University-industry collaborations-The key to radical innovations?

Radical innovations are an important factor for long-term economic growth. Universities provide basic research and knowledge that form the basis for future innovations. Previous research has investigated the effects of universities, university-industry partnerships and proximity on factors such as innovations, knowledge spillovers, entrepreneurial activities, as well as regional growth, wealth and competitiveness. However, the role that university-industry collaborations play in radical innovations, mediated by various measures of proximity such as cognitive or geographic distance, has not yet been explored. With this study, we illuminate the conditions under which university-industry collaborations are the key to radical innovations in German firms. Combining firm, patent and subsidy data, we built a data set consisting of 8404 firms that patented between the years 2012 and 2014. Based on the patent data, we identified the emergence of radical innovations by using new technology combinations as a proxy for (radical) novelty. As our main independent variables, we computed the cognitive distance of firms, universities and research institutions as well as the geographic distance between these partners. We identified formal relationships through publicly supported R&D collaborations between universities, firms, and research institutions using the German subsidy catalogue. Our research is vital for understanding the conditions under which university-industry collaborations contribute to the creation of radical innovations. While not only closing a research gap, this paper has practical ramifications for companies, universities as well as policy-makers by evaluating the concrete effects of university-industry collaborations on the probability to generate radical innovations.