation in a national institutional domain.
Herein interactions among these actors determine the fabric of the system along
with additional factors such as culture, norms, political, and public policy
arrangements (Băzăvan, 2019). Firms in most arrangements are seen as drivers of
such a setup as are seen to incentivize innovation capabilities. However, it should
be noted that firms’ abilities – public or private – are heavily impacted by various
other factors both within and outside the NIS arrangement (Li, 2017). In such an
arrangement, the government’s role is also very critical as they facilitate firms’
capacity to deliver on new technologies, building infrastructure while offering a
platform for the institutional exchange of knowledge and its subsequent diffusion
(Arranz, Arroyabe, & Schumann, 2020). The government also has responsibilities
toward investment in education, training, and in-house institutional research
(Fagerberg, Lundvall, & Srholec, 2018). From a literature point of view, the
coverage of NIS has largely featured advanced economies. There has been spo-
radic mention of developing economies in the literature. Wong (1999) described
the model of Taiwan through which the notion of “reverse value chain” was
addressed.
It was viewed mostly as a technological capability development strategy in the
country with product design and new product creation capabilities. In contrast to
large established high-tech firms in advanced economies, Taiwan’s strategy was a
reversal of the traditional sequence of value chain activities. Such as concept of
“reverse value chain” comprises developing inhouse process capabilities followed

Fig. 9.1. Key Stakeholder of National Innovation System.


An Open Innovation Paradigm 263

by product development capabilities leading to product creation/branding activ-


ities (Jayaraman & Luo, 2007). The rationale as to why Taiwanese strategy was
referred to as “reverse value chain” is because high-tech firms in large and
developed nations purse the product followed by process capabilities as opposed
to Taiwan’s NIS implementation. Within the same context, Shyu and Chiu (2002)
came up with the debate on government innovation policies. They highlighted the
impact of central policies on Taiwan’s competitive advantage, which included
taxation, technological assistance, and government procurements efforts.
Kayal (2008) discussed the Korean innovation system, which has been char-
acterized by large conglomerates and their financial strength to undertake what is
referred to as a “reverse product life-cycle strategy.” For some, this was viewed as
the reason behind South Korea’s rapid technological rise in sectors such as
automobile, steel, and consumer electronics. The key observation from the
Korean context was the role of large conglomerates and their aggressive strategy
to aim for technological advancement. Capacity investment remained the core
strategy that accelerated the learning effect, market share, and further investment
in R&D (Cho et al., 1988). In addition to these large conglomerates, huge state
investments in education, public research, and technology organizations accel-
erated the supply side of technology. Korean government was proactive and
introduced new policies designed to boost the industry’s need for R&D. Overall,
the strategy worked well for the country, and it continues to benefit from a solid
structural strategy toward its NIS (Kim & Dahlman, 1992).
The two cases of Taiwan and Korea recognized the importance of a
knowledge-based economy, and this was particularly salient in the case of South
Korea, which pursued the policy of a powerful knowledge base, cantered largely
on technology and innovation. Singapore is another case in Southeast Asia that
adopted a model of national innovation by focusing on government facilitation of
technological learning from multinational corporations. Such a strategy allowed
for foreign investment and kickstarted industrial development. The central gov-
ernment offered multinational corporations’ reasons to upgrade their
manufacturing process, which resulted in successive waves of advanced products
to be manufactured in Singapore. MNC operations also brought in technological
capability development, which was aided by the influx of skilled technical pro-
fessionals and managers from MNCs to set their contract manufacturing firms
(Wong, 1997). Singapore government also identified mechanisms to promote
diffusion process technologies to small and medium enterprises (SMEs). Subse-
quently, there was a recognition of another mode of technological development.
The government of Singapore aggressively worked to establish and fund univer-
sities’ R&D for MNCs to start production and promote the growth of new
technology start-ups. The duality of technology and innovation has therefore
become the cornerstone for building and developing a genuine innovation econ-
omy (Gackstatter, Kotzemir, & Meissner, 2014). The three cases above underline
the notion of technology, innovation, and knowledge for a successful NIS.
However, the role of government in developing countries is equally critical. The
policies set out by the central government are the major driver as far as the
promotion of science and technology is concerned. According to Kim and
264 Rani Shahwan and Tabish Zaman

Dahlman (1992), there are three different categories as far as public policies are
concerned. First, there are policies that formulated to build the supply side, which
increases science and technological capabilities. Second, there are policies
designed to strengthen the demand side, which creates market needs for tech-
nology. Third, policies that are aimed at effective linkages between demand and
supply side to induce innovation activities.
It has also been noted that in developing countries industry-based innovation is
largely informal. The dominant cultural pattern prevalent in such countries
downplays scientific knowledge and technological innovation (Intarakumnerd,
Chairatana, & Tangchitpiboon, 2002). Various insights have been put forward to
discuss NIS in developing economies. As such NIS in these economies is less
developed and complex. Within these systems, technological and institutional
pillars necessary for such systems are not fully supported centrally. Scholars have
also related NIS to country development overall. For some, it is important to link
NIS development to the level of economic, structural, and institutional develop-
ment. Countries like Korea and Taiwan paved the way for “intensive learning,”
and it was seen as a crucial factor in them catching up with advanced economies
in terms of their NIS strategies. Given the fact that the market mechanisms in
developing countries continue to evolve, the role of the market in knowledge
promotion must be weighed insignificantly when considering NIS strategies in
those countries. Intangible assets such as knowledge and learning are important
factors for technical growth in developing countries.
Advanced economies to a large extent have been providing the blueprint for
the countries. But given the variability and differences in the contextual compo-
nents of the economies, there is a need to revisit the approach for a better
understanding of different NIS strategies. Gulf Cooperation Council (GCC)
countries as such are pushing for political and economic legitimacy on a global
stage and the institutional context within these nations poses a huge challenge as
far the development of the NIS is concerned. This is partly due to the intersection
between religious ideologies, economic development, and educational infra-
structure, which are defining characteristics of the “Gulf State Phenomenon”
(Wiseman & Alromi, 2007). GCC countries as such have turned into national
monopolies, and prior research suggests that the growth of NIS relates to national
economic development. However, when discussing NIS, the complexity of the
situation is merely not masked by the availability of resources, but more often the
output does not correspond to the level of resources made available for such
strategies.

Analyzing the Context of Saudi Arabia


The establishment of the National Science, Technology and Innovation Plan
(NSTIP) was a major policy action line directing research and innovation in Saudi
Arabia. This plan followed a long-term vision for the advancement of science,
technology, and innovation (STI). The determinants of building a National
Innovation Capacity were presented in the Global Competitiveness Forum in
An Open Innovation Paradigm 265

Riyadh in 2011. The forum outlined the existence and the interactions in three
important elements for the development of successful innovation policies – (1)
common innovation infrastructure, (2) cluster development, and (3) capacity for
entrepreneurship. The supported projects by NSTIP are aimed at new products
and services that correspond to the innovation nodes. The implementation of each
project implied the formation of an innovation cluster consisting of project
managers, researchers, industry experts, and international consultants. NSTIP
also included technology transfer and innovation support institutions aimed at
filling the gap. The gap was to be plugged between R&D activities and aspects of
economic activity, through the supporters of technology transfer and localization,
working on market accessibility. This was realized through high-quality tech-
nology products, centers for innovation and entrepreneurship, and business
accelerators. Business accelerators trained and supported owners of innovative
ideas while accelerating the transfer of inventions to the market and supporting
different enterprises and innovative business research (Al-Swailem, 2014).
King Abdulaziz City for Science and Technology (KACST) formulated the
National Policy for Science and Innovation as well as developed the NSTIP. In
addition, KACST had launched 30 initiatives, through the National Trans-
formation Program 2020, to enhance the local content contribution and increase
the value retained in these sectors. King Abdullah University of Science and
Technology (KAUST), as the managing body of NSTIP, has started the imple-
mentation of the first National Plan for Science, Technology and Innovation,
which achieved growth in many global indicators such as patents, peer-reviewed
papers, and citations, which are considered as the main outputs of scientific
research. KACST prepared the second National Plan for Science, Technology
and Innovation, which was meant to end in 2020. A wide range of national
stakeholders as well as global consultants were engaged in the development,
reaching forward to the subsequent Saudi Vision 2030.
Vision 2030 initiative carved plans to develop a vibrant society and a thriving
economy for the Kingdom of Saudi Arabia. In quantifiable terms at macrolevels,
Saudi Arabia aimed to expand its non-oil revenue from SAR 163 billion ($43.5
billion) to SAR 1 trillion ($267 billion) by 2030. Through the same vision, it had
ambitious plans to raise the share of non-oil gross domestic product (GDP) from
16% to 50% by the same year. There were some other notable goals of the vision,
which included the following: (1) increase of foreign direct investment from 3.8%
to 5.7% aligned to the developed economies, (2) 15% increase in contribution
toward GDP from the private sector by 2030, (3) reducing the unemployment rate
to less than 7% from 11.6% by 2030, (4) improve government effectiveness
ranking reflected in government effectiveness index published by the World Bank,
and (5) enhance Saudi Arabia’s position on Global Competitive Index published
by the World Economic Forum (Al-Helayyil, Claps, Rajan, & Schaller, 2016). As
part of Vision 2030, 13 realization programs have been identified and these have
been referred to as Vision Realisation Programs (VRP). Each of the VRPs is
linked to creating strategies and projects in line with strategic objectives referred
to in the Vision 2030 statement. It should be noted that Vision 2030 is a long-term
far-reaching multidimensional program involving economic, social, and cultural
266 Rani Shahwan and Tabish Zaman

aspects of the country. Although at a macrolevel, the aims of Saudi Vision 2030
remain to diversify the country from oil dependency and enhance productivity
and employment in the private sector.
Along with Saudi Arabia, other countries from GCC region have also hinted
at adopting such a strategy. Nations such as Bahrain, Kuwait, Oman, Qatar, and
the United Arab Emirates are home to large supply of fossil fuels, and exports of
fossil fuels have generated substantial revenues contributing to high per capita
income level in respective countries. With a combined population of more than 40
million, the region is considered highly urban, and in the last three decades, GCC
countries have undergone significant economic growth. In the context of rising
demand, urbanization, and pressure on existing resources, each of the GCC
nation has turned to innovation and associated strategies. Countries in the region
have identified innovation as central to enhance organizational capacity. The
innovation capacity is directly linked to public policy, and previously policies
around innovation have mostly revolved around intellectual property protection
and international trade (Furman, Porter, & Stern, 2002). In recent times, how-
ever, public policies encouraging human capital investment in science and engi-
neering have been prioritized. Resources linked to innovative R&D spending led
especially by the academic sector and funded by private sector have gained
prominence (Arman, Iammarino, Ibarra-Olivo, & Lee, 2022). Building on that,
GCC countries have devised long-term economic and social strategies hinting at
economic diversification. Subsequently long-term strategy has appeared in the
form of Vision 2020 in Oman, Vision 2021 in the United Arab Emirates, Vision
2030 in Bahrain, Qatar National Vision 2030, and much discussed Vision 2030 in
Saudi Arabia (Miniaoui & Schilirò, 2017).

Importance of Universities – National Innovation System


When strategizing for Vision 2030, the role of higher education in Saudi Arabia is
extremely critical (Nurunnabi, 2017). Vision 2030 is aimed at transforming the
economy of Saudi Arabia into a balanced model economy, and the aims of the
vision are linked to creating common grounds between Saudi Arabia and different
countries of the world in all areas of education and economy (Moshashai, Leber,
& Savage, 2020). Vision 2030 is linked to the development of curriculum in higher
education at all levels. Effective implementation of Vision 2030 is heavily
dependent on training the educational element in universities and acquiring the
skills. As such the literature has underwhelmingly mentioned universities and the
higher education sector compared to firms who are recognized for their innovative
capacities, given the fact that throughout the OECD countries since the 1970s, the
higher education sector has been impacted by budgetary constraints resulting in
stalled growth and investment (Sampat & Mowery, 2004).
In the United States, for example, federal research funding for full-time
researchers was noted to decline by around 10% during 1979–1991 (Cohen,
Florida, Randazzese, & Walsh, 1998). The state government in the United States
significantly cut down operating budgets to more than 6% with the figure reported
An Open Innovation Paradigm 267

in 1991 (Slaughter & Leslie, 1997). On a similar note, the UK government had cut
back its institutional funding during the 1980s and 1990s. In the face of slow
growth, institutional cutbacks, and increased competition for research funding
especially in the last few decades, the higher education sector and universities have
adopted a more aggressive and entrepreneurial approach to sustain their funding
requirements. Regional and national economic benefits have been touted by
university presidents and vice-chancellors in their communication and call for
academic research. Universities have also forged a strategic partnership with
industry as a way of obtaining additional research support (Mascarenhas, Fer-
reira, & Marques, 2018). In that regard, the neoinstitutional model of higher
education has been conceptualized especially over the last decade and the notion
of “entrepreneurial universities” has been heavily discussed (Lawton Smith &
Leydesdorff, 2014).
As far as the emergence of entrepreneurial universities is concerned, there are
methods in place to empirically investigate the impact of such institutions.
However, such studies have mostly focused on input–output relationships more
than the actual impact (Guerrero, Cunningham, & Urbano, 2015). But from a
conceptual perspective, entrepreneurial universities are known to adapt to envi-
ronmental changes. Entrepreneurial universities are characterized by their ability
to innovate, recognize opportunities, and respond to challenges (Guerrero,
Urbano, Cunningham, & Organ, 2014). These universities offer an optimum
platform for their internal stakeholders to explore entrepreneurial opportunities.
Taking such an approach to understanding entrepreneurial universities also
means universities are to be recognized more broadly than simply fulfilling a role
in technology transfer (Audretsch & Lehmann, 2005; Cunningham, Guerrero, &
Urbano, 2017). Entrepreneurial universities are therefore associated with teach-
ing, research, and entrepreneurship. The three activities or the outcomes of these
missions contribute directly or indirectly to the economic development of the
region or the country where the institution is located. According to the growth
theory, there must be an advancement of technical knowledge in the form of new
goods, new markets, and new processes for sustaining a growth rate of output per
capita in the long run (Aghion, Akcigit, & Howitt, 2014). Such a notion is ably
supported by the recognition of entrepreneurial universities. It should be noted
that for most neoclassical perceptions, knowledge as an endogenous outcome of
university activities was regarded as an external entity to the economic system,
but since the 1980s, economists have begun acknowledging its link to economic
conditions of production (Corona, Doutriaux, & Mian, 2006).
Another term that has often been mentioned in the regard to such activity is
“knowledge transfer,” and for policymakers, it has become a critical strategy for
survival and growth of economic value. Firms, in their aim to obtain external
knowledge, create partnerships with the universities and institutional agencies and
contextualize their innovative requirements (Muscio, Quaglione, & Vallanti,
2013). Universities have been recognized to facilitate a wide variety of channels
through which knowledge and technology can be exchanged between different
stakeholders. The selection in terms of selection of specific channels is dependent
on discipline of origin, use of knowledge, and characteristics of researchers
268 Rani Shahwan and Tabish Zaman

involved in the process. Such a choice is also affected by the environment or


contextual setup in which the type of knowledge is being produced or used
(Bekkers & Freitas, 2008). There are mentions of technology transfer office (TTO)
and industrial liaison office (ILO) in the literature recognized to be at the heart of
the industry–university partnerships. Common earnings between firms and uni-
versities are exemplified indirectly through R&D contracts.
To make the most out of this process, European countries have put in place
reforms of their national research systems to expedite the impact of research and
flow of knowledge from universities to firms (Mascarenhas et al., 2018). Such
reforms are useful indicators and have put the impetus on nonconventional
missions of the universities besides teaching and researching. Universities are
being asked to define their contribution to society in general through the creation
and transfer of knowledge and innovation (Bellucci, Marzi, Orlando, & Ciampi,
2020). Trends in Europe have resulted in universities across the globe looking to
move away from traditional institutional characteristics or the old model of
dependency on funding. Such a shift in paradigm links to the notion of “entre-
preneurial university characterized by strong links to industries and aggressive
role in charting knowledge transfer for industries or sectors” (Bercovitz & Feld-
man, 2007; Rothaermel, Agung, & Jiang, 2007). The triple helix model (Fig. 9.2
as above) is a change in how universities are being viewed as enhanced stake-
holders in innovative activities. This is ably being facilitated by governments as
they foster the academic transformation into economic development strategy

Fig. 9.2. Triple Helix Model. Source: Adapted from Lawton Smith
and Leydesdorff (2014).
An Open Innovation Paradigm 269

(Etzkowitz & Leydesdorff, 2000; Ranga & Etzkowitz, 2013). It should be noted
the triple helix model has not only been postulated by European countries, but it
has also found support by World Bank and OECD. In one of the World Bank
Policy Paper series on a developing country, the triple helix model has been put
into use to analyze and offer policy recommendations (Speakman, Afzal, Yuge, &
Hanna, 2012). OECD too was instrumental in organizing a workshop on
“knowledge-based entrepreneurship” in 2013, further cementing the importance
of the triple helix model in policy circles.
Theoretically, scholars have taken the concept of the triple helix and tried
developing the indicators of the model (Leydesdorff & Park, 2014). To that,
Leydesdorff and Meyer (2003) offered a scientometric measurement of triple helix
dynamics. Leydesdorff’s indicators have been used in various contexts including
Germany (Leydesdorff & Fritsch, 2006), Russia (Leydesdorff, Perevodchikov, &
Uvarov, 2015), China (Leydesdorff & Zhou, 2014), and South Korea (Kwon,
Park, So, & Leydesdorff, 2012). There have been other measures of triple helix
developed through a combination of social network analysis and triple helix
indicators (Swar & Khan, 2013). As is indicated above, the triple helix has been
heavily used in research and aspects of regional innovation. The model as such
faces challenge when innovation systems are internationally interconnected, but
for us to fully understand the conceptual dynamics of the triple helix, there is a
dire need to explore the micro-mechanism associated with it (Pandey & Desai,
2017). In that direction, scholars have used social network theory while discussing
academic collaborations with nonacademic stakeholder groups. Studies utilizing
micro-foundations of triple helix focus on hybrid organizations and this is where
our interest lies as it shines the light on key partners of the triple helix model – that
is, universities. More importantly, there should be an impetus at the microlevel
wherein key players within the higher education established are analyzed for their
role in NIS. A study by Cai and Liu (2020) in that regard highlighted the role of
individual university leaders, academics, and students through the interaction of
local government officials and industry stakeholders. For analytical purposes,
scholars have postulated the importance of developing alternative theoretical
frameworks for the triple helix model depending on the contextual factors and
role of institutional elements.

Open Innovation – Scope for Inclusion of Universities


One of how theoretical frameworks can be developed taking into consideration
the challenges of Saudi Arabia’s context is the integration of the open innovation
paradigm. Studies in the recent past have pointed to the importance of external
sources, and for universities to rely on internal R&D, the outcomes are not often
very competitive. Given Chesbrough’s conceptualization of open innovation,
which is hugely popular in academic and policy circles, Saudi-based universities
can benefit from interorganizational networks (Chesbrough, 2006). The research
indicates that innovation-relevant links between firms end up as network rela-
tionships, but this does not necessarily apply to universities (Hossain, 2013).
270 Rani Shahwan and Tabish Zaman

Universities as stakeholders of NIS have often struggled to feature prominently in


such network relationships. One of how such a notion can gain greater attention is
by focusing on the university–industry relationships within the paradigm of
science–industry links. In that regard, such associations have always featured
intellectual property such as patenting, licensing, and commercialization
(Gretsch, Tietze, & Kock, 2020; Ponce, Polasko, & Molina, 2018). It was Cohen,
Nelson, and Walsh (2002) who studied industrial innovation about university–
industry collaboration and distinguished different channels linked to industrial
innovation – patents, informal information exchange, publications and reports,
public meetings, conferences, recently hired graduates, licenses, joint or cooper-
ative research ventures, contract research, consulting, and temporary personnel
exchanges. To capture different dimensions of the university–industry links,
multiple frameworks have been postulated. To fully understand the different
dimensions of such an association, one can look at the levels at which such a
partnership is forged. It can mean analyzing collaborations ranging from
department or faculty, collaborations managed by the university-owned con-
sortium, and local or national clusters of the institutes themselves (Howells,
Nedeva, Georghiou, & Science & Technology Policy Research in Engineering,
1998). University–industry links are also categorized based on position
industry-pull (such as contract research) and university-push logics (such as
spinouts) (Poyago-Theotoky et al., 2002). The literature has focused on the
diverse nature of university–industry links and some of them are highlighted in
Table 9.1 below.

Table 9.1. Types of University–Industry Links.

Scientific Publication Application of Codified Scientific Knowledge by


Industry Leaders
The commercialization of Exchange of university-generated intellectual
property rights property in the form of patents
Informal interaction Development of social relationships and
networks
Human resource transfer Training of various individuals – industry
employees, graduate trainees, faculty members,
etc.
Academic entrepreneurship Formulation of technologies pursued by
academics through firm partly or wholly owned
Research services Initiative directed by industrial clients including
contract research and consulting
Research partnership Interorganizational arrangements for pursuing
collaborative R&D
Source: Adapted from Perkmann and Walsh (2007).
An Open Innovation Paradigm 271

Conclusion and Recommendations


Universities generally allocate resources to enhance interaction with the industry
(Tseng, Huang, & Chen, 2020). In the United Kingdom, for example, the links
with industry are managed by what is referred to as “third-stream” activities by
full-time research staff to fulfill the need of businesses (Fuller, Beynon, & Pick-
ernell, 2019). Higher education institutions in the developed nation mostly have
an internal resource center for managing academic consulting. There are
arrangements in place where the majority of the academic staff have a contracting
system for staff-business activities (Rossi & Rosli, 2015). Within the context of
developed countries, based on what has been evidenced in the literature, such
arrangements contribute to the industrial innovation process more generally
(Watson & Hall, 2015). Public research as opposed to general understanding
relates to solving problems more than novel ways to solve the same problem
(Bommert, 2010).
When it comes to universities in Saudi, the question remains as to how they can
maximize their presence on national innovation programs? The kingdom has the
vision to lead on a global stage when it comes to science and technology. The aim
of Saudi Vision 2030 is to put in place infrastructure for human resources,
equipment, policies, and institution for future growth. Institutions involved or
identified as part of this process must be allocated designated responsibilities. The
three-core mission, that is, teaching, research, and entrepreneurial activities, must
align with key commitments emerging from higher education institutions (see
Table 9.2). It will serve purposes on multiple fronts, that is, identifying the
different types of entrepreneurial activities and their key commitments toward
national objectives.
The Kingdom’s innovation agenda has pushed forward in some areas to build
on the momentum achieved so far. The innovation system is coherent, presenting
strong interaction linkages between the research, innovation, and commerciali-
zation node. The innovation policy action lines are comprehensive through the
NSTIP that has included specific actions and interlinkages between all innovation
components. The plan is pointed to maximize the targeted results by 2020, leaving
a window for improvement of its outcomes over the next three years. In terms of
comparative global performance, Saudi Arabia’s NIS presents a remarkable
improvement since 2011, presenting above-average performance in terms of
allocated resources for research and innovation. These resources are not capi-
talized, optimally creating a low innovation efficiency gap. Metrics on the inno-
vation’s environment show that Saudi Arabia has satisfactory performance in all
regulatory areas except the institutions and easiness to make business.
The supply of human resource capacity is adequate along with policy guide-
lines to support research activities. These activities are orchestrated to produce
joint research projects between universities, industries, and international excel-
lence research centers. These research activities are overwhelmingly implemented
by a few capacitated, mostly public organizations, such as KAUST and King
Fahd University of Petroleum and Minerals (KFUPM), leaving a vast amount of
research and innovation resources unexplored. Now, the strategy to build a
272 Rani Shahwan and Tabish Zaman

Table 9.2. Landscape of University Activities and Theoretical Evidence.

University Theory-based Evidence on Possible Commitments by


Activities University Activities Saudi Universities
Research efforts In a knowledge-based Saudi universities must
economy or aspiration to be transform into a vibrant and
a knowledge-based dynamic cluster by the
economy, research activities inclusion of local
are considered another communities. The size and
important function of a geographic location of the
university. To sum it institution play a great role
theoretically, the function of as they can create and
research is linked to the catalyze a range of
generation, transfer, and enterprising activities.
commercialization of new In-house teaching activities
transfer (Romer, 1986). have the potential to carve a
Copyrights, patents, licenses, distinct learning
etc. In some policy circles, environment for students,
this has also been referred to wherein students at all levels
as academic have access to skilled and
entrepreneurship taking specialist academics who in
place at the edge of different turn are engaged in vibrant
scientific and professional research projects.
backgrounds (Urbano &
Guerrero, 2013). For
universities to make a
meaningful contribution
through their research
activities, skills
accumulation is critical.
Universities must associate
themselves with the
generation, attraction, and
retention of exemplary
researchers. The primary
outcome of such an initiative
would result in innovation
and knowledge transfer
inside and outside the
organization (Peet, Walsh,
Sober, & Rawak, 2010).
An Open Innovation Paradigm 273

Table 9.2. (Continued)


University Theory-based Evidence on Possible Commitments by
Activities University Activities Saudi Universities
Teaching efforts Universities are recognized Classroom in saudi Arabian
for teaching. Teaching as universities must offer
such is known to be a students an opportunity to
primary function. Higher engage with leading thinkers
education institutes, train and academics who are
students for them to become leading the research in their
job seekers or creators. respective disciplines.
Directly or indirectly, Contact time and
universities impact the independent research
human capital, which plays projects for undergraduates
an important role in creating are key to learning in the
value in the economy. As formative years. Programs
such human capital is for work-based learning and
considered a factor of internships are signposted
human production and is for students to pursue. These
associated with are just some of the
competencies, knowledge, commitments Saudi
abilities, and skills garnered universities should get into if
through education and they are to create conducive
training (Lucas, 1988). conditions for students to
Therefore, there is a harness their creativity and
conceived notion in theory other higher-order skills such
that universities irrespective as critical thinking,
of their background have an problem-solving, and
economic impact through decision-making skills.
generation, attraction, and
retention of human capital.
Entrepreneurial Entrepreneurial activities Saudi-based universities
efforts within the university are a should aim to work with
novel form of action businesses all around the
involving the creation of new country locally or
ventures that could facilitate nationally. High-caliber
job growth and development graduates have a lot of value
through partnership in to offer to businesses in the
regional clusters (Porter, local economy. Universities
Schwab, & Sala-i-Martin, should set in motion
2007). Within the university, mechanisms of innovating
these sorts of activities using research and
274 Rani Shahwan and Tabish Zaman

Table 9.2. (Continued)


University Theory-based Evidence on Possible Commitments by
Activities University Activities Saudi Universities
should be imbibed at all development budgets.
levels – management, Organizations are likely to
academics, researchers, and work with universities
aspiring entrepreneurs through ways such as
among students. research commissioning,
Entrepreneurial universities graduate sponsorship, and
often attract and generate large-scale collaboration on
new ventures, thereby various commercial or social
promoting competition and projects.
value for the local economy.
Impact in terms of
entrepreneurial effort can
contribute directly to the
economy, infrastructure,
culture, and societal
challenges reflected in key
metrics of productivity,
regional capacities, and
regional or national
innovation (Powers &
McDougall, 2005).

limited number of excellence institutions at this first stage that could be replicated
at a later stage creates a divide between the participating innovation actors and
others that participate to a minimal degree. The fact that the country produces
knowledge that is not diffused throughout the country is an issue that must be
examined thoughtfully.
Saudi Arabia presents a coherent innovation node with capacitated clusters,
incubators, and start-up support policies (Leahy, 2021). At this stage of innova-
tion, build-up funding is a critical resource to enter innovative products and
services into the market. This step is the riskiest for most start-ups and is called
the “death valley,” meaning that many brilliant ideas have failed due to under-
funding (Corallo, Errico, Latino, & Menegoli, 2019). The policy action lines
support nonequity funding, but private equity funding is not widely accessible.
Thus, a remarkable portion of funding based on risk capital is missing from the
system. The country’s innovation outcomes are still concentrated on the main oil
and chemical industrial cluster, and a shift toward more creative and ICT-based
results should be made to reach the vision’s 2030 mission for a knowledge society
(Agboola, Bekun, & Joshua, 2021).
An Open Innovation Paradigm 275

Saudi Arabia’s NIS is a robust system, and it is well planned and executed.
There are important strengths in the infrastructure, human resources, business
environment, and dynamicity provided to the system in the upcoming years.
However, in all systems, system failures can be barriers to the success of its
outcomes. The market failures are a low innovation efficiency and an ineffective
institutional and regulatory environment. These market failures could potentially
be caused by systemic failures. These failures could be summarized as a system
with few dominant actors without wide country participation. This leads to low
knowledge diffusion and minimizes the knowledge spillover effects. Another
systemic failure is the access to equity funding for start-ups and the absence of a
risk capital culture. Based on the observations of this paper, the following
improvement reforms should be made to the existing innovation system to bridge
these gaps.

• Improve the institutional and regulatory environment and make new busi-
nesses, facilitate the regulatory environment for foreign investors, and
encourage private–public partnerships and entrepreneurship.
• Encourage participation in research and innovation activities to all of the
country’s capacitated organizations, public and private, and enhance their
ability to actively participate in knowledge diffusion. This includes
academia–industry linkages and the development of frameworks to diffuse
knowledge between various stakeholders.
• Encourage the creation of technology and knowledge-based products and
services to reach the 2030 vision.
• Create an environment for attracting, generating, and making risk capital
available in the form of equity funding. This requires reform in the banking
sector in creating risk capital structures. This may include equity through
public offers or a technological stock market.

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