Ethiopia Triple Helix Conference

Transforming University-Industry-
Government Relations in Ethiopia

Proceedings

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Ethiopia Triple Helix Conference

This document is distributed by the International Organisation for Knowledge Economy and Enterprise
Development (IKED)

IKED is an independent, non-profit association an international organisation focusing on the emerging

issues of the knowledge-based economy.

IKED specialises in activities linking the primary players that comprise the knowledge-based economy:
government, industry, academia and civil society. The organisation engages in international networks,
arranges policy forums and policy reviews, and works with partners aiming for reforms and concrete actions
in support of the development and use of knowledge.

____________________________________________________________________________________
IKED – International Organisation for Knowledge Economy and Enterprise Development

PO Box 298 Tel: +46 (0) 40 – 17 65 00 info@iked.org

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Sweden

© IKED 2008

Title: Transforming University-Industry-Government Relations in Ethiopia

Editor: Henry Etzkowitz, Matthieu Roest
Published: Malmö, March 2008
Publisher: IKED
Layout: Boyan Kostadinov

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TABLE OF CONTENTS

INTRODUCTION................................................................................................... 10

1.1 Foreword...................................................................................................... 10
1.2 Introduction .................................................................................................. 11
1.3 Executive Summary / Overview ....................................................................... 13
The Triple Helix of Innovation and Cluster Creation .......................................... 13
1.4 Keynote address ............................................................................................ 17
H.E. Staffan Tillander, Swedish Ambassador to Ethiopia .................................... 17

PROCEEDINGS ..................................................................................................... 21

2.1 Proceedings from the workshop sessions.......................................................... 21

2.2 Presentation .................................................................................................. 49

VIEWS FROM WITHIN ETHIOPIA ............................................................................. 64

3.1 A preliminary review of Science and Technology Policy in Ethiopia ..................... 64

Abstract ....................................................................................................... 65
1. Introduction .............................................................................................. 65
2. National System of Innovation .................................................................... 66
3. The Need for Science and Technology Policy ............................................... 68
4. The S&T Policy of Ethiopia ......................................................................... 70
5. What Needs to be Done to Strengthen the National Innovation System (Policy
Directions and Actions)? ................................................................................ 75
6. Conclusions and Recommendations............................................................ 76
References.................................................................................................... 78
3.2 Innovation and its Essential Contribution to the Growth of the Private Sector and the
Development of a Country ................................................................................... 79
1. Introduction .............................................................................................. 80
2. Recognition of Reality ................................................................................ 81
3. Role of the Private Sector ........................................................................... 82
4. The Private Sector’s Expectations ................................................................ 83
5. Expectations from Governments ................................................................. 84
6. Expectations from Universities ..................................................................... 84
7. Conclusion ............................................................................................... 85
3.3 Higher Education – Industry Resource Integration Center – Towards Solving Existing
Industrial Problems .............................................................................................. 86
Abstract ....................................................................................................... 87
1. Introduction .............................................................................................. 87
2. Ethiopian Industries ................................................................................... 88
3. Higher Education Institutions ...................................................................... 91
4. University-Industry Linkage Programs........................................................... 92

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5. A Way Forward ......................................................................................... 98

6. Concluding Remarks ............................................................................... 101
3.4 Practical Attachment Program – Achievements and Constraints, Mekelle University
....................................................................................................................... 102
1. Presentation outline ................................................................................. 103
2. Mekelle University in Brief ........................................................................ 103
3. Background of Practical Attachment Program (PAP) .................................... 104
4. Objectives of the Program ....................................................................... 104
5. Achievements of the Program ................................................................... 105
6. Constraints of the Program ...................................................................... 106
7. Conclusion and Recommendations ........................................................... 106
8. Recommendations................................................................................... 107
3.5 Operational Research Program for Food Security (Presentation) ....................... 108
1. Presentation outline ................................................................................. 109
2. Why Participatory Action Research? .......................................................... 109
3. Objectives of Operational Research Programme ........................................ 109
4. What PAR Change? ................................................................................ 109
5. Components of Operational Research ...................................................... 110
6. Participatory Varietal Selection (PVS) ......................................................... 110
7. PVS Process and Outcomes...................................................................... 110
8. FRG has Played the Following Roles in the Process of PVS ........................... 111
9. PVS Design ............................................................................................. 111
10. Result and Discussion ............................................................................ 112
11. Soybean ............................................................................................... 113
12. Teff ...................................................................................................... 113
13. Wheat .................................................................................................. 114
14. Scaling-up ............................................................................................ 114
15. Scaling-up in Operational Research ........................................................ 115
16. Issues in Community-Based Seed Production ........................................... 115

ANALYSES FROM AN INTERNATIONAL VIEWPOINT ............................................... 118

4.1 Ethiopia: Innovation and Growth in international comparison .......................... 118

Introduction and Background ....................................................................... 119
1. Innovation in Low Income Countries: Opportunities and Challenges ............ 120
2. Challenges for Ethiopia: Growth and Competitiveness ................................ 123
3. How Internationally Competitive is Ethiopia?.............................................. 125
4. Benchmarking Ethiopia’s Innovation System ............................................... 127
5. Conclusions and Recommendations.......................................................... 137
References.................................................................................................. 141
Appendix 1. Ethiopia’s Ranking in WEF GCR and ACR ................................... 143
4.2 Illustrated cases........................................................................................... 144
4.2.1. Linking University Research to Production Systems within the Context of a
Poverty-Reduction Strategy: Case Study of Cameroon ..................................... 144

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Abstract ........................................................................................................ 145

Introduction .................................................................................................. 145
1. Data Collection Methodology .................................................................... 147
2. A Re-reading of Miettinen’s Dual Definition of a Research Object .................. 151
3. Adapting the creation of a research object to the case studies ....................... 152
4. University Researcher Initiatives that Seek to link Research to the Informal Sector
................................................................................................................... 156
5. Government Initiatives to promote a Participatory Process ............................. 157
6. Researchers that have Participation from Actors from the Informal Sector ........ 158
Conclusions and Further Work ....................................................................... 160
References .................................................................................................... 161
4.2.2. The Incubator as Organizational Training Method ................................ 165
Abstract ........................................................................................................ 166
Introduction .................................................................................................. 166
1. Method .................................................................................................... 166
2. Invention of the model ............................................................................... 167
3. The development of Brazilian incubators ..................................................... 167
4. How the Model Works: Role of the University in Organizational Training ........ 169
5. The Diffusion of the Model ......................................................................... 171
6. Organization Cooperatives’ Challenges ...................................................... 174
7. Cooperative Incubator and the Triple Helix Model........................................ 176
Conclusion: Implications for other Developing Countries .................................. 177
References .................................................................................................... 179
4.2.3. The Renewal of the African University: Towards a “Triple Helix” Development
Model ........................................................................................................ 180
Abstract ........................................................................................................ 181
Introduction .................................................................................................. 181
From Stage to Spiral Model in Education......................................................... 182
Universities as the Locus of the Third Industrial Revolution ................................. 183
The Emergence of Polyvalent Knowledge ......................................................... 184
Science and Technology Policy in Development and Redevelopment .................. 186
The Renewal of African Universities ................................................................. 187
Information and Communication Technologies and African Universities ............. 188
Towards a Triple Helix Development Model ..................................................... 188
The Endless Transition ................................................................................... 190
Conclusion: The Renewal of the African University ............................................ 191
References .................................................................................................... 192
4.2.4. An Assessment of the University-Industry Relations in Israel: The Experience
of the Magnet Program and Implications for Ethiopia ..................................... 194
Abstract ........................................................................................................ 195
Introduction .................................................................................................. 195
The Exploration of Innovation Networks in the Magnet Context.......................... 197
Data Collection ............................................................................................ 197
Reasons for the Initiation of the Magnet Program ............................................. 197
Relations between Academy-Industry-Government ............................................ 198
The Organizational Framework of the Magnet Program: Office of Chief Scientists &
Balance of Powers ......................................................................................... 199
Results of Networking and Magnet Structure .................................................... 201

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University- Government and Industry (UGI) Relations in Developing Countries .... 203
Implications for Ethiopia: What could be done in Ethiopia based on the Magnet
Experience? .................................................................................................. 203
Lessons Learned in Magnet Program: Readiness for International Collaboration.. 206
Concluding Remarks ..................................................................................... 209
References: ................................................................................................... 210
Appendix: ..................................................................................................... 214
4.2.5. A mission impossible? A tri-partite cooperation in an international context
(Summary) .................................................................................................. 220
Editors’ note: ................................................................................................ 220
Introduction and Background to the Research Challenge .................................. 221
The South African case with particular reference to the Province of the Western Cape
................................................................................................................... 223
Annex .......................................................................................................... 227
4.2.6. Mobilizing University Resources to Create and Support Firms - the Case of
University of Zambia’s Computer Centre and Technology Development and
Advisory Unit .............................................................................................. 233
Abstract ........................................................................................................ 234
Introduction .................................................................................................. 234
2. The University of Zambia’s Entrepreneurial Activities ..................................... 235
3. The case of the Technology Development and Advisory Unit (TDAU) .............. 237
4. The case of the Computer Centre in the Development of Zamnet .................. 240
5. Concluding Remarks ................................................................................. 242
References .................................................................................................... 245
4.2.7. The Oxfordshire Economic Observatory project: Relevance of the Model to
Developing Countries .................................................................................. 246
1. Introduction .............................................................................................. 247
2. What is OEO? Developing the Observatory ................................................ 247
3. OEO’s Regional Role and Relevance to Developing Countries ...................... 254
4. Conclusions.............................................................................................. 255
References: ................................................................................................... 257
4.2.8. Universities as Innovators in the Israeli Biotechnology Industry ............... 258
Introduction: Governments’ Science Orientation, Universities, Industries and
Innovation .................................................................................................... 259
The Founding of the Industry in Israel: ............................................................. 260
1999-2005: A Decade of Growth .................................................................. 261
Companies at the Developmental Stage .......................................................... 262
The Biotechnology Sector ............................................................................... 263
The Monitor Survey ....................................................................................... 264
Patents ......................................................................................................... 265
Students ....................................................................................................... 267
Biotechnology Based Academic Research ........................................................ 267
Government Incentives to Biotechnology ......................................................... 270
Local Organizations ...................................................................................... 271
University Spin-offs in Biotechnology – Illustrative case studies ........................... 271
Complexities Associated with University Spin-offs .............................................. 274
Discussion .................................................................................................... 275
References .................................................................................................... 276

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4.2.9. Management of Technology Transfer Offices: Lessons for Brazilian

Universities ................................................................................................. 278
Introduction .................................................................................................. 279
1. The Technology Transfer Office Model ........................................................ 280
2. TTOs in Brazil: a brief history...................................................................... 283
3. Method .................................................................................................... 285
4. Data Analysis ............................................................................................ 286
5. Case Analysis ........................................................................................... 290
6. Conclusions.............................................................................................. 294
References .................................................................................................... 296
4.2.10. ICT Business Incubation: Evidence from Mauritius .............................. 298
Abstract ........................................................................................................ 299
1. Economic Landscape ................................................................................. 299
2. Development of the ICT sector & ICT Strategy .............................................. 300
3. ICT Business Incubation ............................................................................. 307
Conclusion ................................................................................................... 318
References .................................................................................................... 319
Annex I......................................................................................................... 320
Annex II ........................................................................................................ 321
Annex III ....................................................................................................... 322
4.2.11. Academia-Industry-Government Relationship: Experience of the College of
Engineering and Technology, University of Dar es Salaam Tanzania ................ 323
Abstract ........................................................................................................ 324
Introduction .................................................................................................. 324
SME Contribution to the National Economy ..................................................... 326
COET - SME Relationship .............................................................................. 326
Role of CoET in Innovation for Industrial Development ..................................... 329
Triple Helix Status in Tanzania ........................................................................ 334
Conclusion and the Way Forward ................................................................... 337
Bibliography ................................................................................................. 339
4.2.12. Research Institutions and SMEs: Trust Mechanism and Partnership ....... 341
Introduction .................................................................................................. 342
Background and Problems ............................................................................. 342
Trust Structure in Chinese Society in the Transitional Period ............................... 343
Investigation Design and Means ..................................................................... 348
Case Study and Discussions ........................................................................... 349
Conclusions and Discussions .......................................................................... 353
References: ................................................................................................... 354
4.2.13. Emergence of the Entrepreneurial University and the Future of Higher
Education in China ..................................................................................... 355
Abstract ........................................................................................................ 356
Introduction .................................................................................................. 356
I. Comparison of University, Industry and Government in China and America ..... 357
II. Entrepreneurial University: Definition and Characteristics ............................... 360
III. University-pushed and Government-Pulled Triple Helix ................................. 361
IV. Development of Entrepreneurial University and the Future of Higher Education in
China .......................................................................................................... 363
Conclusion: Policy Implications ...................................................................... 367

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References .................................................................................................... 370

AUTHORS’ CV/BIO: ............................................................................................ 372

Félix-Marie Affa’a.............................................................................................. 372

Mariza Almeida ................................................................................................ 372
Thomas Andersson ............................................................................................ 372
Francisco Javier Cantu-Ortiz .............................................................................. 373
Kimiz Dalkir ...................................................................................................... 374
James S. Dzisah – (University of Saskatchewan, Canada) ...................................... 374
Henry Etzkowitz ................................................................................................. 374
Christian Friedrich ............................................................................................. 374
Devrim Göktepe ............................................................................................... 375
Victor Konde ..................................................................................................... 375
Helen Lawton Smith ........................................................................................... 376
José M. C. Mello .............................................................................................. 376
Marli Elizabeth Ritter dos Santos ......................................................................... 376
Roshan Kumar Seebaluck .................................................................................. 377
Abraham Temu ................................................................................................. 377
Chunyan Zhou .................................................................................................. 377
Yandong Zhao.................................................................................................. 378

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SECTION 1

INTRODUCTION

1.1 Foreword
1.2 Introduction
1.3 Executive Summary / Overview
1.4 Keynote address

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INTRODUCTION
1.1 Foreword
Many individuals made contributions that were crucial for the successful organization of the
Triple Helix Conference on Transforming University-Industry-Government Relations in
Ethiopia. In particular, we would like to thank Dr. Duri Mohammed, former Minister of
Planning and Ethiopian Ambassador to United Nations, who first broached the idea of creating
the Ethiopian Triple Helix Association as a platform for developing more effective cooperation
between various actors in Ethiopia according to the Triple Helix concept with Henry Etzkowitz
(then of State University of New York and who established the concept in the early 1990s), and
Mr. Per Eriksson, Director General of the Swedish Agency Responsible for Innovation Systems
(VINNOVA).

The project evolved with the help of the International Organisation for Knowledge Economy
and Enterprise Development (IKED), Malmö, Sweden and, in Addis Ababa, Ethiopia, the staff
of the Ethiopian Triple Helix Association with Mr. Abdurrahman Ame and other colleagues and
volunteers.

The Swedish International Development Agency (SIDA), as well as the Brazil Infodev Project,
the German Technical Development Agency (GTZ) and MIDROC Ethiopia are thanked for
financial support.

The event was hosted by the Ethiopian Ministry of Education and UNECA, the United Nations
Economic Commission for Africa, generously made its spacious conference facilities in Addis
Ababa freely available as the event venue. We also thank Matthieu Roest at IKED for his
coordination and administration of the conference in Addis Ababa on 29th-31st May 2006, and for
holding together the process of producing these proceedings. It is our hope that the book will
serve as a source of inspiration in Ethiopia as well as for other countries looking for new ways
and means to dynamise the relations between universities, industry and government.

Thomas Andersson

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1.2 Introduction
Better means for developing and using technology and knowledge have become critical for
basically any country in the world. This includes developing countries which can ill afford to try
and advance or survive merely by exploiting cheap labour and simple production technologies.
Whereas the means and the potential of technology to make a difference in any kind of societal
situation keep expanding at high pace, however, so does the need of speeding the upgrading of
competencies and skills that are needed for supporting the task. The needs cut deeply through
society. In developing countries, there are hordes of children and young people who need
education, not merely many hours in school, but teaching and training communicated in ways
that can inspire, allow for active learning and for creativity. Grown-ups and even the elderly need
to let go of outdated practices and embrace new means and new tools. Experts, officials,
bureaucrats, and the like, all need to come to grips with the new opportunities and what they
require.

In this situation, it is becoming obvious that government alone cannot lead the way towards
progress and needed societal change. Different key stakeholders must be able to assume a very
active and productive role, and they need to interact in constructive ways. The concept that
captured this notion ahead of others is that of Triple Helix. By identifying and examining ways in
which government, private sector and university can act in unison and engage in complex
interwoven processes of mutual adaptation and change, and thereby create important synergies
and new capacities in society, the need is revealed of a new paradigm for growth in developed
countries, as well as for generating development in the developing world.

Embarking on a series of reforms and efforts to strengthen the triple helix can be a difficult and
painful task. Each society needs to come to grips with its own specific issues. At the same time,
any country can learn from the experience of others. It will not be sufficient to study just any
individual case, however. In fact, there is a need of a template of alternative and perhaps
complementary stories and collections of experience. For developing countries, it may sometimes
be most fruitful to ponder and learn from the experience of other developing countries, which
may in some respects display those structures and trajectories of societal transformation that yield
the most productive lessons.

A problem is, however, that most academic and other studies of triple helix and related aspects
such as industrial structures, clusters and innovation processes, have concerned themselves with
the United States or other developed countries. For this reason there is a great need of collecting
and systemizing developments in the developing world. This work need to be pursued in such a
way as to be meaningful and relevant to the many actors involved in these issues, i.e. not only
academic and policy planners.

For this reason, a number of actors got together in the first few years of the new millennium and
started to contemplate the potential benefits of organising a conference on the Triple Helix to
take place in a major developing country that displays both the need of tangible reforms, and the
potential for progress, and with a strong presence of participants from other developing
countries. Ethiopia was from early on selected as the country. The conference eventually took
place at the United Nations Conference Centre in Addis Ababa on 29th - 31st May 2006.

An important part of the preparations had to do with investigating how university can encompass
a third mission of economic development in addition to research and teaching, with a particular
view to the situation in developing countries and in Ethiopia. Further, to analyze the concept of
the “entrepreneurial university” and its relevance to this institutional set-up, and how to adapt

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and reorient existing institutions of higher education to take a more active role in society,
especially in fostering an innovation culture and practice. Lastly, there was the task of designing
strategies to facilitate collaboration and modalities for an effective networking amongst the
University, industry and government in connection with the conference itself.

Various actors and resources engaged in the process. Expatriate resource persons included
technology transfer practitioners from U.S and India; Entrepreneurial education experts from
Sweden and Brazil; Incubator directors from Brazil and U.S.; Academicians with experience in
adapting the entrepreneurial university model to Africa from Zambia and Kenya; S&T policy
analysts and “Triple helix” researchers from Brazil, Canada, China, Israel, Madagascar, Mexico,
South Africa, Tanzania, Turkey the US and Sweden; Policymakers from Brazil and Sweden.
Policymakers as well as industrialists and academics in Ethiopia participated enthusiastically in the
event.

An important objective was to help set in motion a participatory process. Resource Persons from
Latin America, Europe and Asia offered their country experiences, which others were set to
compare with, comment on and debate. Models for organizational innovation from abroad were
investigated for utilization in Ethiopia. Case studies of the triple helix model adopted in Brazil
and the Swedish Innovation Agency were presented. Active participation from within Ethiopia
included that drawn from Addis Ababa University and several new regional universities: (i)
Arbaminch University, (ii) Bahirdar University, (iii) Debub University, (iv) Jimma University and
(v) Mekele University.

We shared the organisational responsibility for preparing and carrying out the conference with
the International Organisation for Knowledge Economy and Enterprise Development (IKED),
an independent think-tank located in Sweden and specialised in comparative studies of multiple
countries in the realms of the cross-disciplinary issues affecting the economic transition of
societies at our time. IKED also assumed the task of putting together a substantive review of the
relevant economic and institutional context of Ethiopia, and has coordinated the work of putting
together these proceedings.

The content of this publication addresses a range of issues. The contributions highlight the
varying nature of changes and processes under way in the Triple Helix and wider society. The
overview piece of Ethiopia shows the range of challenges confronting this society, and several
other contributions add further observations and conclusions on efforts that Ethiopia may need
to embark upon to enable more affirmative progress in this area. The book goes much beyond
the Ethiopian context, however. Hopefully it provides observations, comparisons and lessons
that should be useful to contemplate by various actors engaged in these kinds of issues in various
societies around the world.

Henry Etzkowitz Thomas Andersson

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1.3 Executive Summary / Overview

The Triple Helix of Innovation and Cluster Creation

A new role for government has arisen in increasingly knowledge-based societies, transcending
procurement of individual technologies and support of the science and technology base.
Innovation is considered here as the process of developing an institutional infrastructure that
helps create new industries and growth firms. Such “innovation in innovation” guides the specific
process of generating new products or processes that traditionally goes under the heading of
innovation.

In order to pursue such tasks, government needs to move away from traditional approaches,
build new competencies, and operate so as to foster initiatives by other actors. There are great
differences between countries when it comes to government’s preparedness and ability to do so.
However, changes are under way, in many places. The state increasingly introduces measures to
promote innovation and accompanying processes of industrial and societal renewal in
collaboration with industry and university. We call this higher order of innovation, comprising
bottom up, top down and lateral initiatives, from university, industry and government,
individually and collectively, “meta-innovation,” and inquire into the conditions under which it is
produced.

The role of government in innovation in the classic sense is long-standing: to carry out traditional
state functions, such as defense and enumeration of the population, as well as new tasks such as
cure of diseases and industrial advance. Government has employed various means to induce
innovation such as offering prizes for results, for example, a method to calculate longitude to
improve navigation of ships and reduce the risk of shipwreck in 18th century Britain.1
Government has also established laboratories to achieve specific objectives such as improvement
in weapons, sanitation and farming practices in 19th century U.S.2 It has purchased equipment
such as the Hollerith card sorter to speed analysis of census data in the early 20th century and,
especially since the second half of the 20th century, granted funds on a large scale to support
basic research that scientists predict will have both theoretical and practical significance.

Different trajectories of meta-innovation can be identified depending upon the configuration of

the triple helix and of governmental levels in relation to each other. The interaction between
national and regional levels of government is a strategic research site to examine the emergence
of meta- innovation. Conflict, as well as coordination, among the levels of government may be
identified as a driving force of meta-innovation. A meta-innovation system has been created in
the US, since World War II, and in Brazil since the downfall of the military regime in the 1980’s.
Welfare state societies, such as Sweden, and post-Socialist societies, such as Hungary, as well as
developing countries such as Brazil and Ethiopia, are moving in this direction from various
starting points.

The Triple Helix of Innovation

The triple helix of innovation is emerging in widely different societies, with previous traditions of
strong and weak levels of state activity. In statist societies, the relaxation of the total state, based
upon central planning, to a more modest role of incentivizing innovation, without going all the
way to inaction, was also a difficult transition. A triple helix coordinated entirely by the state only

1 Sobel, Dawa Longitude Penguin.

2 Rossiter, Margaret 1976. The Emergence of Agricultural Research, New Haven: Yale University Press.

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provides a limited source of ideas and initiatives. Under these circumstances government may
take initiatives without consulting others; indeed it may subsume the other institutional spheres
and direct their activities. Although large projects may be accomplished it is not the most
productive form of triple helix relationships since ideas are coming only from one source, the
central government.

Of course, top-down models have been highly successful in organizing large military and space
projects in both socialist and capitalist regimes and in promoting economic development in
authoritarian regimes. The Singapore government organized the transition to high-tech
manufacturing and then to knowledge-based economic development. However, too strong
human capital focus on formation of employees for manufacturing enterprises left a relatively
narrow base to draw upon when it became apparent that transition to a knowledge economy was
indicated.

Conceptualizing the role of the state in innovation thus should take into account multiple levels
of state activity, from the local to the multi-national. If the role of the state in innovation is
presumed to be primarily at the national level, policies may be too broad to deal with local or
regional needs. Too great focus on the national level also may result in policies and practices
targeted at large national firms rather than start-ups which typically have local origins. Most
importantly, encouraging different levels of state activity has the advantage of allowing various
sources of program experimentation to arise.

Interaction among university-industry-government, as relatively independent, yet inter-

dependent, institutional spheres, is the key to improving the conditions for innovation in a
knowledge-based society. The change in the role of the state from public partner in dual
relationships, with either industry or university, to one of three participants in triple helix
relationships increases government involvement in innovation issues, irrespective of the political
system or development level. For the triple helix to operate fully there must also be initiatives
rising from the bottom up and from the other institutional spheres. The precise challenge varies
between countries. In many parts of the developing world, government has drastically subsumed
other players, and bureaucrats at various levels keep interfering with university and private sector
activities in ways that divert much energy and resources from anything that resembles productive
innovation. Thus, it is very important that governments put strong emphasis on increasing their
ability to roll back public action in unproductive modes, and to grow the ability to shift attention
to capacity-building and fruitful interface in the triple helix.

Cluster Creation

Civil Society and the Triple Helix

Beyond the question of activation of multiple levels of government is the issue of the societal
base to support innovation. Civil society is the foundation stone of the triple helix and the
relationship between science policy and democracy. Although a limited triple helix can exist
under authoritarian conditions, a full triple helix occurs in a democratic society where initiatives
can be freely formulated.

As the state incentivizes university and industry to enhance their technology transfer and firm
formation capabilities, it does not necessarily imply that the government increases its control over
these spheres. Indeed precisely the opposite course of action may be indicated in societies where
government has dominated the industrial and academic spheres. On the other hand, in societies
where government has been relatively inactive; it may mean playing a greater role in society. The

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ideal triple helix configuration is one in which the three spheres interact and take the role of the
other, with initiatives arising sideways as well as bottom up and top down.

A flourishing civil society of individuals and groups freely organizing, debating and taking
initiatives, encourages diverse sources of innovation. The basis for a triple helix including
bottom-up as well as top-down initiatives can be seen most clearly in countries that are just
emerging from military dictatorships. The first academic revolution, the incorporation of research
as a broad university mission, took place in Brazil in the 1970’s, expanding the role of the
university in society from a traditional support structure to one directly linked to national
priorities. This transformation took place under a military regime where the university had
relative autonomy. University discussion groups became a place where some internal opposition
was tolerated even as many other academics were removed from their jobs and forced out of the
country.

When the military gave up control in the early 1980’s, a space opened up for university science
and technology researchers to introduce the concept of the incubator from the U.S. At the same
time a financial crisis led large scale technology programs to be downsized, making smaller scale
initiatives, such as incubators to encourage the creation of start-ups, a necessity. At a later point,
the national government built upon these programs and made them national policy. However, it
was not until the re-creation of civil society that these local initiatives became possible. In
succeeding years, various levels of government as well as industry and civil associations took up
the incubator concept and spread it throughout Brazilian society, applying to a variety of
problems from raising the level of low tech industry to creating jobs for the poor.3

Thus, one path to the Innovation State is from a top-down model of bureaucratic control, with
the state devolving its authority to various degrees. The other is from a standpoint of modest
participation by central government in which case the pathway is to increased activity. The two
different starting points intersect at some mid-point, where government, industry and university
assume relatively equal status as interdependent institutional spheres.

Government is either taking a more or less active role in knowledge-based economic

development, as the case may be. Direct and indirect innovation polices are formulated in former
statist and laissez-faire regimes, utilizing the university as an intermediary between government
and industry. In countries that followed a linear model, there has been a shift to an assisted linear
model, with intermediate mechanisms introduced to move research into use. An indirect and
decentralized innovation policy, across the institutional spheres, may be more effective than
traditional direct approaches since it is better able to take regional differences into account and
incorporate bottom-up initiatives.

If the regional and local levels are active and with input from universities and industry as well,
there is a much broader base to develop creative ideas for innovation as well as better base for
implementation, especially at the regional and local level. The resulting dynamic of initiatives
from different levels of government and from joint initiatives among the institutional spheres is
the hallmark of an innovative society.

Any country in the world can move in this direction. A country such as Ethiopia, with its proud
history and many talented experts and citizens, can gain tremendously by moving away from
interventionist and destructive bureaucratic procedures, and by putting emphasis on capacity-

3 Etzkowitz, Henry, Jose Mello and Mariza Almeida.2005. Towards ‘meta-innovation’ in Brazil: The evolution of the incubator
and the emergence of a triple helix Research Policy.

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building through participatory processes engaging major stakeholders. The journey is not
straightforward though and any society can benefit from studying and drawing lessons from the
experience of others. There is a compelling case for embracing this task. The journey must start
through the establishment of new partnerships and constructive collaboration and engagement
between the key societal players.

Henry Etzkowitz

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 Ethiopia Triple Helix Conference

1.4 Keynote address

H.E. Staffan Tillander, Swedish Ambassador to Ethiopia

Academia, Business, Government:

A Partnership to Promote Development

H.E. Staffan Tillander, Swedish Ambassador to Ethiopia

Keynote Address delivered at the

Ethiopia Triple Helix Conference on
TRANSFORMING UNIVERSITY-INDUSTRY-GOVERNMENT RELATIONS IN
ETHIOPIA
Addis Ababa, 29th May, 2006

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Ethiopia Triple Helix Conference

His Excellency, President Girma Wolde Giorgis,

Ministers,

Guests,

Academics,

Businessmen:

It is an honour for me to be asked to say a few words at the opening of this Conference.

This country has produced some of the most amazing historical and religious places. It has also
produced some of the most amazing athletes.

A few years ago there was a poster all over Addis Ababa, with a picture of Haile Gebre Selassie,
one of the greatest individuals and athletes of our time. On the poster it said, “Yishalal”. It is
possible.

The Great Ethiopian Run, with 25000 participants, shows that it can be done. Yishalal. If you
run, or take a walk around Meskel Square early in the morning, you see hundreds of young
people, and some middle aged as well, showing the same thing. When they run at full speed up
the hill passing ECA and Hilton and the Foreign Ministry, they show that it is possible - Yishalal.

But the message from Haile Gebre Selassie is not confined to sports only. It says that it can be
done also in other sectors. Ethiopia Yishalal!

The incredible thing with long distance running, which is a highly individualistic effort, is that it
also requires cooperation. Different efforts must pull in the same direction. Team work is
necessary. Haile and Kenenisa together winning Olympic Games is a fantastic illustration of this.

And this is true also in politics and economics. It is true if one wants to achieve growth and
development. Different actors need to work together, to pull in the same direction, to make the
individual efforts possible. To enable the best to win.

Perhaps that is the key message from this Conference. Government, the private sector, academia
must work together, in a partnership.

Each one in the team has a crucial role. That is true for sports, and it is true in the area of
development.

Government does not create growth. Businesses do. The aims of this Conference - to achieve
improved economic and social development – will not be achieved by people like me.
Development and growth will only be possible if businesses can grow and prosper. If individuals
and investors, workers and business women and men, farmers and entrepreneurs, feel that
investing their efforts, time and money is useful and profitable. If so they may produce, sell, buy,
trade.

The private sector is the key.

But it is not enough. From where do businesses get their ideas? Their research and development?
Their trained people?

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Some of this will come out of the family, the village, the businesses. But as businesses grow,
prosper and develop, as they interact and compete with other businesses, as they move beyond
the local and national market, then the challenges grow, the need for information increases. They
need new ideas, they need specialists, researchers.

In Ethiopia, the manufacturing sector is characterized by low productivity and weak

competitiveness due to low skills, shortage of capital and lack of modern technology. Yet this
sector could be a major source of export led growth if these constraints are removed. To realize
this potential, the GOE needs to create an enabling environment for more investment in
manufacturing, both foreign and local and improve the skills base for higher labour productivity.

Universities are a breeding ground for ideas, free thinking, development. Some of it may succeed.
Some may not. Out of hundreds of ideas and thoughts and theories and studies, only a few will
prove to be crucial and useful for further development. But all will contribute to the creation of a
vibrant intellectual climate that is so necessary for ideas to flourish.

Universities are not the only institutions that contribute to such an intellectual climate. Also think
tanks, independent organizations, the free press, people participating in debates – they all play an
important role in creating a climate that breeds innovations and a spirit that it is possible -
Yishalal.

The free flow of ideas and information is a key to economic and social development and to
democracy.

The task of government is to create the general framework for such a climate. A spirit of
openness, respect for freedom of thought and expression, the means through which information
can flow, internally but also externally creating a flow of information and ideas between the
national and the global market. In today’s world the global market creates enormous
opportunities. To take advantage of those opportunities, the connection to them, the awareness
of them and the accessibility to them must be in place.

Perhaps the most important task of government is to remove obstacles to business growth. To
know what those obstacles are, the business community as well as research institutions and
others must be encouraged to participate and voice there demands and criticism. Government
must listen. It must encourage dialogue.

Networks among different actors are key to the success of such a dialogue. One aspect of this is
the networking between government, businesses and universities. A big and important step in the
right direction can be taken through this conference.

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SECTION 2

PROCEEDINGS
2.1 Proceedings from the workshop sessions
2.2 Presentation

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 Ethiopia Triple Helix Conference

PROCEEDINGS
2.1 Proceedings from the workshop sessions

Transforming University-Industry-Government Relations in

Ethiopia
Addis Ababa, May 29 - 31, 2006

Special Acknowledgement:

This section of the document, which records the Proceedings of the Conference, was originally
prepared largely by the Ethiopian Triple Helix Association under the supervision of Mr.
Abdurahman Ame.

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Introduction

Recent years have witnessed growing interest among scholars, the private sector and
policymakers in the importance of the university - industry - government relationship (UIG) in
fostering regional growth. A number of questions have been raised as a result. For example, how
to adapt, reorient existing institutions of higher education to take a more active role in society,
especially in fostering an innovation culture and practice? How to get the universities to better
contribute to the innovation process at the regional level?

An international conference was convened in Addis Ababa at the United Nations Conference
Center, from May 29 to 31, 2006, under the theme of “Launching a Program to Transform
University - Industry - Government Relations in Ethiopia”. Over 150 participants representing
academia, business leaders, researchers, policy-makers, NGOs, the donor community,
ambassadors, and regional and international organizations from various countries participated.

The Ethiopia Triple Helix Conference was unique because for the first time the concept of
“Triple helix” is introduced in Africa. The focus of this policy-oriented conference is on issues
and challenges associated with the “triple helix” strategy for promoting innovation and learning
societies in developing countries through co-operation and exchange of best practice. The
conference is a response to the growing awareness about the need for policy shift from the
traditional technology transfer practice, involving little or no learning of innovation consequence,
to a policy position that is capable of providing a sustainable basis for innovation and
technological progress in African countries.

This report attempts to summarize the key issues that transpired in the discussion and in a
number of papers presented at the conference that focused on the opportunities and the
challenges of African universities in general and those of Ethiopia in particular as these
universities are expected to carry out a third mission of economic development in addition to
research and teaching. In addition, the experience of Latin America particularly Mexico and
Brazil in creating wealth from knowledge and lessons drawn from the experience is included in
the report. The papers presented at the conference are published as an integral part of the
proceedings of the conference.

Opening Session

1. In his opening address to the conference, H.E. Girma Wolde Giorgis, President of the Federal
Democratic Republic of Ethiopia, stated the importance of the conference as its main objective
of transforming university-industry-government relations by identifying common issues through
well-designed strategies. According to the President, the Ethiopian Government has set out the
goal of reducing extreme poverty by 2015. Universities have a special role in promoting
economic growth through enhancing production efficiency and effectiveness. In this regard, the
conference has an immense advantage in defining the role of university-industry-government
relations by synthesizing the local and international experience. It also helps to establish how
Ethiopian universities can encompass a third mission of economic development in addition to
research and teaching through well-designed strategies that facilitate collaboration and modalities
for an effective networking amongst university, industry and government in the interest of
furthering the Ethiopian economy.

2. In his keynote speech to the conference, H.E. Dr. Sintayehu Woldemichael, Minister of
Education, said that the capacity-building strategy of the Federal Democratic Republic of
Ethiopia (FDRE) underscores the developmental role of universities. The strategy of the

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government also recognizes that universities can be used to adapt advanced technologies to solve
local problems. The Industrial Development Strategy of the FDRE also recognizes the
integration of economic and social development with teaching and research. He also noted that
the FDRE was rapidly diversifying and expanding tertiary education and training opportunities.
New universities have been founded and old ones have been re-oriented to this end so as to
increasingly become sources of regional economic development.

The Minister pointed out that it was a common agenda for the establishment of the new
universities that they would strengthen the local economic conditions. All are located in regions
that are broadly characterized as outer regions. The main reason behind the foundation was
clearly that the new universities should lift the regions by having a direct economic impact in
terms of a Keynesian multiplier effect. The attraction of students and academic personnel
consuming and paying taxes in the cities was one side of the economics effect.

He also indicated that universities must play a pivotal role in expediting the country’s effort to
bring about sustainable progress and rapid socioeconomic development through employing
research activities and generating knowledge. What is needed is to develop strong research
capacity in fields with conjoint practical and theoretical relevance, faculties and administrators
interested in using these capabilities to develop local economies and collaborative efforts among
university-industry-government to implement these.

He argued that we have to focus on the adoption of new technology since generation of new
technology need a vast resource that is quite expensive to developing countries.

He declared that “developing countries shouldn’t borrow technology. Africans should also think
to create knowledge, in this era of globalization, to be free from dependence knowledge should
be generated from the land of Africa”.

He noted that for some time it was believed that new knowledge is generated exogenously. He
stressed that “it is known that generation of new knowledge is endogenous i.e., it is a deliberate,
human, motivated action”.

He said that when industry engages in research with the objective of profit maximization as long
as we don’t protect new knowledge it is not possible for industry to fully benefit from new
knowledge. As the market mechanism alone will not enable the generation of new knowledge, he
suggested the need to forge strong university, industry and government interaction to enhance
generation and diffusion of new knowledge. The government has to protect new knowledge
through the special mechanism. When the three actors, UIG, work together new technology can
be generated and solve social problem.

The Minister also raised concern over the mismatches between university capability and private
sector needs and the lack of support for innovation.

Finally he said the education and training offered in higher education institutions should be
expanded with no compromise to its quality and standard. To maintain the quality and standard
of higher education, it is mandatory to improve the efficiency of universities through capacity
building programs.

3. The third speaker H.E. Mr. Staffan Tillander, Ambassador of Sweden, underlined the
significance of the topics addressed and the conference for Ethiopia - a diverse country with a
federal system - where universities as well as businesses are being established and are evolving.

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According to him, federalism has the potential of creating power centres at different levels of
government and in different parts of the country. A well-functioning federal system builds on
and encourages pluralism, diversity of views, new ideas and innovation. Indeed, federalism should
be designed so as to acknowledge diversity while maintaining unity. In his address, Sweden’s
Ambassador further noted the need of pull-back by government of red tape and interventionist
policies that impede the functioning of the private sector. It is important for a country to provide
an environment where a great number of people are willing to make the effort to become
entrepreneurs. “Not all of them will be successful, but eventually some will become a household
name at the global level”, he said.

4. Thomas Anderson, of the International Organization for Knowledge Economy and Enterprise
Development, focused on the growth potential of countries in the present situation, marked by
globalization and the advance in information and communications technology (ICT). He argued
that several enabling conditions need to be in place if the potential of growth is to be fulfilled.
The population must also encounter conditions that enable people to be creative and to drive the
knowledge-based economic development. Professor Andersson emphasized that all countries are
in a learning mode regarding how to accept in full and exploit the existing opportunities. Progress
with respect to new technology and knowledge cannot be commanded from the top. The key
formula for success must critically include the adoption of instruments that allow each society to
advance from within. He mentioned two important factors for growth: the first aspect is the
speed at which the new information becomes available and used in the development process. The
second emanates from the combination of specialisation and collaboration among individuals and
organizations.

With regard to Ethiopia, he noted the critical challenges of raising the quality of education,
improving health conditions, providing better infrastructure, increasing the use of technology
especially information and communication technology (ICT), reducing barriers to
entrepreneurship and improving the investment climate, and addressing the acute weaknesses in
the governance system.

Finally, he suggested the direction for reform to overcome these challenges in fostering science
and technology and innovation in low-income countries. “Here, the centrepiece of collaboration
is between university and societies. In order for universities to operate successfully, funding
mechanisms need to encourage specialization and strive for quality improvement. Universities
need to be encouraged to deliver quality education, research and build relations with societies. In
addition, there must be better conditions for individuals to take on risk to start firms, to invest in
training and research and to turn informal into formal companies. In this collaboration process,
the government must assume a role of developing infrastructure and protective regulatory
frameworks”.

5. Professor Augustin Fosu, representative for the United Nation Economic Commission for
Africa (UNECA) made opening remarks. The representative’s remarks focused on the concern of
“the challenges of Employment” and “the challenges of meeting the Millennium Development
Goals in Africa”. He further mentioned that the meeting of African Ministers of Finance and
Economic Development, held in Ouagadougou, Burkina Faso, during 14-15 May 2006
emphasized on creating employment in Africa.

The UNECA representative paid special tribute to the universities and the private sector in
employment creation. In the learning process, the individual students pass through school with
the expectation of getting the reward, eventually, of being employed. In this respect, the
universities should be aware of societies’ needs and establish an environment for development.

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What the universities deliver has to match with what the society needs. The universities should
deliver the quality services that are required for development.

The UNECA representative also expressed his organisation’s opinion that the kind of ideas
promoted by the Triple Helix Association are of great value, and its certitude that the
international expertise provided at this meeting, in particular, will serve to advance the
partnerships being sown here between university, private sector and government. He also noted
the particular relevance to UNECA of the conference, given the focus of the Commission on
issues of employment on the African continent.

Prof. Fosu said that UNECA’s research indicates that to improve employment perspectives with
a consequent impact on African economies, it is necessary to invest in an integrated capacity
building strategy for development. More than providing training and technical assistance, building
capacity entails the ability of individuals, organizations and institutions to deliver tasks and
mandates.

A capable society is able to build and sustain knowledge systems that enable countries to do the
work for themselves, reducing dependency on outside assistance at the level of the individual,
organizations, and in the institutional context.

To achieve this, Prof. Fosu said, “a society must develop a tripartite arrangement between
government, the private sector and the university. This partnership will ensure that the university
not only delivers professionals of a high calibre that are relevant to employment in the private
and public sectors, but also will assist - particularly through research and development - a country
in building a sound and innovative economic basis”.

Finally, the UNECA representative reiterated the need for partnership among universities, the
private sector and government in every country to produce the thinking and research that are
crucial in building progressive and inclusive societies, where the individual is not only
encouraged, but allowed to contribute to make his or her country a better place for him or
herself, and for future generations, and UNECA’s commitment to assist such kinds of
partnership.

6. Prof. Henry Etzkowitz, Chairman of the department of Management of Innovation, Creativity

and Enterprise at the University of Newcastle upon Tyne Business School, introduced the Triple
Helix concept. Triple Helix acknowledges (1) the enhanced role of university in the innovation
system of knowledge-based society; (2) a movement toward collaborative relationship among
universities, industry and government and (3) in addition to fulfilling their traditional functions,
each institutional sphere also takes the role of others, like universities establishing firms.

Beyond the development of new products, innovation is the creation of new configurations
among the institutional spheres. These organizational innovations are as important as technical
innovation in regional development. University - Industry - Government interactions are
increasingly the basis of economic and social development strategy in both developed and
developing societies. The Triple Helix thesis underscores the possibility of developing capacity to
generate science-based innovation locally rather than relying on turn-key technology-transfer/
traditional technology-transfer mechanisms. The interaction among the three institutional spheres
is the source of sustainable generation of innovation/institutional arrangements especially in
developing countries where a university has traditionally had limited R&D capacity and industries
are not innovating.

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The transition to a “Triple Helix”, characterized by inter-dependence among relatively

autonomous institutional spheres, takes place from divergent starting points of “statist” and
“laisser-faire” regimes (Etzkowitz, 2005). Professor Etzkowitz discussed how the three actors
operate under each model, starting with the statist Triple Helix model in which the government
dominates other spheres, with top down bureaucratic coordination, and the laisser-faire Triple
Helix model where the role of government is limited to addressing market failures. He stressed
that too much, or too little, government is not conducive for innovation. For a country like
Ethiopia a challenge is that UIG relations are still in transition from a system in which the state
was heavily involved in almost all production and distribution activities.

He also introduced the concept of the Entrepreneurial University and the key role it plays in the
transition to a Triple Helix model of regional innovation and economic development. In the
movement from knowledge and consensus to innovation spaces, the university provides the
knowledge space by generating knowledge with economic and social relevance and providing the
leadership in initiation of collaboration with government and private sector to generate
ideas/strategies and also the innovation space where the new organizational mechanisms or
socioeconomic policies are initiated to transform ideas/projects conceived in the consensus
space.

7. Dr. Arega Yirdaw, Chief Executive Officer of MIDROC-Ethiopia, addressed the conference
on “Innovation and Its Contributions to the Growth of the Private Sector and the Country”. He
started his presentation with the nature and importance of the private sector in economic
development as follows:

• To be part of the global market, the private sector is required to innovate,

• The private sector needs to compete and be successful in the international market,
• The private sector should provide products of high quality for domestic markets,
• Introduce innovation for national economic growth, and pay taxes,
• Leaders in the private sector are required to double their production while enhancing the
quality.

He also outlined the role of the private sector, universities and policymakers in fostering
innovation. The private sector can engage with government and university in the following areas:

• Curricula development,
• To make industry leaders “available” (e.g. to support university development in some
way),
• Sponsorship to enhance innovation,
• Participate in studies conducted by the universities.

He further noted that the private sector - government collaboration should:

• Ensure healthy development of the economy,

• Promote the country to attract foreign investment,
• Engage and facilitate to improve investment proclamation,
• Assist policymakers by providing relevant data (information),

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• The universities are the main sources of for the private sector in providing human
resources,
• The three development actors need to join hands to contribute to development.

On the other hand, he argues that the Government should:

• Ensure that enabling conditions are in place,

• Provide incentive to encourage innovation,
• Encourage dialogue between private sector and universities.

He also stared that the private sector on its part expects universities:

• To provide quality and marketable skills,

• To initiate and promote innovation,
• To reengineer the courses where the private sector is interested to do so,
• To take the advantage of market economy.

It was reflected that, traditionally, in Ethiopia everybody waits for any initiative to come from
government. In the discussion that followed, a major challenge to create a network between the
three actors to work together and use the output was noted by Dr. Yirdaw. He argued that
government must not be too dominating and that the three helixes have to recognize each other
and should work together to achieve long-term growth and development in Ethiopia. On behalf
of the private sector, he praised the initiative of the Ethiopian Triple Helix Association for
bringing the three actors together and encouraged them to promise to implement the
conference’s output.

8. The critical importance of maintaining trust in cross-institutional relations calls for focused
opening of dialogue and communication from multiple perspectives. Ms. Genet Fresenbet from
the private sector suggested the strong need for continuous dialogue among the three actors
through the available communication media such as radio, TV, and electronic and print media so
as to enhance university-industry-government relations in Ethiopia. The current Triple Helix
initiative in Ethiopia should be consolidated to create a similar forum for such a decisive
dialogue.

9. Mr. Mulugeta Amaha, the then Director of the Science and Technology Agency of Ethiopia
addressed the conference on “A preliminary review of the Science and Technology Policy of
Ethiopia in the framework of National System of Innovation”. He said that the Ethiopian
Government launched the National Science and Technology Policy in 1993 as part of the
national endeavour to develop (industrialize/modernize, etc.). The Policy was issued with due
consideration to the existing realities and knowledge spectrum of policy during that time. The
review of the S&T policy indicates the successes in the areas of Internet in schools, expanding
higher education enrolments etc. What makes the Ethiopian Science and Technology Agency
unique is that it has been led by the National Science and Technology committee chaired by the
Prime Minister. However, having a high profile chair, who has multiple and urgent demands on
his time, definitely has practical drawbacks. Moreover insufficient funds and the imposition of
taxes on imported technology goods have not augured well for its success.

He further stated enhancing the role of university in socio-economic development is an arduous

task for which there is no blueprint. Mr. Amaha stated that the legal basis that defines the

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relationship between the various elements of the national S&T system constitutes another
important gap. The responsibilities, roles, relationships and accountabilities of the elements of the
system have not been legally defined and established. The functional relationships between all the
elements are, in fact, based on their willingness to collaborate and implement the policy.

Finally, he suggested the importance of reviewing the national Science and Technology policy
taking into consideration the functions and interactions of the stakeholders of the national system
of innovation and to put in place the necessary legal, organizational, operational and financial
instruments to make the national system of innovation more relevant, effective, efficient and
sustainable.

10. Presentations from Professor Etzkowitz opened up a wide range of debates among the
panellists and the audience.

The role of government in Innovation

11. Mr. Asrat Bulbula, former Science and Technology Commissioner, raised the role of
government in the Triple Helix model. Why do we need the government in the model, i.e., is it
not possible to directly link industries to universities?

Prof. Etzkowitz in response to the question said that when the resources needed to develop
research and infrastructure in US although the role of government in innovation is not visible,
there is enormous support for innovation. This takes the form of direct and indirect government
support for innovation: universities both private and public get grants from government for
bridging research to commercialization. In this case government becomes a public venture
capitalist although the term is never used.

“Universities in Ethiopia need resources to train PhD students for research and teaching. In this
case the role of the government is important as contributions from the private sector are not
sufficient to support these. The government is needed to speed up and strengthen the linkage.”

As a follow-up to the question Mr. Bulbula, asked “what if the private university is linked to the
private industry where there is no government, leaving aside the existing public university-
industry linkage?”

12. Prof Eyob Tadese, from the private sector, raised the issue of vested interest and conflict of
interest and how to resolve it. Does conflict of interest hinder collaboration between UIG?

Prof. Etzkowitz, in his response to Prof. Tadese’s question, underscores that the question of
conflict of interest also leads to the confluence of interest. He started with an analysis of conflict
of interest, playing roles in two or more institutional spheres simultaneously “as the university
engages in consultancy besides teaching, and research can enhance the role of teaching and
research role.” Conflict of interest is a sign that some change is taking place in the organisation. It
is a signal for change that could be positive or negative. To manage conflict, first look at the
conflict carefully and resolve it.

Prof. Etzkowitz discussed the role of government in the TH model by elaborating the difference
between the two-actor model and the three-actor model. He said that the disadvantage of the two
actors is that when one element gets weak, the second element has to wait until the other actor
grows fully. But in the Triple Helix if one element gets weak, the second element takes the role of
the other. Here, the good example is when the industry is not active and is not playing its role,

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the university takes the responsibility and establishes firms. When both industry and university
are weak the government can also lead the interaction between the three.

13. Dr. Francisco J. Cantú-Ortiz presented a paper on “Creating a Network of Research Centers
in a Developing Country”. Dr. Cantú started his presentation with an economic and social
background of Mexico. In the economic sphere, the Mexican Economy in terms of Gross
Domestic Income per capita has not shown growth in comparison to other countries and poverty
is a serious problem in the southern part of Mexico with the skewed nature of wealth distribution
in general. In addition, most Mexican industries are producing products with less value (price),
and the issue is how to increase value. In other words, the current challenge is how to create
value and wealth from knowledge.

In creating a knowledge economy, the university has an immense role. Dr. Cantú has the used
Monterrey Tech University experience to show the role of Mexican Universities in wealth
creation. In this regard, Monterrey Tech has contributed a lot. Through time Monterrey Tech has
introduced the entrepreneur university concept changing from the earlier mission of education to
research and development. As a result, Monterrey Tech helps to remove some of the challenges
of the Mexican economy through enhancing competitiveness based on the knowledge economy,
job creation, strengthening public administration and public policy, and reduction of the
education gap.

To address the challenges, Monterrey Tech has established Science and Technology parks/
innovation centres in the context of a “knowledge city”. The science park has a research and
development centre for knowledge and innovation generation, and viable project ideas are taken
to incubators (technology transfer centres) for conversion of technology into wealth (business),
again at a third stage some of the project ideas that can be marketable are taken to commercial
centres for industrial design and production, and finally, industrial designs and production go to
manufacturing companies. He concluded his presentation with remarks on centre for innovation
and technology transfer.

Participants of the conference raised a number of questions including (1) which research centres
first started establishing a Technology Park? (2) What is the interest of the university in linkage
with industry? (3) What can Ethiopia learn from Mexico? (4) For a country like Ethiopia where
industries do not have research capacity, what recommendations are there?

In response to these questions, Dr. Cantú said that the reasons for Universities to establish
Technology (Science) Parks in Mexico are:

• The university graduates can easily get employment (jobs in the science park),
• Venture capital can easily be attracted to the science park because of the potential for
innovations, new skills and knowledge,
• Technology Parks are being designed for the automotive industry and biotechnology,
• Finally, for Ethiopia he suggested the need for looking into the opportunities and to
exploit those opportunities.

Dr. Cantú shared experience on how entrepreneurship is a skill that can be taught and that
institutions can be more or less entrepreneurial. Prof. Andersson asked what Ethiopia can learn
from Mexico. Dr. Cantú-Ortiz responded by saying that first of all by identifying niches in which
Ethiopia has in terms of human capacity and competitive advantages is important. Once, the

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national resources are identified there should be intellectual property rights. So, if you work on
the opportunities and protect innovations, there is room to grow.

14. Prof. Andersson commented on the role of government in the Triple Helix model.

On the positive side government is important in creating conditions that can enable effective
roles for other actors. Government can also play the role of the facilitator by creating rules and
regulations. At the same time, it can play a negative role by making it difficult for other actors to
fulfil their respective roles.

It was observed that universities and the private sector presently do not have an adequate
mandate to fulfil their roles, e.g., in terms of specializing for unique conditions at regional level.
In this regard, he suggested the government should take a step back in some respects, lower taxes
so as to facilitate for actors in the informal sector to form real businesses and provide incentives
for research and development needed for universities to integrate with industry.

The Swedish experience in linking small companies to university through mentoring:

Prof. Andersson further noted the importance of the Triple Helix concept as a framework for
analyzing the potential and problems inherent in the national innovation system. The Triple Helix
Model provides important building blocks for understanding what roles can be played by the
various key societal actors to enable effective implementation of reforms needed for a successful
innovation system.

He elaborated by providing examples of Jönköping University in Sweden, which has pioneered in

the development of a mentorship program through which students are connected to enterprises.
The scheme was in part facilitated by the relatively large freedom of the institution to mature,
following from its standing as one of the few private universities in Sweden, and thus less
constrained by the law by which public universities have to abide. It took time to establish
collaboration, to build a basis for speaking the same kind of language and to bridge the gap
especially between small- and medium-sized companies and the university. He emphasized the
need for training and using specially-adapted people in or around the university to communicate
with the private sector.

He also made a remark on the need for a high-level support for Innovation (S & T policy) in
Ethiopia. What is needed is the shift from top-down planning to more dynamism for
experimentation from below. In order to make this tradition he stressed the need for a signal
from the top to address the conflict of interest in constructive way. Otherwise a lot of
bureaucracy that remains in the system can become an obstacle.

Some countries succeeded by putting this system in practice, in transforming the top-down
approach, like Finland when it lost its export revenue from Russia, and became interested in
addressing the problem. For other countries he suggested the need to make constructive dialogue
at high level and that innovation is central in every policy making today. It needs a change of
mentality. The role of government is strong but also the private sector and university have to play
their respective roles.

It also reflected that the organizational structure of the national S&T system is of a centralized
type; it does not take into consideration the existing Federal Government structure. In this
context the need to ensure the participation of all stakeholders in the science and technology
policymaking is stressed.

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Prof. Andersson noted that Ethiopia has built a federal system of government, and devolved
authority and responsibility to local and regional governments. Federalism is based on the basic
principal that decision-making should be devolved to levels of governance close to the people
affected by the decisions. In this regard, the need to ensure the participation of all stakeholders in
the science and technology making is important.

The African Experience

The conference explored the relevance of the triple helix model of innovation in the creation,
dissemination and sharing of knowledge in Africa. A special feature of the conference was the
presentation of African countries’ experiences from Cameroon, Tanzania, South Africa and
Zambia with sharing of experiences in triple helix transition. These presentations gave rise to a
debate on whether the triple helix model is relevant for developing countries, where universities
are not producing enough research; industries don’t exist or are not innovating. Several papers
(e.g., by Dr. Félix-Marie Affa’a from Cameroon, and Dr. Victor Konde from Zambia and Dr.
Tadele Teffera from Ethiopia) presented in diagrammatic representations the suggestion to
reinterpret of the concept of Triple Helix to make it more relevant to local realities.

These included the need to expand to include a fourth helix. For instance, Félix-Marie Affa’a
proposed the addition of the informal systems, which are distinct from industry in Cameroon.
While Dr. Victor Konde suggested the modified Triple Helix model where donors replace
industry as this is largely lacking in Africa. Dr. Tadele Teffera from Haromaya University also
came up with the multiple actors/stakeholders alternative: researchers, farmers, local government
and NGOs.

15. Mr. Dereje Alemu from UNDP and Mr. Abdurahman Ame from ETHA said that an
expanded model may affect creative dynamics of the university-industry-government interaction.
In responding to the issues, Prof. Etzkowitz appreciated the attempt to modify the analytical
model to meet the realities of developing countries. As the Triple Helix illustrates dynamic
interaction among different spheres that can enhance their contributions to the economy by
interacting in a complementary, mutually-reinforcing manner, adding additional spheres may
cause the model to lose its creative dynamics.

The presentation from South Africa was unique as it demonstrated how in South Africa a so
called White Paper from 1995 outlines A National Strategy for the Development and Promotion of Small
Business in South Africa where the Triple Helix concept is indirectly called for.

Dr. Chris Friedrich of the University of the Western Cape, Cape Town, South Africa said the
concept of Triple Helix and its way of working have received great attention in the Western
World, even if we still have little theoretical understanding. In the developed countries in general
– and as in our case here, in South Africa – the concept has received less attention and an
espoused rhetoric about Triple Helix does not exist. Even so, a so-called White Paper from 1995
outlines A National Strategy for the Development and Promotion of Small Business in South Africa where
the Triple Helix concept is indirectly called for.

His presentation dealt with entrepreneurship and growth in the Western Cape region of South
Africa through the perspective of Triple Helix. In this area at least two universities have business
outreach programs – the University of the Western Cape and the University of Cape Town. His
paper examined how academia, business firms and local authorities in the Western Cape region,
through cooperation, are working for fostering entrepreneurship and growth. He also identified

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impediments for working according to the model and discusses its possible outcome in the South
African context.

Finally, he suggested elaboration of the Triple Helix model and the need incorporate the
dimensions of donors and non-governmental organizations, and above all – a proactive
entrepreneur in the model.

16. Dr. Abraham K. Temu from the College of Engineering and Technology CoET), University
of Dar es Salaam, presented a paper on the Academia-Industry-Government Relationship:
Experience of the College of Engineering and Technology, University of Dar es Salaam
Tanzania.

He said in Tanzania, whereas academia-industry relationship looks reasonably strong, the

government-industry or government-academia relationship has not been equally strong.
Government involvement in the Triple Helix is, however, improving as a result of a series of
awareness campaign, spearheaded by CoET, through workshops, conferences, exhibitions,
publications and direct interaction with responsible officials. The CoET awareness campaign is
now directed to the financial institutions to ensure SMEs are funded in order to be competitive.

He suggested the need for tripartite relations between university, industry and government to
enhance the competitiveness of small and medium enterprise in the Innovation Systems and
Clusters Programme in Eastern Africa, which CoET has spearheaded since 2003, with a view to
fast-tracking socio-economic development in this region.

Among other things, the Triple Helix model illustrates how the interactions among government,
university and business are becoming more important in transferring research and technology to
users. The emergence of organizational mechanisms linking U-I is one of the most discussed
issues. Participants noted that African universities exhibit entrepreneurship traits that, if
harnessed, can meet the development aspirations of their people. Universities in Africa are
oriented towards interaction with government or the private sector; however, variations abound in
terms of comparisons between African countries. Issues raised were how directly should an
academic institution involve itself in for-profit activities? If it establishes its own businesses, or
supports those founded by its members, does the university risk undermining its traditional
independence and commitment to open intellectual exchange?

Moreover, interactions among these institutions have had the effect of generating new structures
within each of them, such as the establishment of research centres in universities or spin-off
companies. These organizational innovations are as important as technical innovation in regional
development. For example, Viktor Konde presents an interesting model of how universities
could mobilize their intellectual and social capital to create and support businesses. It is not clear
whether the enterprise is university run spin-off. It is becoming increasingly common for African
universities to establish consulting firm.

17. One panellist noted that academic institutions have themselves taken the initiative to
reorganize their resources in their pursuit to become profit-makers. Besides the traditional
approaches of linking research to development through seminars, annual symposia, journals, and
short-term trainings, university-industry relations have been a priority for regional universities with
a focus on regional development (Dr. Ayana from Arba Minch University and Dr. Teffera and Mr.
Zergaw from Haromaya University).

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However, in Ethiopia, Dr. Teffera noted, on the basis of case studies from the Eastern Ethiopian
region, the challenges of institutionalizing the UIG linkage. Mr. Ambachew Maru and Mr.
Tesfaye Mulu identified the challenges of building bridges with the Ethiopian textile and garment
industry: (i) The industry is reluctant to involve intellectuals in its day-to-day problems; and (ii) A
co-operative effort to enhance the industry as a whole is missing.

Panellists from Ethiopian universities, private sector and policy makers were also active in
presenting a wide range of examples of cooperation between academia and industry (including
agriculture) to improve the effectiveness of knowledge transfer to the surrounding communities:

18. Mr. Bekele Tsegaye, Manager of Bekas Chemicals PLC, presented a paper on the Potential
Benefit of University - Industry Linkage. Bekas Chemicals PLC is one of the companies
established in the mid-1990s. The company's establishment and growth history justifies the
potential importance of university-industry linkage to bring a difference in this country. Although
the initial start up, seed money, was about Birr 1,000, the current registered capital of the
company is about Birr 2.5 million. This remarkable record is the result of the transformation of
knowledge from the university into capital.

The company’s success was attributed to the early 1980’s programme for institutionalization of
university-industry cooperation. Within the framework of that programme, Mr. Tsegaye got a
chance (in 1984) to work as chemist on a project for the utilization of Endod (Phytolacca
Dodecandra) as a detergent, or people soap. He joined the program from Reppi Soap Factory to
carry out routine tests on detergent parts, under the supervision of one of the department staff,
Niguise Retta. (of the Chemistry department of AAU). Coming back to the university after
graduation and working in the industry gave him an appreciation for Research & Development.

He was asked whether Ethiopia’s higher education system provides opportunities for staff
progression and mobility. A strategic and more immediate challenge for Ethiopia will be to
enhance the network and create fast mobility between different actors in the innovation system
through complementary mechanisms and institutions. This implies working towards a system
where academic researchers can become entrepreneurs, where entrepreneurs can work in
universities, where there are forums for academic and industrial researchers to meet, and where
government institutions can take on a variety of roles in providing the interface between
policymakers, private sector and the academia.

The role of universities in regional innovation systems

Higher education in Ethiopia has been under transformation both in size and composition from
public and private domains. Until a few years back, Ethiopia had only two public universities.
There are now nine such universities. A major campaign is currently underway to establish
another 16 universities at a cost of about 2 billion US dollars.

While primary and secondary education has been in the focus of the international policymaking
community’s attention for decades, the issue raised was the reason behind the attention given to
higher education more recent years.

The common agenda for the establishment of the present universities is that they would
strengthen the local economic conditions. All new universities are located in regions that are
broadly characterized as outer regions. This, combined with considerable local political pressure,
was the main reasons behind the foundation. The new universities should lift the regions by
having a direct economic impact in terms of a multiplier effect. The issue has catalyzed the

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transition of what may be described as a “top down” to a “bottom up” innovation system with
universities playing an active role in society.

19. Dr. Daniel Kitaw, from the Faculty of Technology, AAU, informed the participants about the
current campaign to establish the Technology Faculty–Industry Linkage Unit (TFILU) to
strengthen the university efforts to promote relationships with industry since 2000. Currently,
there is a Technology Faculty-Industry Linkage Unit led by the committee composed of
members from:

• Ministry of Trade and Industry,

• Ethiopian Science and Technology Commission,
• Public Enterprises Monitoring Authority,
• Chamber of commerce,
• Private companies, and
• Addis Ababa University - Technology Faculty.

Dr. Kitaw mentioned different initiatives like the recent development between the manufacturing
industry association and Addis Ababa University that have signed a memorandum of
understanding. As a way forward, he suggested the coordination of different efforts to link and
establish university-industry-government relations in Ethiopia. It was reflected that the
participation of the private sector in such a top-down initiative was weak.

20. An attempt has also been made to link university and industry through special schemes
associated with the regional universities. Universities are reorganizing their existing resources into
new combinations in order to market services and gain income: research and consultancy services
for regions, developed conference centres and short courses for industry.

21. It was reported that Haromaya University performs a quasi-governmental role as a regional or
local innovation organizer. Dr. Teffera from Haromaya University indicated the concentration of
the university’s research activities in the areas of livestock- and crop-improvement, natural
resources conservation and post-harvest technology and food sciences, improving farm
mechanization, and research in the socioeconomic area. Multiple stakeholders: farmers, input
suppliers, processing and marketing enterprises, research and education institutions, credit
institutions, extension and information units, the private sector, international development
agencies and the government have been involved in regional innovation/development.

The university has established a research extension-farmer linkages advisory council in 2002. The
council consists of farmers, researchers, investors, input suppliers, credit institution, extension or
development agents, GOs and NGOs. The council serves as the meeting place for the
stakeholders to identify, prioritize and plan the functional and structural linkages between
research extensions and farmers.

Challenges identified in organizational mechanisms to link university research to users are the
lack of commitment by some actors, limited area coverage, and absence of accountability.

Mr. Daniel Zergaw presented experience from Faculty of Sciences at Haromaya University where
the university’s established linkage with government to generate and disseminate knowledge in
the health sector. The University’s Faculty of Science designed community-based practical
education programmes. These are a drought mitigation project and a reproductive health

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programme. This is an integrated approach - involving students and staff, with government
bodies and in-service training in collaboration with partners. Students are evaluated on the
contribution made to the programmes. There are 709 final-year students in 15 attachment areas
in Eastern Ethiopia.

Mr. Abnet from Adama University presented the university’s long-term objective to become a
centre of excellence in technical teacher education. To realize its objectives, the University has
drawn up its research strategic plans and planned reforms. The reforms include the preparation
of teaching material through the active learning methods. He argued that the Tripartite
networking among the university, government and industries can be realized if Adama’s research
reform strategy works out well.

He noted that curriculum reforms are underway so that the University can respond to demand of
the technical vocational education training needs. Moreover he noted that management reforms
like out sourcing non-academic student’s services are implemented.

He also questioned the achievement of the university’s objectives because of the high tensions
between teaching and research activity of the university as the result of the high teaching load.
Critical shortage of facilities and innovative lecturers and stiff competition with the private higher
education providers were also mentioned as impediments.

22. Dr. Mulu Bayray from Mekelle University explained the practical attachment programme of
Mekelle University. This indicates the university’s transition to entrepreneurial university is
introduced through the teaching mission in the form of extension of entrepreneurial training
throughout the university. Practical Attachment Program is designed as part of the curriculum
that all students should fulfil before graduation. The questions to be addressed here include (1)
Are there any innovative projects coming from the practical attachment program? (2) How
students be evaluated?

23. Dr. Mokonnen Ayana of Arba Minch University, presented the Arba Minch Water
Technology Institute’s main objective since its inception in 1986 to produce skilled and qualified
manpower, which is vital for effective utilization and exploitation of the country water resources
for various aspects of development. Research activities include the development of water-related
innovation like a simple low-cost drip-irrigation system. The drip-irrigation system is developed
from pot (pot is a simple and locally-made and available product) to increase water application. A
filter is developed to clear out micro-course to enhance effectiveness of water usage. The drip
irrigation system has shown tremendous increase in fresh potato production. Following the
innovation, the technology has been adapted and the surrounding communities were given
training on its use.

The second innovation of the Arba Minch University presented at the conference was a manually
operated fibre-winding machine. The machine has the possibility of winding 32 spindles at a time
and offers an enormous increase in productivity compared to the traditional methods of winding.

Finally, Dr. Ayana concluded his presentation with the present experience of water harvesting at
household level to enhance food self-sufficiency and to enhance its productivity. He suggested
wide implementation of a low-cost drip-irrigation system as it can save and supply water to plants
more efficiently and be afforded by poor farmers.

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25. Mr. Tewodros Tefera, from Hawassa University, presented a paper on operational Research
for Food Security and Sustainable Livelihoods, a Case Study on Participatory Research through
the Triple Helix Model.

He started by presenting a series of measures that have been taken by the Government of
Ethiopian and non-governmental organization to reorient agricultural research and innovation to
support the on-going development endeavours of the country.

As a part of this commitment, Hawassa University, in collaboration with the Regional research
institute and Bureau of Agriculture and Rural Development, has designed the Operational
Research Programme for Food Security and Sustainable Livelihood. The programme was
developed through the Triple Helix model that links university-regional government
development-oriented institutions and the farmers (the farming industry). This model has
promoted participation through farmers’ centred organization, consortium-based management,
and development-oriented research approach, which contributes towards comprehensive poverty
reduction, food security and sustainable livelihoods of the targeted watershed communities.

Within the framework of Triple Helix, the programme has used Participatory Varietal Selection
(PVS) methodology. It was employed in order to ensure the involvement of different actors who
have a stake in research and development. Since April 2003, in the Participatory Crop
Improvement component five varieties of haricot bean, three varieties of soybean, five varieties
of teff, and four varieties of wheat were tested with the participation of 1,158 farmers. Out of the
new varieties introduced, farmers selected two varieties of haricot bean, teff, wheat and three
varieties of soybean. A seed multiplication work has been completed and a community-based
seed production scheme established for mass production. Currently the programme has
undertaking a market analysis research to link farmers with exporters, food industry and
consumers.

26. Dr. Nele Wasmuth and Dr. Michael Nebelung presented a paper on The Triple Helix
Paradigm for Development: Strategies for Cooperation and Exchange of Good Practice,
Contribution of the Engineering Capacity Building Programme (ECBP).4

Dr. Wasmuth and Dr. Nebelung said the Triple Helix Model focused on innovation through the
establishment of new networks within a region, with universities, the private sector and the
government as major players to be interwoven in order to contribute to the emergence or
renewal of high-tech complexes and the creation and organization of new industrial sectors.
Academic-industry-government cooperation is to be shaped in accordance with the demand and
the challenges of the global knowledge economy.

With respect to international development cooperation and its overall goal to alleviate poverty,
knowledge and its proper management – on the one hand – is the main key, which also has led to
a new paradigm of cooperation. On the other hand, technology transfer can only be successful
on the basis of respective capacity development. In this context, between the scope of the Triple
Helix concept and the major challenge of sustainable development, particularly in the African
continent, there still seems to be quite a gap that needs to be bridged.

The “Engineering Capacity Building Program” (ECBP) contribution aims to introduce in

particular the German Technical Cooperation Agency (GTZ) knowledge management approach,
some best practices of GTZ in the field of “Promotion of technology and innovation” in a

4 See the supporting slide presentation on the ECBP by GTZ following this section.

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developmental context, as well as the ongoing development cooperation of ECBP in Ethiopia,

which may be considered as a multi-sectoral approach combining university, the private sector
and the Government of Ethiopia, and thus be an example of translating the spirit of Triple Helix
into concrete efforts towards sustainable development.

The two speakers described the relationship between knowledge generating institutions and
industry as the most important factor for sustainable development. Knowledge, and herewith
innovative technologies, is generated - to a large extent - in higher education. Appropriate
transfer, including qualified graduates, to the industry together with respective partnerships
between higher education and the industry sector increases employment opportunities and thus
contributes to economic growth, which is an essential factor for social and political stability.
There is a clear impact on the improvement of the living conditions of the poor, which is the
utmost goal of development cooperation.

The two speakers also said that the ECBP contribution aims to introduce the particular GTZ
knowledge management approach, some best practices of the German Technical Cooperation
Agency (GTZ) in the field of “Promotion of technology and innovation” in a developmental
context, as well as the ongoing development cooperation “Engineering Capacity Building
Program” (ECBP) in Ethiopia, which may be considered as a multisectoral approach combining
university, the private sector and the Government of Ethiopia, and thus be an example of
translating the spirit of Triple Helix into concrete efforts towards sustainable development.

Finally, they said successful collaboration among higher education, industry and government
creates the positive frame conditions that are needed for sustainable development. The process
itself involves a permanent generation and application of new knowledge that needs to be
protected and further developed.

27. Mr. Getahun Gebru, from the World Bank Ethiopia, presented a paper on the Development
Innovation Fund (DIF), a sub-project of the Post-Secondary Education Project (PSEP), aimed at
encouraging innovation in Tertiary Education in Ethiopia. He indicated that under the previous
International Development Association (IDA) Credits, funds were mainly used for expanding
physical facilities to increase access, mainly for primary education in Ethiopia. Over the last 4 to 5
years, according to Getahun, the government of Ethiopia has been investing heavily in
infrastructure and access to higher education institution has been expanding substantially. IDA’s
support under the PSEP with the IDA credit of US$ 35 million was aimed at helping the higher
education reforms that are under way to taking root, contributing to the development of better
quality of instruction and management.

The DIF contains the bulk of the resources - originally $16 million and now $20 million -
designed to stimulate innovation, promote modernization changes, and reward quality-enhancing
efforts within the universities. Resources will be distributed on the basis of approved proposals,
evaluated against criteria that place emphasis on performance, improvements in strategically-
selected areas of teaching, learning and management. Considerable effort has been invested by
university faculty to develop and get approved 46 Level 1 and 37 Level 2 proposals in Round
One which have a total project disbursement value of US$ 4.3 million, and an additional 121
Level Two proposals in Round Two were submitted. Analysis of 83 DIF project proposals and
performance contracts from Round 1 shows that three out of every ten DIF proposals contain
inadequate plans for procurement. This indicates that implementation problems can be expected
in the future. It seems that little attention is devoted to the relationship of the institutional
spheres of university, industry and government in the process of evaluating the projects under
DIF.

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The response reflects the enthusiasm university faculty members have expressed for the
opportunities presented by the DIF. It was observed that Addis Ababa University as one of the
oldest universities in the country benefits the least of the fund. This can raise a question whether
benefits are related to capacities.

28. Mr. Zelalem Begashaw from the Ethiopian Information and Communication Technology
Development Agency (EICTDA) presented the Information and communication technology
(ICT) incubator assisted by EICTDA aimed at fostering innovation and advanced use of ICT
business ideas (in setting up operations by the private sector). The objectives are to boost
entrepreneurship in the ICT sector and to provide start-ups with the necessary infrastructure,
professional and business-advisory services and financial support.

It was reflected that business incubators play major roles in the creation and facilitation of small-
and medium-sized businesses. Their roles range from providing affordable space to providing
core business-support functions, such as business development, financing, marketing, and legal
services. In general, several factors that are considered important to determining business
incubator success include: public policy to facilitate venture capital creation and provide business
infrastructure; private sector partnerships for mentoring and marketing; community involvement;
a knowledge base of university and research facilities; and professional networking.

It was also reflected that the benefits of the new technologies are the result of not only an
increase in connectivity or broader access to ICT facilities per se but also the facilitation of new
types of development solutions and economic opportunities that ICT deployment makes
possible. When strategically deployed and integrated into the design of development
interventions, ICT can enable development resources to go that much further by facilitating the
development of cost-effective and scalable solutions.

There is considerable interest in identifying ways of measuring the socioeconomic impacts of ICT
and its potential contributions to the implementation of the Millennium Development Goals.
Much of the information available on this subject has not received substantial policy attention,
and as a result, popular claims about the impact of the ICTs on development continue to lack
strong conceptual and methodological foundations.

Another significant problem in developing countries like Ethiopia is the absence of demand for
value-added and more sophisticated technological activity. One of these technological activities is
research and development relates to enterprises’ collective learning functions - that is, their
organizational path is assimilating and implementing innovative technologies. If this important
function is left unattended, enterprises remain largely dependent on imported technologies that
are expensive and are not suitably adapted for local conditions. If demand for future high-level
technological activity is not transmitted to enterprises through appropriate policies, countries run
the risk of only importing equipment without the complementary generation of domestic
innovations. It was observed that the proposed business incubator’s link with university is weak.

29. Dr. Yohannes Woldetensae from the Higher Education Relevance & Quality Agency
(HERQA) addressed the conference with “University-Industry linkage for promoting Quality of
Higher Education in Ethiopia”. In his paper, he underlined, among other things, the rationale for
university-industry partnership:

• Enhances the relevance of university research to national development needs,

• Promotes applied research for investigating national and regional industrial problems,

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• Enhances innovative capacity of the nation improves the relevance of curricula,

• Facilitates industrial placement/training,
• Increases opportunities of employability,
• Promotes the quality and relevance of HE.

Finally, he put forward the following recommendations:

• Create networks and initiate discussion among stakeholders,

• Review current practices,
• Identify opportunities and activities for collaboration,
• Commit financial resources,
• Prepare joint proposals and develop a national policy for University-Industry linkage.

30. Reflection from Mrs. Frehiwot Worku, Executive officer of Ethiopian Airlines, the leading
African airline, which celebrated its sixty years of existence in business in June 2006 shows that
the company uses, as much as possible, in-house expertise. The company used to have foreigners
doing training but the decision was taken to do training of pilots, technicians and managers
within the company.

The airline used to recruit high school students for in-house training based on their high school
performance. As the quality of education had declined in high schools, the airline started
recruiting diploma and degree-level students though many of them didn’t yet fulfil the required
standard. Besides, the airline could not find the right institution to provide relevant courses for
the staff.

The speaker found the Triple Helix concept useful for her industry. The airline industry is unique
but it welcomed the government initiatives to develop the concept and associated curriculum and
provision of training.

The company could take a bigger role not only within Ethiopia but also in a number of African
countries by training more pilots and technicians than needed – but this would require a subsidy
from government as it is expensive to run such courses.

It was reflected that in the discussion that the basic issue is either that the quality of education
has declined or that attitudes towards quality have changed. If that is the case, why has it
changed? Moreover, the measure of quality of education is the key issue. He also highlighted that
there are differences between urban and rural areas.

A comment made by a participant was that Ethiopian Airlines have not delivered this broader
role of applying skills to the nation – training has been given by ex-pats, and external experts
have been brought in.

The speaker from Ethiopian Airlines, who underlined the competition from the Far East as a
major challenge, supported this.

31. Mr. Ishac Diwan, World Bank Country Director for Ethiopia, noted that the World Bank will
internalize the triple helix model and provide support but he questioned the root causes of
difficulties – why has it not been done before? Do laws discourage academics being involved in
such delivery and being entrepreneurial? Is there a brain drain? Does IP legislation inhibit such

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activities? Are the causes historical? Are there more structural issues to be dealt with? He pointed
out the huge brain drain of doctors and pilots as a major problem for Ethiopia as the government
has failed to pay competitive salaries.

32. Dr. Kasirim Nwuke, Senior Economic Affairs Officer at UNECA, argued that the private
provision of higher education in Ethiopia has confronted the twin challenges of quality assurance
and improved access. The private higher education sector in Ethiopia is growing at an impressive
rate. The sector, although young, is vibrant and making a demonstrable contribution to the
expansion of access and provision of industry-relevant skills. The sector provides an offering of
programmes (social sciences and humanities, business studies) that do not require substantial
investment outlays. To the extent that there is very limited research activity in these institutions,
their contribution to the production of new knowledge is at best modest.

Dr. Nwuke also agued that the increase in the number of private providers could result in the fall
in the average quality of higher education graduates. He also argued that if participation in higher
education is a function of household income, then expansion of the sector through private
provision is unlikely to result in improved access for the poor.

33. Mr. Redwan Hussain, head of the Education Bureau of Southern Ethiopia Nation
Nationalities and Peoples Region, argued, in historical context, that Ethiopia is a country of
diversified nations, nationalities and peoples with varieties of language, cultural and historical
heritage. As a result, the diversity goes to economic variations manifested not only in individual
life but also in a societal form. But the founders of our higher education system were those
regimes that denied even the existence of nationalities; hence, education was not meant for all
citizens.

Policy recommendations were made in order to overcome the challenges of the trade-off
between low-cost provision and quality assurance and the challenge of improving real access to
the poor. In this context, the Ethiopian government will need to reconsider the manner in which
higher education is currently funded. Since private providers serve a useful social purpose,
government may need to consider new criteria for allocating funds among higher education
institutions and across programmes. A new funding mechanism should be used to introduce
differentiation in the higher education sector, enabling institutions to exploit their comparative
advantage. Some of the institutions should be encouraged, through the funding system, to
expand access while others can concentrate on research and competing with the best in the
world.

One panellist appreciated the sector for achieving academic excellence and hence recommended
the need for consolidation.

34. Prof. Eshetu Wencheko from the private Alpha University identified a number of factors that
inhibit the growth of private higher education in Ethiopia. The major ones are:

• Newness of the sector to the country,

• Absence of a sense of partnership between government and private stakeholders,
• Lack of capacity in human resource and finance,
• Difficulty to come up with a common nationwide strategic planning in higher education
population growth, infrastructure development, trained manpower requirements, etc.

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The key incentives to stimulate growth are:

• Capacity building in the areas of deficiencies,

• Financial support and loans,
• Sharing of resources,
• Tax exemption for certain imports of educational support materials and equipment,
• Efficient response from service provider offices,
• Establish a standard quality assurance and accreditation centre.

As the private higher education institutions in Ethiopia are self-financing, the government needs
to reconsider the current funding conditions in higher education.

It was observed that the prospects of the private higher education sector in Ethiopia are bright. If
the economy maintains the average annual growth rate of 5%, it will be safe to assert that the
demand for private higher education is likely to expand. The country’s demographic profile,
dominated by young people, is going to be a very important factor too especially as it is unlikely
that government expenditure will continue to grow at the current rate. This potential can easily be
exploited if a conducive hand-in-hand working environment among industry, enterprises, NGOs
and government could be created. In order to get a good result from such activities, discussion
forums must be organized so that interested parties could come together and work on specifics
where they can carry out some collaborative work. He also argued for the government/private
partnership to work together to design a credible accreditation mechanism that will assure quality.

The Third Education Sector Development Programme (ESDP III) underscores that private
delivery of higher education will be encouraged through facilitation of quick access to incentives
like provision of land, tax exemption, etc. Annual intake capacity of private institutions is
anticipated to reach between 45 and 50 thousand by the end of the five-year planning period:
2005/6 to 2010/11. In the accomplishment of all the plans and programmes laid in ESDP III, it
is essential that all the available resources within reach are genuinely mobilized.

35. Dr. Helen Lawton Smith made a presentation to the conference on ‘the New Economy-
Innovation and Regional Development’. Her presentation focused on the experience of the
Oxfordshire Economic Observatory Project. The project has the mission to undertake world
class research, providing data and analysis to major stakeholders in Oxfordshire region and to
broaden communities - on regional, national and international scales.

The Oxfordshire Economic Observatory Project was established in January 2001 following the
political agenda of the Labour Government that prioritized universities’ role in economic
development post 1997, which is based on the White Paper, “Our Competitive Future, Building
the Knowledge Driven Economy” in 1998, and clusters (White Paper on Business Cluster
published in 2001) among others. The Oxfordshire Economic Observatory Project has produced
a number of outputs that have direct relation to university-industry link.

36. The strong Latin American participation in the conference provided opportunities for sharing
experiences with Brazil (Marli Elizabeth Ritter dos Santos and José Luis Solleiro Rebolledo on
“Management of Technology Transfer Offices: Lessons for Brazilian Universities”, and José
Manoel Carvalho de Mello on “Integrating entrepreneurial initiatives in Brazilian universities
experiences’’. Their shared experiences on how the emergence of the entrepreneurial university

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has been assisted by university technology-transfer offices, entrepreneurship centres, technology

parks and incubator facilities.

Prof. José Manoel Carvalho de Mello, Visiting Professor, Universidade Federal Fluminense Rio
de Janeiro, Brazil, presented a paper on “Integrating Entrepreneurial Initiatives in Brazilian
Universities”. Universities’ contributions to development are being thought to go further than
generate knowledge and training highly qualified professionals, performing a third stream of
activities in a proactive fashion, for economic and societal development.

He analyzes the Brazilian universities’ third mission evolution as the result of a socio-historical
process, showing the knowledge transfer mechanisms created integrating the diffusion,
production and relationships aspects of it. He also said universities’ strategies concerning their
third role are taking into account a proper balance between national government interests, on one
side, and state and regional governments on the other.

37. Mrs. Marli Elizabeth Ritter dos Santos presented a paper on “Management of Technology
Transfer Offices: Lessons for Brazilian Universities”. She said the development of an innovative
system based on the interaction of academy with industry has promoted different ways to
optimize the link between science, technology and economic development. In this context, the
association between universities, industries and government constitutes one of the best ways to
establish links between technology and economic development.

From the theoretical point of view, the linkage of these three agents - university, industry and
government - has been the object of different analyses, ranging from the macro perspective to
the establishment of conceptual models of technology transfer from the university to industry. As
a starting point for enhancing their participation in these institutional arrangements, specific
mechanisms have been devised by universities, such as Technology Transfer Offices (TTOs),
created with the objective to stimulate and to facilitate their interrelation with the other two
agents of the innovation systems: industries and government.

In Brazil, although the creation of this mechanism represents the institutional recognition of the
importance of incorporating technology transfer as a formal function, the introduction of new
routines that are “imported” from private sector practices in the academic environment has not
been fully accepted due to different perceptions from the university community about the
university’s mission as well as to a lack of capabilities to deal with business activities that are new
for universities’ managers. Those institutions where such offices have been adopted assign them
the duty of administrating all the services related to the interaction activities, including
management of intellectual property and licensing.

Within this context, her paper analyzed the importance of the role performed by Brazilian
university TTOs, from the point of view of their organization, policy and performance. The
diagnosis carried out has the purpose of determining: a) the main functions of the offices, (b) the
position they must have within the university structure and (c) the pattern of internal relations
and with the market.

38. Prof. Mariza Almeida addressed the conference on the “Incubator as Organizational Training
Method”. The cooperative incubator of Brazil was initiated by the Brazilian Universities to create
job for marginalized social sectors, increasing their income, improve their living condition and
provide educational opportunities. The consolidation of this process through collaboration of the
Triple Helix actors has lead to the transformation of the experiment into public policy.

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The first Technological incubator of popular cooperatives was established at the university in
1995. This was a time when a number of civil entities organized to combat poverty. This
movement called itself “Citizens in Action Against Hunger and Misery and in Favor of Life”. It
was only towards the end of 1999, with the internet phenomenon already at its peak that private
internet incubators started to appear in Brazil. These incubators are concentrated in the area of
information technology, particularly in business involving the internet.

39. Papers from Latin America provided the venue for the analyses of significant innovations in
organizational mechanisms that may be applicable to Ethiopia. Of particular interest is the paper
by Mariza Almeida on “The Incubator as Organizational Training Method”. Prof. Almeida
presented a model of the cooperative incubator created in Brazil in 1995, the aim of which was
the creation of cooperatives, not firms, in the classical sense. The Brazilian universities have
always been concerned about the country’s social inequality. The consolidation of this process
through collaboration amongst industry, government, universities and civil society - the Triple
Helix, has transformed this experiment into public policy.

40. Participants discussed the Brazilian experience and drew parallels between the Brazilian and
recent experiences in Ethiopia. Mr. Abdurahman Ame, Managing Director of the Ethiopian
Triple Helix Association, noted that the industrial development strategy of the country paid
significant attention to this sub-sector particularly with respect to its role in absorbing
unemployed urbanites and in serving as a springboard for the development of medium and large-
scale enterprises.

New entrepreneurial firms and micro- and small enterprises (MSEs) are gradually recognized as
generators of innovation and economic wealth. In order to address internal lack of sufficient
skills and competencies among Ethiopian start-ups5, different institutions are involved in skills
development in new training programmes targeting young professional entrepreneurs. Today, the
study of - and policy focus on - entrepreneurship is rapidly gaining importance and initiatives
supporting the development of entrepreneurial activity have become a priority issue.
Entrepreneurial courses were given at the universities and technical and vocational education and
training at higher institutions level.

In order to overcome the difficulties SMEs face in securing funding to support their initiatives,
the government of Ethiopia provided some money for start-up firms. One of these strategies,
which have become increasingly popular in Ethiopia since the early 1990s, involves micro-finance
schemes, which provide financial service to the working poor. In line with this, the Ethiopian
government has issued a proclamation to establish and run Micro-Finance Institutions (MFIs) in
Ethiopia and currently a number of MFIs are operating legally. These micro-finance schemes
mainly focused on the rural poor; however, since the last election, urban unemployed youth is
getting credit from MFIs.

In the era that has arrived, universities and research institutions (including Technical and
Vocational Education and Training Institutes - TVETs) are deeply integrated into the productive
sector as well as in society at large. Universities are starting to be viewed as a valuable resource
for business and industry. Universities can undertake entrepreneurial activities with the objective
of improving regional or national economic and social performance to their own advantage. For
instance, many analysts claim the current competitive environment places demands on firms to

5 Start-up firms are firms whose products or services develop out of technology-based ideas or scientific/technical know-how
generated in a university/TVET setting by a member of faculty, staff or student who founded (or co-founded with others) the
firm. The individual or individuals may either leave the university to start a company or start the company while still inside the
university..

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draw on knowledge sources outside of the firm (e.g., Gibbons et al., 1994). Needless to say, the
enhancement of the competitiveness of domestic firms, and thereby also the acceleration of
industrial development in the country, could only be guaranteed via the reinforcement of the
university-industry link. Ethiopian universities mainly due to rigidity are not ready to deal with
micro- and small enterprises. The government has taken the initiative in triggering a process of
strong interaction between universities/TVETs and the MSEs by establishing at the federal and
regional levels a small and medium enterprise development agency. Their roles range from
providing affordable space to providing the necessary technical and managerial skills, financing,
marketing, and legal services to cooperative firms established by unemployed youth.

In recent years, there has been growth in the number of firms that have been spun off from
universities/TVETs sometimes facilitated by action at the federal and regional governments and
NGOs, which proves an interesting focus for analysis as the opening of the political space, the
freedom of individual and groups to freely organize and take initiatives increases. Unemployed
youths are organized as cooperatives/firms and engaged in traditional industries: construction,
clothing, furniture and metal works. The point is whether the traditional industries within
construction, clothing and furniture manufacturing and metalworking find new ways to
overcome the pressure of foreign competition.

It was reflected that these enterprises need to be promoted to grow and become competitive in
the formal market in order to contribute to industrial development in the country. Yet
investment alone is likely to be insufficient to improve the technological capability and
competitiveness of firms. They need to have the necessary skills and technical know-how to
optimally choose the relevant technology, put it into effective use, adapt it to local conditions
when necessary and eventually improve the technology itself.

41. H. E. Dr. Sintayehu Woldemichael, Minister of Education, noted that efforts are being
exerted by regional governments to link the TVETs with the micro- and small businesses in the
urban centres. In Addis Ababa, for instance, business clusters have been established to cater for
graduates of TVETs. Similar exercises are being widely undertaken in the major urban centres all
over the country. The cluster approach provides a linchpin to join policies that were in the past
separated, especially industrial technology, foreign trade and investment initiatives. Delivering
assistance to SMEs through clusters also economizes government resources. A considerable part
of the technological problems faced by SMEs may be solved by the use of well-known
technologies and organizational procedures (Etzkowitz et al., 2004). A cluster provides three
favourable conditions for the diffusion of technologies: similarity of technical problems,
geographical proximity and cultural homogeneity. Such conditions enhance the cost-effectiveness
of policy in terms of design, implementation, monitoring and assessment (Etzkowitz et al., 2004).

Experience in Brazil, however, reminded us of the urgency to sustain productivity gains, job
creation and accelerate growth. Hence, there is an urgent need to search for the organizational
innovation that is transferable to Ethiopian situation and a detailed study on the nature of firm
linkages with universities/ TVETs.

In his keynote speech to the conference the Minister for Education underlined the need to
undertake future research in the following areas:

• How to scale up to the wider community?

• How to generate ecologically specific technology?
• How to promote university-industry linkages?

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• Sustainability of innovation. Are these innovations/interaction driven by the underlying

economic forces or subjected to government interventions?
• What constitutes appropriate levels of government intervention?

42. Mrs. Devrim Göktepe presented a paper on assessment of “the University Industry Relations
in Israel: The Experience of the Magnet Program and Implications for Ethiopia”. She said social
and economic networks determine the economic success of nations and thus play a prominent
role in explaining the wide-range of economic growth and performance in especially knowledge-
based economy. Reasonably networking between the users and producers of knowledge thus the
achievement of the synergy among the networking participants has been argued as an efficient
way for the better utilization of the benefits of the knowledge-based economy. Correspondingly,
innovation networks and national innovation systems have been acclaimed as accurate models for
science, technology and innovation systems of the twenty-first century.

She said the Israeli Magnet Program for pre-competitive generic technology production within
the consortia of university, industry and government (UIG). The analysis of the Magnet Program
reveals the importance of the interaction of domestic and international factors and typical
organizational setting of Magnet for the formation of innovation networks successful in Israel.

Consequently, a network-based innovation system, which provides the communication linkages

and basis among the actors of innovation, leads to the achievement of the synergy among these
actors of innovation. Such a production system is believed to bring about much more economic
and industrial development to the Israeli nation than the sum of these participants individually.

43. Prof. Chunyan Zhou, of the National Research Center for Science and Technology for
Development, Beijing, China, The entrepreneurial university and the Future of higher education
in China. She focused on the issues about the entrepreneurial university, such as the possible
differences between developed countries like the US and developing countries such as China.
What is the definition of an entrepreneurial university? What characteristics does it have? Why
has it emerged and developed in the US since the early and mid-twentieth century? Can the
entrepreneurial model in US be adapted to developing countries?

In order to answer these questions she discussed the recent situation and future of the Chinese
university system. She also discussed university-run enterprises, and why Chinese university-run
enterprises are hierarchical or the “baby” of the university mother rather than its “spin-offs”.
Moreover, there was an analysis of the relations among the technological academy, teaching
university, research university and entrepreneurial university.

Drawing upon the physical concept of “field” she proposed a “field theory” of Triple Helix, i.e.
the model of Triple Helix and field interaction in innovation systems. She found out each helix
can be seen as having its own internal core and external field space. In this field theory of Triple
Helix, field intensity is a key concept which explains the degree of interaction of each helix with
the others. She suggested that field theory of Triple Helix can be used to analyze the
development of an entrepreneurial university during the early stages of transition from a statist
regime.

The interacting force mainly depends on three factors: guidelines arising from government policy,
possible spillover of university knowledge innovation and absorptive capacity of industry.

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Conclusions

Recognizing that higher education as a critical aspect of the development process especially with
the growing policy awareness the role of science and technology can play in economic renewal,
the government of Ethiopia is investing in higher education as a strategic input into the
development process. Higher education in Ethiopia has been under transformation both in size
and composition from public and private domains. Until a few years back, Ethiopia had only two
public universities. There are now nine such universities. A major campaign is currently underway
to establish another 16 universities at a cost of about 2 billion US dollars.

The capacity building strategy of the Federal Democratic Republic of Ethiopia (FDRE)
underscores the developmental role of universities. The national strategy recognizes the
important role universities can have in fostering science and technology, in adapting advanced
technologies to solve local problems, and in supporting economic development more broadly.
The Industrial Development Strategy of the FDRE also recognizes the integration of economic
and social development with teaching and research.

Bringing together University, Industry and Government to discuss the traditional approaches to
university industry and government, aiming at re-dynamising the role of university service in
order to better equip the universities to face the changing socio-economic and political
conditions in Ethiopia is important for two reasons. First, knowledge is a crucial tool for
overcoming underdevelopment. Relying on rich endowments of natural resources and cheap
labour, without any contribution of local “intellectual added value”, has been - and continues to
be - a dead end for development.

In a traditional view (Neoclassical economy theory), the role of knowledge and of institutions
involved in the creation of knowledge was seen as exogenous although not unimportant to the
production system. The development and diffusion of knowledge was viewed in linear terms –
the science push model – in the sense that knowledge was created outside the productive system,
either in universities or the laboratory of large firms and then “pushed” out to industry for
applied development and adoption.

The emergence of the concept of “triple helix” of university-industry-government relations

approach changes this conceptualization of the generation, diffusion and use of technology. The
creation, diffusion and adoption of knowledge were envisioned as dynamic complexes of
interaction among industry, government and university. The locus of action in knowledge
creation, diffusion and adoption are re-focused from an exogenous position (to the firm) toward
a clear endogenous location within firms, networks of firms and networks of firms, universities
and government.

The triple helix model of university, industry, government relations is a new approach
conceptualizing the role of university in socio-economic development. Universities and technical
colleges are not only training students and conducting research, but are also making efforts to put
knowledge to use. Nowadays it is increasingly recognized that important roles as enablers, even
leaders, of regional and social development, which has been incorporated under the notion of a
third role for the universities, besides the teaching and research ones.

Triple Helix acknowledges the enhanced role of university in the innovation system of
knowledge-based society. The Entrepreneurial University plays a key role in the transition to a
Triple Helix model of regional innovation and economic development. In the movement from
knowledge and consensus to innovation spaces, the university provides the knowledge space by

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generating knowledge with economic and social relevance and providing the leadership in
initiation of collaboration with government and private sector to generate ideas/strategies and
also the innovation space where the new organizational mechanisms or socioeconomic policies
are initiated to transform ideas/projects conceived in the consensus space.

Triple Helix acknowledges in addition to fulfilling their traditional functions, each institutional
sphere also takes the role of others, like universities establishing firms. The new university elides
the traditional boundaries between academia and industry. Strategic R&D alliances among
companies and governments taking the role of venture capitalists are parallel developments.
Interaction among the three institutional spheres is the source of sustainable generation of
innovation/institutional arrangements, especially in developing countries where a university has
traditionally had limited R&D capacity and industries are not innovating.

The Triple Helix thesis underscores the possibility of developing capacity to generate science-
based innovation locally rather than relying on turnkey technology-transfer/ traditional
technology-transfer mechanisms. University-Industry-Government interactions are increasingly
the basis of economic and social development strategy in both developed and developing
societies.

The conference explored the relevance of the triple helix model in Africa. A special feature of the
conference was the presentation of African countries’ experiences from Cameroon, Tanzania,
South Africa and Zambia with sharing of experience in triple helix transition. These presentations
gave rise to a debate on whether the triple helix model is relevant for developing countries, where
universities are not producing enough research; industries don’t exist or are not innovating.
These included the need to expand to include a fourth helix. The proposed candidates are the
informal economy, donors and NGOs. A heated debate was made on whether the expanded
model may affect creative dynamics of the university-industry-government interaction.

Participants appreciated the attempt to modify the analytical model to meet the realities of
developing countries. As the Triple Helix illustrates dynamic interaction among different spheres
that can enhance their contributions to the economy by interacting in a complementary,
mutually-reinforcing manner, some participants felt that adding additional spheres may cause the
model to lose its creative dynamics.

It was reflected that no ready-made model exists to guide these changes; they will require both
creativity and the willingness to engage in thoughtful dialogue, both within and outside
universities. It was stressed that the sources of innovation in a triple helix configuration are no
longer synchronized a priori. They do not fit together in a pre-given order, but they generate
puzzles for participants, analysts, and policy-makers to solve. Creative reinterpretation of the
concept of Triple Helix is needed to make it more relevant to local realities.

One important issue brought out by the conference concerned a better understanding of the
relationship of the institutional spheres of UIG in the development. It was reflected in the
conference for a need to hold a similar forum but specifically designed to for each regional
university.

Participants found the concept of the triple helix of university-industry-government relations has
proved useful in conceptualizing the role of universities in economy. Participants felt that in
analyzing the Ethiopian universities third mission role, the importance of the triple helix concept
as a framework for realizing the potential and resolving the problems inherent in the national
innovation system. It is expected that it will help to designed strategies that facilitate

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collaboration and modalities for an effective networking amongst university, industry and
government in the interest of furthering the Ethiopian economy.

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2.2 Presentation

Building Ethiopia – a presentation of the GTZ (German

Technical Cooperation) – Engineering Capacity Building
Program

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SECTION 3

VIEWS FROM WITHIN ETHIOPIA

3.1 A Preliminary Review of Science and Technology Policy
in Ethiopia
3.2 Innovation and its Essential Contribution to the Growth
of the Private Sector and the Development of a Country
3.3 Higher Education – Industry Resource Integration
Center – Towards Solving Existing Industrial Problems
3.4 Practical Attachment Program – Achievements and
Constraints, Mekelle University
3.5 Operational Research Program for Food Security
(Presentation)

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VIEWS FROM WITHIN ETHIOPIA

3.1 A preliminary review of Science and Technology Policy in Ethiopia

A Preliminary Review of the S&T Policy of Ethiopia in the

Framework of the National System of Innovation

Mulugeta Amha
Director General of the Ethiopian Science and Technology Agency (ESTA)

Abebe Mekuriaw
Head, Department of Mines, Water and Energy, ESTA

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Abstract

The Ethiopian Government issued the National Science and Technology Policy in 1993 in
response to the realization of the country’s weak science and technology capacity, on the one
hand, and recognition of the role of science and technology for development, on the other. The
major objectives of the policy include building capability to generate, select, import, develop,
disseminate and apply appropriate technologies; and improving the knowledge, culture and the
scientific and technological awareness of the peoples of Ethiopia.

The purpose of the paper is to examine this policy using the national system of innovation as a
policy analysis framework. It is widely accepted that such analysis makes explicit the many
different kinds of necessary inputs and interactions to produce an innovative and competitive
economy.

Ethiopia needs to pay attention to supporting and promoting innovative activities in conjunction
with building its scientific and technological capacity. Appropriate attention needs to be paid to
encouraging and supporting SMEs in the national system of innovation and to demand- side
interventions, including the use of the government purchasing power. It is therefore high time to
review the national S&T policy, taking into consideration the functions and interactions of the
stakeholders of the national system of innovation. Measures should be taken to put in place the
necessary legal, organizational, operational and financial instruments to make the national system
of innovation more relevant, effective, efficient and sustainable. In this paper, a preliminary
attempt is made to do this, in the hope that it can provide a useful contribution for further in-
depth study of the subject.

1. Introduction

The level of technological knowledge that is actually in use throughout the entire economy of a
country determines the manner in which resources can be combined to yield outputs of goods
and services. Development of new technology and its application in the overall production
system has therefore been identified as a powerful factor in raising the standard of living.
Technological progress has contributed to the improvement of the health of people, increased
the amount of their leisure, improved the working and living conditions, and increased their
income many folds in different parts of the globe.

Developed countries are able to generate and extensively apply science and technology so as to
ensure their development and global competitiveness. They have already created the necessary
preconditions for the generation, promotion, diffusion and application of scientific and
technological knowledge whereas, in the case of many third world countries, the application of
this knowledge in the realization of their development objectives is at a very low level. The
daunting challenge centres on how S&T can be developed so as to contribute to a country’s
socio-economic development objectives.

It is believed that the first half of the 20th century is considered as the beginning of application of
modern science and technology in Ethiopia, along with the establishment of higher learning
institutions. However, most socio-economic problems of the country are deeply rooted largely in
the absence of well-established scientific and technological base to generate and/or select, adapt
and innovatively apply scientific and technological knowledge to solve development and
environmental problems.

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The Ethiopian Government launched the National Science and Technology Policy in 1993 as
part of the national endeavour in the fight against underdevelopment. The Policy was issued with
due consideration to the existing realities and knowledge spectrum of policy during that time.
The major purpose of this paper is therefore to examine the national science and technology
policy framework of Ethiopia from the wider perspective of the national system of innovation. In
doing so, an attempt has been made to briefly introduce the policy, to identify the major policy
directions set to promote innovative activities, and to point out the main strengths and
weaknesses of the policy. The gap observed between the intentions expressed in the policy
document and their implementation over the last twelve years has also been identified. The paper
concludes by suggesting some recommendations regarding the need to use the national system of
innovation to revise the policy highlighting some possible policy directions and implementation
actions.

2. National System of Innovation

According to the OECD, national system of innovation is defined as “a system of interacting

private and public firms (either large or small), universities and government agencies aiming at
the production of science and technology within national borders. Interaction among these units
may be technical, commercial, legal, social and financial, inasmuch as the goal of the interaction is
the development, protection, financing or regulation of new science and technology”. Such a
system can be seen as comprised of a set of functioning institutions, organizations and policies
which interact constructively in the pursuit of a common set of social and economic goals and
objectives, and which use the introduction of innovations as the key promoter of change.

All countries have, at least in embryo, a national system of innovation. What varies immensely
among countries is the extent, efficiency, and effectiveness of their different systems (UNESCO,
1997). Thus, the concept of a “national system of innovation” provides a useful framework for
technology policy analysis and formulation since it makes explicit the many different kinds of
inputs which are necessary to produce an economy which is innovative and hence competitive in
today’s increasingly globalized markets.

The three principal reasons underlie the utility of the concept of a “national system of
innovation” as a basic framework for policy analysis are the following:

1. It affords an opportunity to think of means for the promotion of coherence and

integration among national activities,
2. It offers a means of identifying what needs to be done without automatically tying the
necessary functions to any particular institution or organization which is currently in
place; and
3. It focuses attention on “innovation” – on doing new things in new ways – rather than
simply on the production of knowledge.

2.1. The Functions of a National System of Innovation

There are six sets of functions of the national system of innovation, the first two sets of which
are the exclusive domain of government, while all of the others are the domains of activities of
many stakeholders.

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Government functions

• Policy formulation and resource allocation at the national level,

• Regulatory policy-making.

Shared functions

• Performance-level financing of innovation-related activities,

• Performance of innovation-related activities,
• Human resource development and capacity building; and,
• The provision of infrastructure.

2.2. Stakeholders in a National System of Innovation

Stakeholders are the set of individuals and institutions that influence and are influenced by the
activities of an NSI. They may have different relationships with the system. In any country, the
principal groups of stakeholders in an NSI are to be found in government, the business sector,
the education and training sector, within organized civil society, and among interested outsiders.
The typical stakeholder groups that exist in the setting of a national system of innovation,
according to the experience from South Africa, are shown below (UNESCO, 1997).

A. Government

• Central policy and budgetary agencies,

• Relevant Parliamentary or Congressional Committees,
• Science councils (or other specialized S&T financing bodies),
• Departments of government with S&T functions (e.g. in health, agriculture),
• State corporations,
• Defence forces,
• Other government S&T bodies, including regulatory agencies,
• Government advisory mechanisms,
• Other levels of government (including municipal authorities, especially in the larger
cities).

B. Business

• Large local corporations,

• Transnational corporations (TNCs) and their subsidiaries,
• Small, medium and micro-Enterprises in the formal sector,
• Micro-enterprises in the informal or subsistence sectors,
• Business associations, producer groups, chambers of commerce,
• C. Education and Training Institutions,
• Universities,
• Technical colleges,

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• Teacher training institutions,

• NGOs or private bodies involved in S&T education and training,
• Primary and secondary schools,
• Other education or training institutions.

D. Organized Civil Society

• Professional and Academic Societies,

• Labour unions, especially those dealing with technical change,
• NGOs interested in technical change.

E. Interested Outsiders

• Other countries, especially the participants in their national systems of innovation,

• Other countries, including primarily both the participants in their national systems of
innovation and their Official Development Assistance Agencies,
• Multilateral Agencies (including UNESCO, UNCTAD, UNEP and other S&T-related
UN Organizations, the African Development Bank, the World Bank, WHO, etc.).

3. The Need for Science and Technology Policy

S&T policy is an integrated sum of principles, strategies, and objectives and actions adopted by a
government in response to the realization of the country’s weak science and technology capacity,
on the one hand, and the critical role of science and technology for development, on the other
hand. National S&T policy is therefore required in order to develop long-term national scientific
and technological potential and capability to generate and apply S&T for socio-economic
development. As a government response to the critical and defining role of science and
technology for socio-economic development, S&T policy is, among other things, a call for:

(i) Coordination: to bring about synergy and cost-effectiveness in science and technology
activities through conscious and systematized provision of strategic directions and
creation of enabling environment.
(ii) Priority setting: to focus on a few, but strategic areas of activities.
(iii) Core budget allocation: government commitment to allocate an annual core-budget
specifically devoted to S&T and create various funding mechanisms, including fiscal
incentives, to those engaged in science and technology development activities, in addition
to the national core-budget.

3.1. Arguments against a National S&T Policy

1. National S&T policies are designed to benefit a national economy by creating and
facilitating a competitive edge for the goods and services it produces. A globalized trading
arrangement means that not only goods, business, and finance but also S&T move
unrestrictedly across national borders. Thus, any possible benefit from national S&T
policies will quickly move (“leak”) outside a country, and in a globalized world, such
policies are therefore doomed to failure.

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2. It is generally accepted that national policies are desirable for macroeconomic stability
(for example, exchange-rate policies, fiscal balance). Beyond such fundamentals, however,
rather than facilitating a national competitive edge, national S&T policy actually prevents
development. Effective S&T decisions, it is argued, can only be made at the level of the
individual company or firm; approaches to S&T must be entirely flexible to take
advantage of rapid technological change; but national (that is, government) policies are
necessarily rigid and run counter to the interests of development.

3.2. Arguments for a National S&T Policy

1. The role of national policy is critical to establishing conditions for developments that go
beyond those the market is likely to create (World Bank 1997). In arriving at this
conclusion, the World Bank made it explicitly imperative that poorer countries build up
the appropriate human capital and fine-tune the complex relationship between the market
and society. In this regard, the World Bank observed that the experiences of the East
Asian Tigers, as well as the failures of national efforts elsewhere, strongly support the
need for appropriate instruments of modernization, including instruments of national
S&T strategy.
2. Firms and companies target the investments that come with globalization, and on which
it depends, to locations with a comparative advantage not only in low-cost labour but
more often in S&T. Long-term national policies and actions, particularly in Asia, have
been critical in attracting and retaining such investments.
3. If the strength of globalization is in its wealth-creating capacity, its weakness, if
undirected and uncontrolled, is in its disregard for, and damage to, the environment and
in its exacerbation of gross inequalities both within and between nations.

3.3. S&T Policy Instruments

A policy may remain a mere rhetorical statement if not followed by appropriate policy
instruments. A policy instrument comprises the means used to put a given policy into practice. It
can be considered the vehicle through which those in charge of formulating and implementing
policies use their capability to orient further decision-making by others. Thus it may also be said
that a policy instrument is supposed to induce individuals and institutions to make decisions
following the collective rationality established by those in power. In short, it is the vehicle or
connecting link between the purpose expressed in a policy and the effect that is sought in
practice.

An instrument is a complex entity comprising one or more of the following components:

• Legal device (legal instrument): embodies the policy, or parts of it, in the form of a
law, decree, resolution or regulation. Formal agreements and contracts may also be
considered here. The legal device goes beyond a policy and stipulates obligations, rights,
rewards, and penalties connected with its being obeyed. The intention of the government
enshrined in the policy, derives its validity and power from the legal acts put in place by
the responsible body in the government structure.
• Organizational structure: This refers to the state structure or ministry that is put in
place so as to ensure the implementation of the policy after it has been adopted. The
introduction of a policy does require an institutional framework with unequivocally spelt
out duties, responsibilities and accountabilities. Apart from describing mandates the

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framework delineates the duties and accountability lines of the major actors involved in
the national S&T system.
It includes in one hand, one or more existing institutions which may be thought as the
hardware” of the organizational structure. On the other hand, the procedures,
methodologies, decisions, criteria, and programs of one or more institutions that must be
carried out in processing the pertinent information for the purpose of applying the policy.
This are considered the “software” of the organizational structure.
• Set of operational mechanisms: refers to the organizational arrangements (government
departments or directorate) created to oversee the day-to-day operation of the policy.
These are the levers, or actual means, through which the organizational structure makes
decisions on a day-to-day basis, and attempts to obtain the desired effect the policy, was
set out to influence.

4. The S&T Policy of Ethiopia

The National Science and Technology Policy of Ethiopia was formulated by the Ethiopian
Science and Technology Commission through a series of consultative discussions with the
stakeholders during 1987 – 1993. The formulation process involved working visits of task forces
to some countries for experience sharing, sectoral S&T situation assessment and a national
workshop. The policy was issued in December 1993 by the then Transitional Government. The
main reasons stipulated for the enunciation of the Policy include the need for:

(a) Sustained science and technology capacity building,

(b) Committing resources for the long term on sustainable basis,
(c) Avoiding unnecessary duplication of efforts and uneconomical use of resources,
(d) Reduction of the level of technological dependency,
(e) Coordination of S&T activities (effective and efficient use of the resources the county can
make available for the activities.

The objectives of the Policy are:

1. To build national capability to generate, select, import, develop, disseminate and apply
appropriate technologies for the realization of the country’s sustainable socio-economic
objectives,
2. To improve and develop the knowledge, culture and the scientific and technological
awareness of the peoples of Ethiopia, and promote the development of traditional, new
and emerging technologies,
3. To make Science and Technology (S&T) activities more productive, efficient and
development oriented.

The national S&T policy comprises of policy directives, strategies; and priority sectors and
programmes. It also determines the organizational structure of the national S&T system and
sources of financial support and the kind of international collaboration deemed appropriate.

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4.1. Major policy directives and provisions of the national S&T policy relevant to the
National System of Innovation

The following are the policy directives intended to help realize the set objectives and to build
S&T capabilities in the priority accorded areas.

1. Build the capacity to search, select, negotiate, procure, exchange and introduce
technologies suitable to Ethiopia’s socio-economic conditions,
2. Establish and/or strengthen S&T institutes, Research and Development (R&D) centres
and support services as necessary and appropriate in the various administrative regions,
3. Establish responsible bodies/organs in every economic and service sector for the
execution of S&T development activities,
4. Facilitate conditions for the wider participation of women in S&T activities,
5. Establish a system to encourage young scientists and technologists,
6. Establish a system for a wider popularization of science and technology amongst
different nations and nationalities utilizing their languages in order to improve and enrich
the S&T culture of the Ethiopian people,
7. Create a working environment conducive to encouraging scientists and researchers for
better productivity,
8. Ensure rapid dissemination and application of Research and Development (R&D) results,
9. Encourage the private sector and its capital to participate in the promotion and
development of scientific and technological activities,
10. Build trained manpower in Science and Technology (S&T) both in quality and quantity,
11. Promote the mutual support between S&T education, research and production,
12. Encourage the improvement, wider diffusion and application of traditional technologies.

The national S&T Policy also identifies about twenty strategies to implement the policy
directives. Among these, the strategies that refer to the national system of innovation in one way
or another include:

1. Develop, strengthen and modernize the country’s engineering and technology base to
build a strong national economy and to assist the chemical, textile, agro-industry, mineral
and other production sectors which are necessary to meet the demand for basic consumer
goods,
2. Expand and raise the quality and understanding of science and technology education at all
levels of the educational establishments in all regions,
3. Facilitate conditions to create favourable & mutually reinforcing relations between S&T
education, R&D, and the production & service sectors,
4. Establish a national S&T information network capable to acquire S&T information
relevant to national development needs and suitably process it for dissemination to
potential users in government and private sectors,
5. Develop the capacity and the mechanism to search, choose, negotiate, procure, adapt &
adopt and exchange technologies that are appropriate and environmentally sound to the
Ethiopian socio-economic conditions,

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6. Establish a system to encourage and support applied and basic S&T research in areas
appropriate to the needs of the country,
7. Encourage and support the publication of books, research results, journals and
periodicals of Science and Technology of interest in the different languages of nations
and nationalities as appropriate,
8. Build capability and methodology to identify the scientific content of traditional
technologies; improve & change those that are useful for wider dissemination and
diffusion,
9. Establish efficient mechanisms for a speedy dissemination and application of Research
and Development (R&D) results,
10. Develop a conducive working environment and an appropriate career and promotion
structure for scientists and researchers and encourage & support the establishment of
professional and amateur associations,
11. Prepare awards and prizes for outstanding innovations and productive achievements in
the fields of Science and Technology (S&T),
12. Establish an efficient national patent and technology transfer system to promote and
support local technological innovations and creative achievements,
13. Promote locally developed material inputs,
14. Encourage the private sector and its capital to participate in S&T development activities
through the provision of tax and other incentive mechanisms,
15. Mobilize resources for S&T development and strengthen international cooperation.

The policy also identifies agriculture, natural resources development & environmental Protection,
water resources development, energy, industry, construction, transport and communication,
mineral resources, health and population planning, education, and new and emerging
technologies as the priority sectors. Programmes are also identified for each priority sector.

The National Science & Technology Policy also maps out the governance structure of the
National Science and Technology System. Accordingly, the national science and technology
system has four management structures: National S&T Council, Technical Advisory Committee
of the National S&T Council, Ethiopian Science and Technology Commission, and S&T
operational institutes and centres.

The policy indicates that the National S&T Council presided over by the Prime Minister, with a
membership of Ministers of selected Ministries is the highest decision making body of the
system. The Ethiopian Science and Technology Agency, according to the Policy, is mandated to
plan, promote, coordinate, finance and oversee science and technology activities of the country.
In addition, the Agency is responsible to advise the government on issues of S&T, implement the
government’s S&T policy and follow up the appropriate and immediate application of research
and development (R&D) results.

Operational institutions are responsible for the actual performance of S&T activities. According
to the spirit of the policy, establishment of research institutes, technology centres, design
enterprises, and various S&T support services is mandatory particularly in areas requiring special
attention. Such operational institutions can be established under the Ethiopian Science and
Technology Agency and could either be merged with other relevant organizations or operate as
autonomous bodies at the stage of maturity.

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Pursuant to the National Science and Technology Policy, sectoral S&T policies on agriculture;
health; industry; mines, water, energy and geo-information were also formulated and approved by
the Council of Ministers in 1994. For the implementation of the Sectoral Policies, sectoral
Councils composed of professionals and/or institutional representatives drawn from the
respective sectors were established to advise the Ethiopian Science and Technology Agency and
follow the execution of Sectoral S&T policies and strategies. Although, the Sectoral Council on
Agriculture was dissolved following to the establishment of EARO, the other three councils are
still functional.

4.2. Strengths and Weaknesses of the National S&T Policy

Strengths

• It provides a comprehensive and broad base that serves as a springboard to initiate

formulation of detailed policies and prioritized action programs in the various socio-
economic sectors.
• The National S&T Council is organized under the chairmanship of the Prime Minister of
the country and membership of Ministers of relevant ministries. This provides the
required commitment and leadership for productive and effective business in S&T
capacity building.
• The Government is committed to allocate up to 1.5% of annual GDP in order to support
and sustain the different S&T activities, build up S&T capability in all sectors and apply
generated research results.
• Equipment and materials imported for R&D activities are exempted from all kinds of
taxes.
• The policy consists of a number of directives that can be used to encourage, support and
coordinate scientific and technological activities of the various stakeholders.

Weaknesses

• The policy does not treat social science as one branch of science and technology.
• There are no clear distinctions between the policy directives and strategies.
• The priority sectors and programs in the policy document do not clearly show priorities.
• The Policy is too much focused on the public sector.
• Demand side government interventions are not well stipulated.
• The organizational structure of the national S&T system is centralized type; it does not
take into consideration the existing Federal Government Structure.

4.3. Gaps between the Policy and its Implementation

A number of encouraging developments have been observed in Ethiopia since the issuance of
the national science and technology policy. The following are the major steps that are recognized
by the national S&T system for their potential contribution to building innovative economy in
the country:

1. Rapid expansion of elementary, secondary, technical and vocational; and university

education (both at undergraduate and graduate levels) through the Government capacity
building national program. Growth of the number of universities and colleges and their

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intake capacities is particularly impressive. The number of universities has increased from
two to nine. Participation of the private sector in education is also encouraging.
2. Strengthening of the national agricultural research system through human resource
development and infrastructural capacity building of the Ethiopian Agricultural Research
Institute and establishment of Regional Agricultural Research Institutes.
3. Technical, financial and administrative support to young graduates of Technical and
Vocational Education and Training Colleges to develop and run their own small
businesses.
4. Provision of continued government research and development grant to encourage young
researchers and promote problem solving applied research.
5. Establishment of a national intellectual property system with the necessary legal,
organizational, and operational framework.
6. Creation of conducive business environment that attracted a good number of foreign and
local investors to establish business enterprises in agro-industry, manufacturing,
construction and services.
7. The aggressive and commendable efforts of expanding ICT use across the country
(including the Woreda Net and School Net programs).

Although all the above-mentioned undertakings are basic steps for building and utilizing national
S&T potential for socio-economic development, we believe that a lot has to be done yet in a
coordinated manner to implement the directives of the national S&T policy and to achieve its
objectives. The major problem with respect to the national S&T policy of Ethiopia is therefore
mainly the wide gap observed between the statements of the policy and their implementation.
The major gaps can be summarized as follows:

• The general directives and strategies of the policy have not been followed by the
appropriate policy instruments and action plans as well as prioritized concrete programs
and projects that could contribute to the development of national science and technology
capability.
• The organizational structure of the national S&T system envisaged in the policy
document has not been realized in full. The prevailing situation is that the council is
chaired by the Director General of ESTA with membership of State Ministers and vice
Ministers. Coordination and prioritization of S&T activities which are multi-sectoral,
multidisciplinary and multi-institutional at national level could have been more effectively
handled by a national S&T council that is chaired by the Prime Minister or the Deputy
Prime Minister as his representative or a high level minister of with a stature of
political seniority.
• Absence of legal basis that defines the relationship between the various elements
of the national S&T system is also another important gap. The responsibilities, roles,
relationships and accountabilities of the elements of the system have not been legally
defined and established. The functional relationships between all the elements are in fact
based on their willingness to collaborate and implement the policy.
• Absence of any system to prioritize and allocate resources for the national S&T efforts.
Although the policy stipulates that the Government of Ethiopia is committed to
allocate up to 1.5% of the annual GDP for S&T activities in the country, no
mechanism has been developed to allocate core S&T resources annually for

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programmes and projects approved by the national S&T council. It has to be

emphasized here that the intention is not on controlling the flow of annual budgets to the
various S&T institutions; it should rather be on creating a system by which resources
meant for national S&T activities are earmarked and used taking into account national
inter-sectoral and inter-regional priorities and needs.
• Equipment and materials imported for R&D activities are exempted from all kinds of
taxes according to the policy. The present practice, however, is that all equipment
and materials imported even as donations are taxed. This does not pause much of a
problem for public institutions, as the Government has shown demonstrated willingness
to absorb such costs in the annual budgets of institutions. Probably the problem is
when it comes to private and civic institutions.

5. What Needs to be Done to Strengthen the National Innovation System (Policy Directions
and Actions)?

Ethiopia needs to pay attention to supporting and promoting innovative activities in conjunction
with building its scientific and technological capacity. It can be clearly seen that the most
important issue in the Ethiopian S&T development is not lack of a policy guideline; it is instead
lack of systematic efforts to implement the Government policy.

Not enough attention has been given to encouraging and supporting SMEs in the national system
of innovation (Comment: and removing barriers, their role in innovation, but not R&D, could be
elaborated). The major directions of the present national science and technology policy and the
attempts to implement it are focused mainly on the supply measures of scientific and
technological knowledge generation with inadequate attention to innovative activities at firm
level. Revision of the policy should therefore take into consideration all the stakeholders of the
national system of innovation and pay adequate attention to the demand side interventions
including the use of the government purchasing power.

Given the above it is now imperative to review the national S&T policy of Ethiopia using the
national system of innovation as a framework of analysis. It is believed that the existing policy
could be upgraded taking under review the functions and interactions of the stakeholders of the
national system of innovation. Participatory policy formulation, and adoption of policy
implementation instruments including legal, operational and financial should therefore be
followed to make the national system of innovation more relevant, effective, efficient and
sustainable.

The S&T policy review must obviously focus on local conditions because any model that is
simply imported is unlikely to yield the desired benefits. Relevant lessons can be learnt about the
review procedures and activities from the past experiences of OECD and IDRC (S&T policy
review of Chile, China, South Africa, Vietnam, etc. in late l990s). The essential features for
undertaking such a review could be:

• Strong national leadership,

• Participation of S&T-policy professionals from both developed and developing countries,
• Assessment and sharing of previous experiences and the lessons learned from these,
• A substantive national assessment, and

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• Combined open examination, and tabulation of national views, observations, and

recommendations (obtained from government, scientists, technicians, and the business
community) and those of the international team of policy professionals.

6. Conclusions and Recommendations

Although the National S&T policy has some weaknesses, it has provided the basis to consider
S&T activities in a national system. In the review, it was observed that the most important issue
in the Ethiopian S&T development is lack of systematic efforts to implement the Government
policy. It is believed that the existing policy could be upgraded focusing on coordinating,
supporting and enhancing interactions of the various stakeholders of the national system of
innovation including universities, industry and the government. The following section
summarizes the most important points that need to be considered during policy revision and
subsequent implementation.

• Appropriate policy instruments including legal, organizational, operational and financial

should be adopted to make the national system more relevant, effective, efficient and
sustainable,
• Adequate attention should be given to supporting and encouraging innovative activities at
small and medium firm levels,
• Demand side government interventions including the use of government purchasing
power need to be applied to promote and support interactions of the stakeholders,
• The organizational structure of the national system science and technology should be
based on the decentralized governance structure of the nation to ensure active
participation of the federal and regional stakeholders,
• Science and technology capacity building and applications need to be integrated with the
overall development plan of the country,
• The capacity to define and make use of policy instruments needs to be developed.
Building the capacity to undertake policy analysis as well as to assess and forecast
technical change in the country also needs to be accorded priority,
• Banking and financial institutions need to improve their role of fostering technological
innovation by introducing venture and other forms of risk capital to create new
innovative businesses and improve their sustainability,
• It is imperative to install mechanisms by which institutional research capacity is
strengthened and/or built based on national priorities,
• The linkages between industries and higher level technical and engineering establishments
and industries of all types should get policy support to enhance their joint technological
development and innovation activities,
• Business and technology incubators should be nurtured to provide affordable space and
core business support such as business development, financing, marketing, and legal
services,
• Adequate scale of investment should be ensured in R&D for the absorption, adaptation
and, wherever possible, improvement on and generation of new technology,
• Policies and capacity building efforts are needed to stimulate technology diffusion and its
effective usage to the desired levels. These efforts include: a) infrastructure (b) education
and human capital building, (c) public and private research activities,

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• Capacity building efforts in the national system of innovation should emphasize

understanding, adopting and using new technological knowledge by the private and
public business enterprises,
• The role of institutions of higher education in producing new knowledge through
research, serving as conduits for the transfer, adaptation, and dissemination of knowledge
generated elsewhere in the world, and their support to government and business with
advice and consultancy services need to be duly recognized in the national system of
innovation,
• R&D is essential to maintaining and improving competitiveness. Therefore companies
need to be encouraged and provided incentives to spend on R&D to be competitive in an
innovation-driven economy,
• Facilitating the linkage between the universities/ research institutes currently engaged in
R&D activities and industry via the provision of subcontracting services for basic and
applied research needs to be encouraged.

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References

Bezanson K., J. Annerstedt, K. Chung, D. Hopper, G. Oldham, and F. Sagasti (1999), .Viet Nam at the
Crossroads: The Role of Science and Technology.

ESTA (Dec. 1993), National Science and Technology Policy of Ethiopia, Addis Ababa.

IDRC (1995), Building a New South Africa Volume 3: Science and Technology Policy. Editor: Mark Van
Ameringen.

IDRC (1997), A Decade of Reform: Science and Technology Policy in China, IDRC and the State Science and
ESTA (February 2006), Background Document for Revision of the National S&T Policy of
Ethiopia (draft).

Mullin, J., R. M., Adam, J. E. Halliwell, and L. P. Milligan (1999), Science, Technology, and Innovation in
Chile, IDRC publication.

Sagasti, F. (1977), Science and Technology Policy Implementation in Less Developed Countries, Working Paper
prepared for the Dissemination Meeting of the Science and Technology Policy Instruments.

Technology Commission (People’s Republic of China), Beijing.

UNESCO, (January 1997), A Prospectus for the Conduct of S&T Policy Review for African States.

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3.2 Innovation and its Essential Contribution to the Growth of the Private
Sector and the Development of a Country

Innovation and its Essential Contribution to the Growth of

the Private Sector and the Development of a Country

Dr. Arega Yirdaw

Chief Executive Officer, MIDROC Ethiopia

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1. Introduction

It is indeed enlightening and profoundly encouraging to observe that notable professionals with
ample experience in and exposure to the inner workings of the academic institutions as well as
the private and public sectors are engaged to design a system that can create an environment of
collaboration and mutual benefit among universities, industries and governments by using what is
known to us as “The Triple Helix Model”.6 It is a privilege and indeed an honor to be here today,
in this respectful forum, to make few remarks about the role and contribution of the private
sector, as one of the three institutions, and the expectations it has from the other two institutions.

At the outset, I would like to underscore the fact that this paper is based merely on the practical
realities and experiences acquired in the day-to-day operations of the private sector.

Figure 1: The Triple Helix Model

Government

Cooperation

University Industry

Innovation in the context of this presentation is taken as any activity that deals with new or
improved ideas related to science & technology, management & leadership, manufacturing &
production, methods & processes, and the like. It is primarily about the adoption of globally or
locally available ideas to enhance productivity.

In this globalized world, the private sector is faced with the challenge of providing quality
products and/or services at competitive price to well-informed, savvy and educated
customers/consumers. These customers utilize modern information systems to gainfully transact
with manufacturers/suppliers and achieve the best possible satisfaction for their money.

- What must the private sector do to use innovation as one of the elements for productivity
and growth?
- What must the private sector expect from the academia and policymakers (i.e.,
universities and governments) to achieve a modern, knowledge-based, technologically
acceptable companies with sustainable growth and profitability?

6 (Etzkowitz et al, 1998).

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This paper is prepared to shade light on the above two questions to help provide to the forum
the point of views from the private sector.

2. Recognition of Reality

In an effort to set aside generalities and focus on ideas and suggestions that may produce near
term results, it is essential, at the outset, to recognize the realities faced by private, public and
other institutions in any underdeveloped countries including Ethiopia.

First:

To be part of the global market, such countries are required to conform to the demands of the
international or global market and play an active role to survive and grow. This requires the
availing of products and services that must meet international quality standards at a competitive
price.

Second:

To compete and be successful in the global market, the private sector needs to operate using
resources which must, not only be compatible with the international standard, but also compete
in a playing field where the other players have huge historic, technological and financial muscles
to crush or knockout new entries from marginalized economies. It is obvious that the poorer a
nation, the less its innovative resources, the stiffer the challenge for it to be in the global market.

Third:

The private sector must also provide satisfaction to local consumers by providing products that
can compete and win the invading imported products from countries privileged with own raw
material, modern equipment and better innovative capabilities.

Fourth:

The realities surrounding the infrastructure, financial strength, governance, health and the like are
factors that hinder success in the ever-challenging and difficult local and international market that
the private sector must participate.

Fifth:

Globalization and its implementation has created a paradox in the activities of the private sector.
On one hand, it is a fact of life to be a part of the global market for survival, growth and
development. This, without a doubt, must be the goal of any institution that strives to succeed as
an institution. On the other hand, the reality of the market requirements and the practical
implementation of globalization in the third world create undue pressure on the private sector
with technologically inadequate resources such as capital, machinery equipment, as well as skilled
manpower.

This phenomenon where industries are required to provide quality products meeting strict
international standards, while lacking all the tools needed to do so, is a paradox that is currently
being faced by the players. Likewise, it is also clear to the private sector that some strategy needs
to be utilized to be part of the global market while making sure that such participation is
implemented with full recognition of the stated paradox and the need for accelerated support in
upgrading resources through innovation. The “Triple Helix Model”, which promotes cooperation

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among key players, can help alleviate the problem. It is an undeniable fact that any lone player in
a private sector will be doomed to failure unless supported by relevant institutions.

3. Role of the Private Sector

In order to successfully meet the challenges stated above, it is imperative that the private sector
make the necessary effort to constructively engage with all those institutions that will make it
possible for the sector to be productive.

The private sector, by its very nature, needs to be profitable. To achieve this, it is essential that
the sector plays its role as a team member. It shall accomplish this by focusing:

- on the growth and expansion of the sector by introducing innovative ideas.

- on the growth of the country by being profitable thereby paying taxes to the country.
This, in turn, will enable the government to provide the necessary fund for its regulatory
and other services.
- on the growth and development of the community through its corporate citizenship
contributions and participations.
- on the growth of the number of skilled and technologically advanced workforce by
providing support to relevant academic institutions, and
- on the growth of foreign capital and investment by successfully rewarding investors with
the necessary return on their investments.

To achieve the above, leaders in the private sector are required to accept the realities of the local
and global economy, the competitive environment and the inadequacies that currently exist in the
support and regulatory institutions.

This situation, hence, requires the private sector to re-double its efforts and meet its obligations
by recognizing:

- the need to provide quality products and services marketable at a competitive price,
- the need to accept the realities of the market, adjust, adapt, re-engineer, re-align and
change activities accordingly,
- the need to constructively engaging with the regulatory bodies/agencies to help promote
and improve the working environment for the private sector, and
- the need to establish and work hand-in-hand with institutions that are organized to add
values to the private sector through their innovative ideas.

In practical terms, at this stage in time, the private sector in this country, can engage with the
universities and the government to help encourage innovative ideas.

With regard to cooperation and collaboration with universities and other similar institutions, the
private sector can and must:

1. Participate in the formulation of curricula relevant to the enhancement of the private

sector.

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2. Participate in the development and implementation of specialized classes that will help
add-value to the private sector in its effort to reduce cost, improve productivity, manage
and lead companies for profitability, meet global challenges, adopt or create new methods
and processes, and secure skilled labour force.
3. Participate in promoting “entrepreneurial university” for the university’s own
development as well as the private sector and the government.
4. Participate in the training of management, leadership and other relevant technical skills by
placing the resource of the private sector at the disposal of the university.
5. Participate in availing industry leaders and qualified experts to participate in the
entrepreneurial activities of the university in a form of research or classroom activities.
6. Participate in availing sponsorships to the universities to help accelerate the innovative
process that will benefit all players.
7. Participate in studies that must be made by universities to help growth and development
by bridging the gap between the private sector and the regulatory agencies with the prime
goal of promoting the growth and development of the country by utilizing researched and
useable data/information.

With regard to the cooperation and collaboration with the government/policymakers and
regulatory agencies, the private sector must constructively work:

1. to ensure a healthy, productive and cooperative spirit between the policymakers and the
industry.
2. to promote the country to foreign investors by demonstrating “showcase success” stories
in the private sector that can help attract foreign capital and create the possibilities of
securing an equitable portion of the pie in the market.
3. to facilitate the introduction of new or the revision of old proclamations, laws and
regulations that help promote growth and development in the private sector.
4. to participate in the alleviation of the socio-economic problems and challenges faced by
the government through the introduction and implementation of innovative ideas.
5. to assist the policymakers by providing relevant data as well as first-hand-experience that
will be used to formulate rules and regulations, relevant to the growth and development
of the country.

The private sector, therefore, can be an active partner in the “Triple Helix” cooperative effort by
employing the above and other similar ideas and assumptions that can help promote innovative
ideas for the benefit of the Nation.

4. The Private Sector’s Expectations

Any reasonable and well-informed leader in the private sector recognizes the national and
international constraints and challenges faced by underdeveloped countries like ours. Such
leaders do also appreciate the positive and constructive efforts that are being put forward by
policymakers to help the private sector.

The necessary focus and assistance, although not satisfactory by any measure, provided by the
Ethiopian government to the private sector during the last four to five years is a testimony to the

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dedication and determination of the leaders to help promote growth and prosperity in the private
sector.

Likewise, the universities, despite their limitations in resources, have been the major sources of
trained manpower for use by the private sector.

One, however, cannot help but wonder how the private sector ought to operate in an
environment where the two key allies in the promotion of growth and development are seriously
under-funded. The fact that the industry, the universities and the government have serious
limitations to meet the demands of the global market, makes it imperative that the three
institutions need to join hands and network effectively to exploit each other’s innovative ideas for
the betterment of their own activities as well as the growth of the nation.

Some of the expectations of the private sector from the two institutions are provided herewith,
not arranged in any order of importance, for possible considerations.

5. Expectations from Governments

In the context of innovative ideas and the growth and development of the sector, industries
expect the government to:

1. Provide the necessary fund and support to government-run universities so that innovative
ideas can be exercised for the benefit of all.
2. Provide necessary assistances to private educational institutions to help encourage their
participation in the innovative ideas.
3. Provide and implement laws and regulations that are conducive to implement innovative
ideas.
4. Provide supportive and enabling environment for the universities and the private sector
to effectively network to advance the implementation of innovative ideas.
5. Provide incentives to help instil innovative culture and practice among the parties
involved.
6. Provide the framework and policies that can help generate constructive and fruitful
interactions between the private and the public sector.

6. Expectations from Universities

Despite the fact that most universities are mainly part of the government thereby, subjected to
several operational and financial limitations, it is, nonetheless, important for them to do what is
possible to participate in the efforts to help cement the growth, expansion and profitable
operation of the private sector. To achieve this, the sector expects universities:

1. to recognize the critical aspect of higher education in the development process and play
the necessary role in meeting the demands of the private sector by availing them with
graduates with marketable skills.
2. to enhance the traditional research and teaching functions by engaging with
entrepreneurial activities that help promote economic development.
3. to promote and become the prime mover in the adoption of innovative ideas that can
easily be implemented to assist the efforts of the private sector as well as the government.

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4. to re-engineer the courses and re-direct the priorities to help focus on the activities that
are currently needed to support the private sector to compete effectively. This requires
products and services that are made available by knowledge-based companies supported
by innovative ideas.
5. to foster innovative culture and practice in all social fabrics of the country thereby helping
the private sector operate in a conducive environment.
6. to take advantage of the system of the market economy and help provide relevant and
researched material that can be used not only by the private sector, but also by the
government.
7. to focus on creating innovative solutions to improve or replace century old tools or other
productivity related methods and practices.
8. to engage in the production of simple but useful “how-to-do” publications to help small
or medium entrepreneurs so that success to failure ratio of entrepreneurship can be
improved.
9. to ensure their existence as viable and relevant institutions with practical and result-
oriented contributions to society through the implementation of technology and non-
technology related specializations such as leadership, managerial and marketing skills as
well as the use of electronic based communication systems.

7. Conclusion

In conclusion, if our goal is growth and development, then it is essential that the three
institutions mentioned above recognize that they have no better alternative other than working
together to meet the developmental needs of the country.

If we believe that any dynamic innovative system provides the means to utilize new ways of
doing things through invention, technology transfer and the like, then it is imperative that the
three institutions lead the way to exploit its usefulness.

Each one of the institutions can play their own roll by improving their activities within the limits
of the realities they are confined with. This may not be of great challenge. The major challenge,
however, is the development and implementation of a network system that can serve as a catalyst
to create result-oriented relationship among the three players. This task may require the creation
of a body that can take the challenge and help achieve the benefit that can be obtained from the
use of the “Triple Helix” concept of collaboration.

No one will deny the challenges faced by underdeveloped countries like ours with regard to lack
of infrastructure, skilled manpower, inadequate exposure to science and technology, red tapes,
bureaucracy, limited access to finance and the like.

All developed nations, however, in one form or the other, have gone through such challenges
prior to becoming industrialized and wealthy. Having said that, we have no choice other than
working together in an environment where all institutions are employing better and innovative
ideas to accelerate the implementation of changes that are required for the growth and
development of the country. The private sector will constructively engage with the academia and
the policymakers to help the “Triple Helix” concept become a reality in Ethiopia. This concept,
perhaps, will test our resolve and determination to accept new techniques and methods for better
and profitable use of our resources. The private sector welcomes the initiative and looks forward
to positively participate in its implementation.

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3.3 Higher Education – Industry Resource Integration Center – Towards

Solving Existing Industrial Problems

Higher Education - Industry Resource Integration

Center - Towards Solving Existing Industrial Problems

Dr.-Ing. Daniel Kitaw

Associate Professor, Mechanical Engineering Department, Faculty of Technology
Addis Ababa University

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Abstract

This paper depicts a short history of the Ethiopian industries and deals with the problems and
constraints that these industries are facing in this unprecedented competitive world. Furthermore
the missing link between higher institutions and industries is discussed under the light of
international experience, Addis Ababa University-Ministry of Industry Cooperation program and
Technology Faculty Industry Linkage Unite.

The paper uses the concept of triple helix and proposes the establishment of Higher Education
Institutions-Industry Resource Integration Center as a way foreword to solving the problems
that the Ethiopian industries are facing.

1. Introduction

The central economic difference that distinguishes the 21st century man from that of the
preceding ages lies in the capacity to produce goods and services. If the technological capacity of
a country is to be assessed, a much greater role has to be assigned to the means of the practice
needed for translating the general concept of technology as “capability” into actual “capacity” to
produce goods.

There are basically two schools of taught with regard to the technological gap between
developing and developed countries. One school of thought believes that, the gap is very large
and is growing every year. At the other extreme is the views of the second school of thought that
however large the gap may be, with recent technological advancements, the bases are being built
up for narrowing it rapidly.

Those who have the second view, generally maintain that the task is to pursue the building up of
national capacity, so that maximum advantage may be taken of all available technologies,
wherever they have been developed, and to embody them in the instruments of production and
in the labour force in order to achieve an accelerated rise in productivity. They urge a rapid
expansion of output of producer goods, training of technological personnel and promotion of
design and engineering capabilities, so as to achieve as quickly as possible the objective of much
greater technological and economic development. To this effect, this paper proposes the
establishment of Higher Education-Industry Resource Integration Center to enhance the
acceleration of industrial development.

If rapid economic development is to be achieved, it is essential to transfer and make use of

emerging technologies. The concept of technology transfer is the purposive movement of
established technology in one context when implemented in a different cultural, economical, and
technological context. A technology is said to be transferred when the recipient understands and
knows the technology deep enough to use it, adapt it, modify it or adjust it until it begins to
spread within the recipient’s economy.7

However, the transferred technology may entail non optimal use of natural resources, which may
have its root in the wrong definition of raw materials for the technologies conveyed. It is not
always possible to get the appropriate technology with all the necessary criteria fulfilled.

Technological information about the source, terms, and conditions associated with acquisition;
the cost of machines and life time; the skill, raw materials and maintenance requirements, and so
7 Charles H. Smith, III “Japanese Technology Transfer to Brazil” UMI Research press, Michigan, 1981

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forth are important in order to select the right one among alternative technologies.
Unfortunately, people who make decisions on technology selection are usually misinformed. As a
result people tend to rely on technologies with which they are familiar or which are easily
accessible, even if more efficient or cheaper alternatives are available.

An important remedy with this respect would be the introduction of triple helix: the linkage
between government, university and industry. In the triple helix “technological facilitators” would
be identified. These are people in the higher education and research institutions, who because of
their intellectual capabilities, investigative zeal and contacts with the centers of relevant
technological developments and industries, become vital sources of technical information. The
“facilitators” combat the calm acceptance of advertiser’s claims and promote a healthy scepticism
of current claimed advances and alert to the changes of being overwhelmed by a rapidly changing
technology. The “facilitators” will also have the responsibility of ensuring that the transferred
technology entails optional use of natural resources in the country, and adapting the imported
technology so that is becomes compatible to the domestic market and should have a comparative
advantage.

Ethiopia’s comparative advantage today lies in its natural endowment, mainly agriculture and
cheep trainable unskilled labor force. However, given the low level of labor productivity and the
traditionally nature of agriculture even exploiting its static comparative advantage cannot be relied on
for long. Developing dynamic comparative advantage primly requires developing technologically leading industries,
which could create positive externalities and spill over effect for other industries.

2. Ethiopian Industries

The history of industrial enterprises in Ethiopia is a very short one compared to its early
civilization and independence which dates back over three thousand years. It was during
Emperor Menelik’s reign that modernization of the country started. The establishment of the
Bank of Abyssinia, modern education, hospitals and the appearances of the first bicycles, sewing
machines and shoes were during his reign. The only railway transport, the Djibouti-Addis railway,
the first notable infrastructure, which linked interior Ethiopia to the outside world, was
constructed by 1917.

Until the 1939-45 war, Ethiopia remained largely insulated from the influences of the world
market. Italy had colonized Eritrea in 1896 and during the next forty-five years built up a network
of trade and some small-scale production in the area. Yet Eritrea was only a small part of
Ethiopia and remained isolated physically, politically and economically from the rest of the
Ethiopian Empire. Such relations as existed with the world markets took the form of a division
of labour according to which Ethiopia exported a few primary products (almost entirely coffee
and animal skins) and imported some manufactured goods. Nevertheless, capital accumulation
and participation in the international division of labour remained insignificant.

While Ethiopia’s topographical features played an important part in the economy’s historical
isolation from the world market, the country’s inaccessibility by land, the immobility of labour for
both geographical and social reasons were also factors explaining why colonial powers did not
expand their interests in Ethiopia. Although there were some military expenditure and
infrastructure investments during the Italian occupation of Ethiopia (1936-41), the insulation of
Ethiopia did not change significantly until the 1940s. The principal reason for this change was
that, owing to various mainly non-economic considerations, the United States began to take an
increasing interest in Ethiopia’s strategic importance.

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During the reign of Emperor Haile Selassie modern schools and universities were opened; roads
were built and a few small enterprises mainly foreign-owned and owner managed appeared. They
were traditional industries of food processing, beverage, tobacco, and sugar; leather shoes and
woodwork; cement and foundry; textile, soap, chemicals, paper and printing presses. The account
of the evolution of government policy towards foreign investment in particular and the transfer
of technology in general over the year 1950-74 could best be divided into two periods: 1950-59
and 1960-74. The former period was characterized largely by piecemeal changes in Ethiopian
policy in response to specific circumstances whereas in the latter period there was a gradual
attempt to integrate policy with development planning.

After the fall of Emperor Haile Selassie much has been tried to develop the industrial sector. The
ten-year Perspective Plan, 1984/85 - 1993/94, was the first long-term plan to be introduced since
the early 1970’s, when scientific socialism was adopted as a guiding ideology of the revolution.
The Plan had been launched with a view to bring about rapid economic and social change and to
lay the ground for socialist economic reconstruction. In the centrally planned economy all private
industries were nationalized and were put under ten corporations of the Ministry of Industry.

With the end of the civil war in 1991 and the take-over of power by the Ethiopian People’s
Revolutionary Democratic Front (EPRDF), the main preoccupations of the Transitional
Government were security concerns and the quest for relative political stability. A process of
rehabilitating the economy was soon initiated. Essentially, the objective of the program was to
utilize emergency assistance to overcome the devastating effects of decades of war and to
recommence economic activity. Crucially, however, the government recognized the need for a
more coherent economic strategy to correct entrenched macroeconomic imbalances.8 This
culminated in the New Economic Policy (NEP), which was unveiled in late-1991. The emphasis
was to dismantle the enormous state intervention and to limit the role of the state in economic
activity. The systematic reduction in the role of the public sector in productive activities was to
be undertaken in favour of the expansion and deepening of the private industrial sector.

Because of lack of technological capability, most firms are inefficient. Furthermore their productivity
and profitability has been declining for long. Thus the firms must update their technology improve their
managerial and labour skills significantly improve their technical know how and enhance
marketing capabilities so as to move to a high productivity and efficiency frontier.

These industries that have come to existence through the century, however small and technically
backward, they have trained industrial personnel, disseminated the industrial culture and are
stimulus to the development of heavy industries. These are then the heritage of the past and the
springboard for the future.

2.1. Problems and Constraints in Industries

The problem analysis in figure 1 summarizes the problems and constraints of Ethiopian
industries.9 The decisions with respect to the types and capacities of industries have, to a large
extent, disregarded the market potentials of the products to be manufactured.10 As most
industries were aimed at producing consumer goods that were imported, they were consequently
directed to urban centres, while the majority of the population lives in the rural areas. Such policy

8 “Basic Principle and Practices in Industrial Policy Formulation and Plan Preparation in the Eastern and Southern Africa Subregion” ECA
Subregional Workshop, Djibouti, 1991.
9 Daniel Kitaw “Objective Oriented Problem Solving - A case study: Mugher Cement Factory” Journal of EAEA.Vol 12,1995.
10 Contractor Faroke J. e Lorange Peter “La cooperazione tra imprese: joint ventures, alleanze technologiche ed alter forme di
collaborazione per I mercati internazionali” Etas libri, Milano, 1990.

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contributed to forcing most of the industries to operate at a very low level of their capacity since,
after the rapid growth of the early stages, they were not able to extend their market to the rural
areas. The other causes of capacity under-utilization include poor design of industrial plants,
inadequacy of skilled manpower and qualified managers, shortage of inputs, poor physical and
institutional infrastructures, etc.

Poor maintenance is the result of insufficient planning in the procurement of spare parts and
replacement components. Generally, when foreign companies provide some maintenance
services, its cost is such that it undermines the competitiveness of the industries concerned.

The management of the industrial enterprises has been characterized, in most cases, by
insufficient planning with respect to raw materials supply, marketing, optimum production and
manpower utilization. Such a situation generally resulted in financially inefficient enterprises
which, rather than generating surpluses, constituted a financial burden for the economy as a
whole.

High cost of production is another major characteristic of the existing industries. High costs of
investments, due mostly to lack of proper feasibility studies, excessive use of expensive expatriate
skills, over-supply of equipment (in some factories) and wrong technological choice have resulted
in a very low productivity of the capital in the manufacturing sector.

The importance of programming or planning manpower requirements for industrial development

in the country is twofold. On the one hand, success in industrial development depends in part on
the availability of skills, and it is the task of the planners to ensure that skills are available at the
appropriate moment. The productivity of plants and equipment is low when the managers and
workers handling them are of low capability. Domestic investment may become a burden on
communities already poor, and foreign investors may be deterred when no skilled manpower can
be recruited or trained.

Three major constraints seem to emerge with regards to higher education and industry linkage,
needs and capability assessment and co-ordination of manufacturing industries.

Constraint C.1 Many higher education institutions, research institutions and industries are
working in isolation and their efforts fail to result in improved tools, equipment and services
reaching the community in volumes, which would make a real impact on productivity.

Constraint C.2 A critical misalignment exists between the research output from research
institute, the type of curricula and skill endowments of graduates from universities against the
immediate skill needs of industry. This may be due to the information gap between the needs of
the industrial sector and the resources available at the higher education and research institutions
and the inadequate linkage between the economic development objectives of the country and the
education policy that helps to match the needs of industry.

Constraint C.3 Most enterprises in Ethiopia like Kotebe Metal Tool Factory and the Akaki Spare
Parts factory are operating at less than 25% of capacity while complaining that competition from
imported tools is robbing them of their market. The causes of capacity under-utilization may
include poor design of industrial plants, inadequacy of skilled manpower and qualified managers,
shortage of inputs, poor physical and institutional infrastructures, etc.

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3. Higher Education Institutions

The main aim of higher education institutions is to train mature citizens and carryout research
and consultancy activities to make significant impacts in the country’s development in various
sectors of the economy. To this effect the higher education institutions have been imparting
fundamental education to students and carrying out research activities in their faculties and
institutions.

If the available technology and the available skills are incompatible, either the technology needs
to be adapted or the skills improved. Training does the latter; for instance, it makes it possible for
people to use, repair and maintain machinery so far unknown or unfamiliar to them. Training can
be imparted in formal institutions or on the job; its content and duration vary depending on the
nature of the job and the complexity of the technology involved. Experience suggests that there
is a trend towards on-the-job and tailor-made training and away from formal and general training.
Moreover, it has been found that training is more effective if it is planned and organized with the
active involvement of those to be trained. A good example is the National Cleaner Industrial
Production Project of Ethiopia (NACIPPE) in which the Chemical Society of Ethiopia was
involved in the training of industry employees in cleaner production. At the end of their training,
the employees came up with a number of projects, some of which were implemented by the
industries concerned with substantial financial gains in some instances in addition to having
trained employees.

Training can help managers to appraise alternatives and choose more appropriate technologies to
use installed capacity more efficiently, to be better supervisors, etc. At different levels, training
may enable workers to contribute to improving product quality, to adaptation of technologies,
and to innovation.

Technology adaptation and the generation of new technologies require research and
development, and more broadly, an environment in which R and D have a chance of being
effective. Where urgent national problems have to be solved, the direction of R and D efforts
should be determined by national science and technology policies whose priorities are compatible
with available skills and financial resources and have been shown to be valid in the light of what
is being done elsewhere.

Many of the Universities with their teaching and research resources available in the Faculties,
Schools and Institutes carry out teaching and research activities. Nearly all faculties in the Addis
Ababa University have started post-graduate studies to satisfy the manpower requirement of the
country, especially for the newly emerging regional universities.

However, in most of the faculties and research institutes, problems of research staff
development, financial constraints, adequate selection of relevant research areas and proper
research facilities including infrastructure, equipment and supplies are evident. As a result, the
research activities carried out are not to the university’s satisfaction both in quantity as well as
quality. The over crowdedness, impoverishment, dilapidated infrastructure, and poor status of the
rewards and morale of the academic staff seem to lead to a crisis in university education and
research.

The time which qualified and experienced R and D workers can devote to actual R and D work is
minimized by a shortage of efficient, well-qualified researchers and supporting staff. The social
status, even of good researchers, tends to be as low as their income. There is a preference of R
and D workers for theoretical research (Ph.D. thesis syndrome) and a relative distaste for

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practical application. Monitoring of research in progress and evaluation of R and D effectiveness

are quite unheard of.

It is evident that, while it is essential for R and D institutions to establish a close relationship with
the productive sector, effective linkages are often lacking. Research results, for example in the
form of designs for more appropriate technologies, often stay on shelves instead of being tested
and disseminated. One proven and significant reason for establishing linkages is the need for
indigenous consultancy, which has the ability, knowledge and experience to tailor results to the
practices and needs of the market.

An attempt was made to form Addis Ababa University-Ministry of Industry co-operation

program in mid 1980’s. The program had done quite a lot in solving industrial problems.
However after the change in policy by the present government, from centrally planned economy
to market economy, the university-industry linkage deteriorated and the program was suspended
(vide infra).

Another attempt was recently made by the Technology Faculty so as to revive the linkage
between the University and the industries.

4. University-Industry Linkage Programs

4.1. Foreign Experience

There is hardly any university in the developed countries that does not have some form of
interaction with industry. These interactions are very greatly supported by the governments.

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Figure 1: Problem Analysis of Industrial Development

EFFECT
WEAK INDUSTRIAL
DEVELOPMENT

Under utilized Weak regional Less investment Unused scattered

industries Link resources

High Cost of
Construction without Low priority to Production
analysis Regional programs Weak link between science, Week link b/n industries
Technology and production

Weak industrial Wrong priority High Cost of Low productivity Low quality
policy selection investment products
Planning and coordination
weakness
Excessive use
expatriate staff
Wrong technology Lack of properly
choice skilled manpower
Over supply of
equipment
Scarcity of resources
Lack of training Improper selection of Disorganized training
Poor feasibility facilities training fields programs
study
High maintenance
cost

Insufficient planning of
procurement
High cost of
replacement
Few skilled
personnel CAUSE
Weak planning and
management

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of the different countries for instance in the US, the National Science Foundation (NSF) is one
of the many government agencies that play a great role in fostering university-industry
interactions. It does this in several ways, some of which are: encouraging and providing partial
support for academic and industrial researchers to cooperate in an Industry/University
Cooperative Research Project. The projects are in specified areas deemed to be of great
importance for the nation to be competitive; this varies according to the era: for instance,
condensed matter physics, materials chemistry (polymers), biotechnology have all been or are
presently receiving NSF funding under this program; establishing Industry-University
Cooperative Research Centers; creating the Small Business Innovation Research (SBIR)
program. SBIR provides an important opportunity for small science and technology-based firms
to participate in NSF research and working with universities, government agencies and large
companies.11

The nature of university-industry interactions varies widely. In some instances the interaction will
be between a single industry and a university in a specific area e.g University of Texas and
Raytheon Company in Systems Engineering Master’s Program. In other cases it may be a
university with a consortium of industries and in still other instances it could be a consortium of
universities with a consortium of industries covering wide fields of cooperation. There have been
several advantages to these interactions; among the most important advantages are the
establishment of Science and Technology Parks near many universities (e.g. the Research Triangle
Park near the University of North Carolina) and of spin-out companies (e.g. the many
biotechnology companies near Oxford University) near universities. These have benefited
universities and industries in varied ways and have facilitated the university-industry interactions
even more. It is not only the developed countries that have well established university-industry
interactions but also the newly developed countries such as South Korea and Singapore which
have used these interactions to be highly competitive in a variety of fields such as electronics. The
Science and Technology Park set up near the University of Pune in India “proposes to convert
into applied technology some of the discoveries and inventions of the University departments”.12

Because the distinctive assets of a modern economy are now recognized as knowledge, skills and
creativity, the future competitiveness of any country’s business in this age of globalization will be
dependent upon the country’s ability to create innovation networks among universities, industries
and government agencies. In the words of the US Council on Competitiveness
"Interconnectedness is one of the keys to competitiveness in the knowledge-based economy”.
The nation that fosters an infrastructure of linkages among and between firms, universities and
government gains competitive advantage through quicker information diffusion and product
deployment.13

4.2. Addis Ababa University - Ministry of Industry Cooperation Program14

The oldest national university, Addis Ababa University, has been the main source of trained
manpower to the economy. There has been a continuous contact between individual academic
staff members of the University and the industry. Many scientific researches have been carried

11 E.Bloch and C.E. Kruytbosch, “The NSF Role in Fostering University-Industry Research Relationships”, IEEE Transactions on
Education, E-29, 1986.
12 http://intcent.unipune.ernet.in/site/interactions.htm.
13 “Global: The New Shape of American Innovation” US Council on Competitiveness, September 1998.
14 Tarekegn Gebreyesus, “Past University-Industry Cooperation” March 1998 (Paper presented at a workshop on University-Industry
Cooperation, March 27, 1998, Addis Ababa).

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and remarkable results obtained. However, a coordinated effort has not been made for the
research outputs to make a significant impact on the society. This is simply because of the lack of
a sustainable institutional linkage between the University and the industries.

Some twenty years back, a number of meetings were held at the highest levels to establish a
university-industry cooperation program. It culminated in the formation of the Addis Ababa
University-Ministry of Industry Cooperation Program (UICP) in February 1986 through a formal
agreement between the Addis Ababa University (AAU) and the Ministry of Industry (MOI).

The overall objective of UICP was to bring together Addis Ababa University and the Ministry of
Industry so that they can accomplish their respective goals to achieve different aims. On the part
of industry these aims included

• solving technical and managerial problems,

• injecting new processes, technologies, etc.,
• maintaining and improving productivity and efficiency,
• facilitating further training of existing staff, etc.

The aims of the university included

• practical training of students,

• making R&D relevant while maintaining independence of staff,
• augmenting its R&D resources with those from UICP,
• obtaining feedback on the direction of R&D, curricula, teaching approaches and
consultancy services, etc.

The UICP was composed of four bodies:

• the Policy Committee,

• the Executive Committee,
• the Secretariat and
• the Liaison Office.

The Policy Committee was in overall charge of the UICP. It was composed of 12 university
delegates and 13 from the Ministry of Industry and corporations under its control. Until the
change of government in 1991, it was reported that the Minister of Industry, who served as the
Chairman, ran the UICP personally through the Secretariat.

Funding was of two types: the regular budget for administration and office expenses was funded
equally by MOI and AAU; the operational budget was funded partly by the two institutions and
partly by “voluntary” contributions from the corporations of the Ministry of Industry. Each
budget was approximately Birr 50,000 (US$25,000) per year.

Operational Activities

Some of the main functions of the UICP as described in the Policies and Procedures Manual
included:

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• research and development projects,

• seminars, workshops and symposia,
• thesis support,
• sponsorship of students,
• short courses,
• AAU-MOI cooperation program week, etc.

It was reported that a number of projects had some kind of UICP involvement but it was
difficult to ascertain whether these projects would not have been carried out even if UICP was
not involved.

4.3. Technology Faculty – Industry Linkage Unit (TFILU)15

It is believed that some groundwork has to be accomplished in order to establish a sustainable

University - Industry Linkage. To this effect the Faculty of Technology, Addis Ababa University,
started a Technology Faculty – Industry Linkage Unit (TFILU) on its premises. The main
objective of this unit is to pave the way for the establishment of sustainable University - Industry
Linkage. It had the responsibility of conducting need and capability assessment of Technology
Faculty and the industrial sector at large so as to form a strong foundation for a reliable linkage.
The Unit examined the activities carried out by the Addis Ababa University – Ministry of
Industry (AAU-MOI) co-operation program to learn from the successes and shortcomings of
their experiences.

TFILU run its activities in collaboration with the National Advisory Body (NAB) of the Unit and
the Addis Ababa University Research and Publication office. NAB is composed of members
from the Ministry of Industry, the Ethiopian Science and Technology Commission (ESTC), the
Public Enterprises Supervising Authority, the Chamber of Commerce, private companies and the
Faculty of Technology. The activities to be carried out by the Unit towards meeting its objectives
include;

1. Study on “Survey on Skill Needs and Capabilities of Technology Faculty and the
Industrial Sector”,
2. Lay the foundation for (IT) technology information dissemination,
3. Prepare and conduct summer courses for industrial personnel,
4. Organize seminars and workshops on recent industrial issues (at least one workshop and
one seminar a year),
5. Organize educational visits and vacation jobs for students,
6. Conduct research activities on already identified problems of industry and promote and
co-ordinate research activities in the Faculty.

Organization of the Unit:

The Unit began its operation in July 2000, soon after the grant had been obtained from ESTC.
The first few months have been devoted to organizing the office

15 Daniel Kitaw “Proposal for Technology Faculty Industry Linkage” AAU, Faculty of Technology. Jan. 2000

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• The executive committee of the Unit, which has five members, was formed from
various departments of the Faculty.
• Sub committees for Training, Research and Consultancy, Industry Job-Core,
Workshops and Seminars, and Information Technology were formed maintaining the
departments’ mix of the Faculty.
• By-laws of the Unit were drafted and discussed upon at all levels of the Unit’s
organization.

Operational Activities:

Some of the main functions of TFILU as described in its document include

1. Training,
2. Researches and Consultancy,
3. Industry Job-core,
4. Workshops and Seminars,
5. Information Technology.

The initial fund to establish TFILU was provided by Addis Ababa University (in kind by
providing office facility) and the Ethiopian Science and Technology Commission and was
expected to continue. However the freezing of the project fund by ESTC made it very difficult
for the Unit to carryout its activities as intended. This has jeopardized its activities and quenched
the vigorous interests of the committee members who freely sacrificed their time and energy for
the cause.

4.4. Recent Developments

In the first week of February 2006 the Ethiopian Manufacturing Industries Association took the
initiative to carryout activities during the Ethiopian industry week. There were work shops,
seminars and discussion forums during the week. The main topic that was debated upon was
University Industry linkage. At the end of the workshop a steering committee was set up to
follow the linkage issue through.

The committee then approached the Ministry of Capacity Building, Engineering Capacity
Building Program. An encouraging progress has been achieved in the past three months. An
international consultant (from Germany) and a national consultant have now signed contracts to
carry out a study on university industry linkage and come up with a concrete proposal on the
modalities of the linkage that has to be institutionalized.

In April 2006 a memorandum of understanding was signed between the Faculty of Technology,
Addis Ababa University and the Ethiopian Manufacturing Industries Association. The
cooperation was an outcome of the preliminary contacts and discussions made between officials
of EMIA, and the Faculty of Technology. After the signing of the understanding the planning of
joint activities (training, research, consultancy, exchange of staff and the like) is in progress by a
joint team.

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5. A Way Forward16

5.1. Development Rationale

The Ethiopian industries are operating in business environment characterized by unprecedented

global competition and technological change. Furthermore, their efforts fail to result in improved
tools, equipment and services reaching the community. For the industries to survive and be
competitive it is essential that they have to consciously link with higher education and research
institutions so as to optimally use the available scarce resources of county.

The existence of scientific and technological institutions in the country doesn’t guarantee the
provision of appropriately skilled workers and relevant research out put to satisfy the immediate
needs of the industry.

The proposed Center, in this study, is not in the slightest to duplicate what the others are doing
nor to create a giant institution as to satisfy the national pride. But, it is an attempt to make a
conscious and co-ordinated effort in order to integrate the scarce available resources of the
country. On one hand, it would provide a linkage to integrate the resources available at higher
education institutions and the industries, and set research priority areas and bring an immediate
impact on the rural communities. On the other hand, the proposed Center would enhance the
underutilized industries to produce better tools and equipment and would thus provide a direct
stimulus to the industrial development.

As a cross-sectoral project, the counterpart institutions would be the Ministry of Trade &
Industry, the Ministry of Education, the higher education academic and research institutions,
Ministry of Capacity Building, Ethiopian Manufacturing Industries Association and Chamber of
Commerce.

5.2. Objectives of HEIRIC

This proposal has the main objective of establishing a “Higher Education–Industry Resource
Integration Centre” (HEIRIC).The primary thrust of the proposed HEIRIC, is to integrate the
Higher Education Institutions staff and students as well as its research infrastructure to resolve
problems of industries and boost productivity and to improve their own teaching and research
capabilities. To realize this objective, HEIRIC plans the following distinct but interrelated
activities.

1. Short term training courses tailored to industries in various fields and at different levels,
2. An internship program (or vacation jobs) for pre-graduating students in industry during
their study period,
3. Organizing sponsorship program for students,
4. Carrying out research activities based on the needs of the industry,
5. Involving the University staff as advisors to industries especially as counter parts when
the industry is involved with foreign advisors,
6. Inviting experienced industrial workers as part-time lecturers, guest lecturers or through
joint appointment both at under-graduate and post-graduate level,

16Ideas are taken and adapted from “Proposal for a Sustainable University Industry Linkage Program” Tarekegn G.Yesus and Daniel
Kitaw AAU Dec 2003.

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7. Strengthening and developing research facilities of the Technology and other Faculties
through the fund generated,
8. Providing technical support during purchase and running of sophisticated equipment,
9. Promoting and fostering appropriate “Technology Transfer”,
10. Prototype development and building incubation units,
11. Promoting and initiating Techno parks.

Such activities and interactions would be of benefit to both industry and university by enabling
them to:

• Establish multidisciplinary programs that are responsive to industrial needs,

• Carry out specific company-sponsored projects,
• Strengthen team-based, cross-disciplinary, problem-solving industry-university exchanges
by placing faculty and students at industry sites and industry scientists/engineers at the
university,
• Provide a real world and a high-calibre educational experience for graduate and
undergraduate students.

5.3. Organisation

HEIRIC requires a Board of Directors (composed of government, higher education institutions

and the industries), which will be vested with responsibility for establishment of polices, and
strategy, and supervision of its activities. The Board should be represented by the following (with
additional members to be added as needed)

- Ministry of Capacity Building 1

- Ministry of Education 1
- Ministry of Industry 1
- Science & Technology Agency 1
- Public Enterprises Supervising Agency 1
- Public Higher Education Institutions 5
- Private Higher Education Institutions 3
- Ethiopian Chamber of Commerce 1
- Addis Ababa Chamber of Commerce 1
- Professional Association Joint Secretariat 1
- Private Companies 5

Membership to the board shall be on a three-year rotation basis. Under the guidance of the
Board members, the Center director serves as chief executive officer of HEIRIC and will be
responsible for the planning, direction, supervision and control of all day-to-day activities of the
centre.

Under the Center director there will be committees (Figure 3) responsible for

1. Training,
2. Research and Consultancy,
3. Industry-job core,

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4. Workshops and Seminars,

5. Information Technology.

Figure 3: Proposed Organizational Structure of the HEIREC

Board Members

Co-ordinator

Secretary

Training Branch Research Industry Workshop Information

& Consultancy Job-core &Seminars Technology

Training

The objective of this program encompasses both formal and informal education and other forms
of learning experiences. It relies on structured approaches to knowledge and skill enhancement
that better match labour force needs. It is possible to have three different types of trainings:
tailored; off-the-shelf; and combinations of tailored and off-the-shelf training.

Research and consultancy

The main objective of the Research & Consultancy branch is to facilitate a conducive
environment for researchers to carry out research that is relevant to the Ethiopian industries.

Industry-Job core

The primary objective of the “Industry-Job Core” program is to introduce students into the
workplace early on their academic studies. The program has dual impact. First, it helps to close
the gap between the academic studies and the practical application of acquired knowledge and
skills in the working environment. Secondly, it provides the industry with an opportunity to
access semi-skilled labour as well as to have direct influence over the development of skills of
future graduates.

Workshops and Seminars

The objective of this program is to organize relevant workshops and seminars on a regular basis
and disseminate the outcomes using newspapers, newsletters, professional journals or any other
appropriate means.

Information Technology (IT)

The objective of this program is to electronically network higher education institutions and
industries. To this effect the network set up by Addis Ababa University (AAU) promises a
revolution in information gathering and dissemination both for institutions of learning and the
public at large. For industries affiliated with the HEIRIC, the network promises to greatly
increase their information gathering capacity; with the envisaged computerization of the library
system at AAU.

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5.4. Source of Finance

The initial fund to establish the HEIRIC is expected to come from the Ministry of Capacity
Building, Ministry of Trade and Industry, Ethiopian Science and Technology Agency, public and
private Higher Education Institutions and Manufacturing Associations. In due course the Centre
will search for internal and external collaborators both in the public and private sectors. It will
also start generating its own fund through consultancy and training activities.

Basically, profit making is not the Centre’s principal objective. However it shall generate
reasonable incomes by rendering consultancy and/or training services to the community at large
and to the industries in particular. The Centre shall also seek donations, in cash and/or other
forms, from national and international institutions wishing to support its objectives.

The Centre shall encourage industrial firms and organizations to be its institutional members and
pay nominal standing fees and, as a reward, get a 15% reduction for institutional members and
10% reduction for associate institutional members on the charges for consultancy and/or training
services.

6. Concluding Remarks

There have been many attempts, by national and international organizations, to resolve the
problem of technological under development. Some of the efforts made are establishments of
industrial plants, design centres, scientific and technological institutions and the like, in addition
to the seminars, workshops, trainings abroad and advisory services at different levels. The effort
made by many governments, donor organizations and international agencies is undoubtedly
remarkable and has addressed the problem to a certain extent. However, the attempt lacks a co-
ordinated effort and falls short of making the maximum out of the existing under-utilized
industries, reforming the weak regional co-operation, making the industrial ambient attractive to
investors and strengthening the link between University, Industry and Government.

The past Ethiopian University-Industry linkage experiences were primarily anchored on

administrative decision rather than being on needs and demand. The administrative decision was
easily executed for it was public-public partnership. The current and future scenario would be
complex: public-public, public-private and private-private: where the players would be both
public and private higher education institutions and industries owned by the government and
private sector. The Centre would be established on true demand and assured sustainability.

Based on the experience of other countries, AAU-MOI cooperation program, TFILU, and the
felt need that exists in the industries, the author strongly recommends:

1. Ministry of Capacity Building, Ministry of Education, Ministry of Industry and Trade, the
Ethiopian Science and Technology Agency, public and private Higher Education
Institutions and the business community should make a coordinated effort to establish
and strengthen a nation wide Higher Education - Industry Resource Integration Centre.
2. Secondly, all higher education Institutions should start linkage units at an associate vice
president and associate dean level as early as possible. And those who have already
started should properly appreciate the efforts made and strengthen the initiatives.

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3.4 Practical Attachment Program – Achievements and Constraints, Mekelle

University

Practical Attachment Program:

Achievements and Constraints

Mulu Bayray
Esubalew Tamrat
Yeshambel Mekuriyaw

Mekelle University

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1. Presentation outline

• Mekelle University in Brief,

• Background of Practical Attachment Program (PAP),
• Objectives of the Program,
• Achievements of the Program,
• Constraints of the Program,
• Conclusion and recommendation.

2. Mekelle University in Brief

• Mekelle University was established through a merger of Mekelle Business College (MBC)
and Mekelle University College (MUC),
• MBC begun accredited diploma program in 1991 in the fields of business, while MUC
started as College of Dry land Agricultural and Natural Resource (CDANR) in 1993,
• MBC enrolled 150 first batch of diploma students while CDANR enrolled 42 degree
students in its first batch,
• Mekelle University currently enrolls close to 20, 000 students in its regular, continuing
and distance programs,
• The yearly student population for the last fourteen years is shown in Table 1

Table 1: Student Population Mekelle University 1991 - 2005

• Currently Mekelle University has six academic Faculties and one College.
• Overall the University runs 40 academic departments offering undergraduate program
and 5 departments offering graduate programs.
• Staff profile (see Table 2).

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Table 2: Staff Profile Mekelle University

Faculty No. of staff

FDANR 115
FBE 158
FST 125
FOL 26
FED 198
FVS 11
CHS 44
Total 624

3. Background of Practical Attachment Program (PAP)

• Mekelle University has a motto which says “Higher Education with Practical Emphasis”,
• The University began its PAP in line with the motto for the first time under the Faculty
of Dry land Agriculture and Natural resources,
• Faculty of Science and Technology, Faculty of Business and Economics and Faculty of
Law followed in introducing PAP in their curriculum,
• The PAP at Mekelle University is designed as part of the curriculum that a student should
fulfill before graduating,
• The program has two to four credit hours with clear objective, tasks to be carried out by
students and method of evaluation,
• The duration of practical attachment program varies with Faculties. In Faculty of Dry
land Agriculture and Natural Resources the duration is three months while for the Faculty
of Science and Technology, Faculty of Business Education and Faculty of Law the
duration is two months,
• Students are evaluated on their performance of the program by their respective
departments. The evaluation process generally is based on three stages:

1. evaluation by host institution,

2. supervision during the program, and
3. report and presentation of their work.

• Mekelle University incorporated the Practical Attachment Program as one of its

objectives in the 20 years strategic plan. In line with this plan the University established
PAP offices at each Faculty and appointed coordinators.

4. Objectives of the Program

• The general objective is to produce graduates with practical orientation, competent, and
confident to carry out their jobs. The program enables students to understand the existing
situations of the community, organization or industry.
• The course is designed with the following major objectives:

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– To orient students with their field of profession,

– To enable a good career development for students,
– To identify potential employers through networking,
– To enable students understand the livelihood of the rural community, work
procedures of organizations and industry.
• In addition to fulfilling their academic requirement students benefit from PAP:
– Identify practical problems for their senior essay or final year projects,
– Attain practical skills,
– Change attitude and behavior,
– Test their theoretical knowledge and professional competence,
– Develop and instill confidence.
• Host institutions will benefit because they will:
– Get areas of interventions identified in their activities,
– Get feedback on the performance of their developmental activities,
– Identify research priorities,
– Fill man power gaps during the program period,
– Have opportunity to asses potential employees.
• The University will benefit because it can:
– Produce practically trained, skilled manpower,
– Gather information for practical and problem solving researches,
– Get feedback for curriculum review,
– Establish partnership with institutions,
– Analyze current situations in communities, organizations and industry.

5. Achievements of the Program

• The University conducted annually the PAP during the summer season in collaboration
with host institutions. It has successfully conducted ten rounds with all students hosted in
different institutions.
• The feedback from students who participated in the program and host institution was
very positive. Students have benefited from the program and many have been employed
in institutions where they were initially hosted for the PAP.
• Institutions have also positively responded to the objectives of the PAP (see Table 3).

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Table 3: Students from Mekelle University Faculties involved in PAP

Faculties
PAP cycle Total
FNDAR FST FBE FOL
1st - 1996 28 28
2nd -1997 38 38
3rd –1998 42 42
4th -1999 48 48
5th - 2000 53 53
6th - 2001 101 101
7th - 2002 84 191 275
8th –2003 118 145 186 449
9th - 2004 196 132 198 526
10th-2005 606 117 257 34 1014
Total 1314 394 832 34 2574

6. Constraints of the Program

• Even though the program was successful and benefited all stakeholders there is difficulty
to accommodate all students to potential sponsors with the increasing number of
students.
• Due to sponsorship problem students were forced to complete the program by their own
(self-sponsor) and resulted in not objectively designed practical works.
• Due to the significant increase in number of students since last year, the university was
unable to secure placement of all students.
• The main constraint of the program is lack of budget to run the program. The University
has made some efforts to close the gap:
– Through encouragement of students to sponsor themselves,
– Soliciting sponsorship by projects under Mekelle University,
– Arrangement of placement of students close to their homes,
– Through encouragement of students to work in their localities.

7. Conclusion and Recommendations

• Practical attachment program will equip students with appropriate tools to be competent
citizens in their field of profession. This program should be strengthened and given
attention by all stakeholders.
• Therefore, the government, funding institutions, private institutions and organizations
should actively get involved to overcome the budget problem to accommodate the
increased number of students.

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• This conference which aims at transforming University-Industry-Government relations is

an opportunity to create awareness about the problems associated with PAP and pave
ways to bring about solutions.

8. Recommendations

– The relationship between higher education, government, non government and private
organizations has to be strengthened,
– Higher institutions have to work towards involving more non governmental and
private institutions in the program,
– Encourage students to sponsor themselves,
– Funding organizations should support the program until sufficient awareness is
created in all stakeholders,
– The government has to allocate budget to partially cover the expenses of the program,
which may be included in the cost sharing scheme.

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3.5 Operational Research Program for Food Security (Presentation)

Operational Research Program for Food Security and

Sustainable Livelihood:
A case study on Participatory Varietal Selection (PVS)

Hawassa University Southern Agricultural Research Institute & Bureau of Agriculture and Rural
Development

Funded by: Ireland Aid

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1. Presentation outline

• Theoretical foundation of operational research:

– Why Participatory Action Research,
– Evolution of research and development thinking,
– Agricultural Research and Innovation Continuum.
• Components of operational research,
• Participatory Varietal Selection: the process and outcomes,
• Scaling-up.

2. Why Participatory Action Research?

• The conventional research and development model:

– Has failed to provide appropriate and relevant technologies that support agricultural
and economic development
– Has not taken sufficient time to understand clients needs, priorities and practices
– Underpinned by instructional and blue-print approach

Table 1: Evolution of Research and Development

Period Explanation Prescription Key extension Socio-economic Dominant
to farmers activity research frontier research
non-adoption methods
1950s & 1960s Ignorance Extension Teaching Understanding the Questionnaire
diffusion & surveys
adoption process
1970s & 1980s Farm level Remove Supplying inputs Understanding FS Constraint analysis
constraint constraint
FSR
1990s Technologies Change the Facilitating Enhancing F Participatory
doesn’t fit process farmers competence, research by and
participation changing with Farmers
professional
behaviour

3. Objectives of Operational Research Programme

1. Undertake relevant and appropriate research “in-situ” that is farmer-led, disseminated to all
relevant stakeholders, and which informs future program orientation;

2. Conduct training needs assessment for farmers, development agents, subject matter specialists,
and key policy makers in the region; design/modify training materials as appropriate, and deliver
appropriate training and related capacity-building activities.

4. What PAR Change?

• PAR recognize that innovation is a social competence ( several actors or stakeholders are
involved and contribute successfully and less successfully in the process)
• PAR demand new methodologies, institutional set-up and professional attitude
• PAR links research, development and policy

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Figure 1: Agricultural Research and Innovation Continuum

5. Components of Operational Research

• Diagnostic and site characterization: a wide range of participatory appraisal on bio-

physical and socio-economic aspects was undertaken (PRA, SLS, Transect survey on
vegetation and feed resources, HIV/AIDS etc.).
• Farm recording: was carried out with farmers selected and trained to keep a daily record
of all their farming operations as well as inputs and outputs.
• Technology testing and dissemination: different action researches in crop, livestock
and forage development, soil and water conservation has been conducted.

6. Participatory Varietal Selection (PVS)

• Participatory Varietal Selection (PVS) is a process of active and functional involvement of

farmers in the planning, implementation, monitoring and evaluation of crop varieties and
their promotion,
• PVS can be used to identify acceptable new varieties and thereby overcome the
constraints that cause farmers to grow landrace and obsolete cultivars,
• PVS exploit local expertise (farmers’ wisdom) and local resources (farmers land in place
of on-station plots) in achieving outputs that are more appropriate to the environment.

7. PVS Process and Outcomes

• Selection of varieties: Five varieties of haricot bean; three varieties of soybean, five
varieties of teff, and four varieties of wheat were tested.
• Selection of farmers: A well-being ranking, largely based on the levels of food
sufficiency and resource endowment, was conducted at the beginning to allow farmers

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from different well-being categories to be equally represented in Farmers Research

Groups (FRG).
• A total of 25 farmers were selected for FRG in each PA

8. FRG has Played the Following Roles in the Process of PVS

• Actively participate in action research activities,

• Participate in testing and selecting appropriate technologies and practices,
• Share their knowledge and expertise with researchers and development practitioners,
• Mobilize the communities for field days, trainings and seminars,
• Play a model farmers role.

9. PVS Design

• Mother and baby trials was employed due to its simplicity and suitable to the condition of
Ethiopia.
• A baby trial consists of a single new variety that is given to the farmer to enable him/her
to compare it with his/her own variety. Sufficient seed was given to allow the farmer to
plant a relatively big plot so that the comparison can easily be made.

The “Baby” Trial (Figure 2)

• one or two new cultivars per farmer;

• compared to local cultivar or second new variety:
• farmer managed, farmer inputs:
• evaluation of farmer’s perceptions.

Figure 2: ”Baby” Trial

• In the mother trial all new varieties tested in baby trial were grown in as a single replicate
in centrally located villages often with innovative farmers. The varieties comprising the
baby trails came from the mother trial. Each mother trial in our case was composed of 4-
5 varieties.

The “Mother” Trial (Figure 3)

• many cultivars, several locations, one replicate per location;

• researcher designed, farmer managed, farmer level of inputs;

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• yield and maturity measured by researchers;

• consultative evaluation of other traits.

Figure 3: ”Mother” Trial

10. Result and Discussion

• Haricot bean: Haricot bean is one of the major grain legumes widely cultivated by
smallholder farmers in SNNPR. The farmers are using the crop for home consumption
and income generation.
• Only a single variety has shown a yield advantage over the local one (Figure 4). However,
farmers employed a number of parameters to select their preferred Variety (Table 2).

Figure 4: Haricot Bean Yield Performance.

Haricot bean Yield Performance

23 21 18 22
20 15

Awash-1 Awash Roba-1 Ibbado Omo-95 Local

Melka

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Table 2: Farmers’ preference ranking

Farmers’ preference ranking, Key for scale (1-6); 1= best, 6= least

Farmers selected Awash-1 and Ibado because of their market and best food value respectively

11. Soybean

• Soybean is a newly introduced crop in the region and its production is not as such
intensive among smallholder farmers. Awassa Agricultural Research Centre has recently
released seven varieties for production. In operational research only the three varieties
were selected for PVS due to their earliness (Table 3).

Table 3: Soybean Varieties Yield Performance (kg/ha).

12. Teff

• Except one variety (i.e. Dz-1681) all improved varieties showed yield advantage over the
local varieties. As a result farmers in both woredas selected Dz-1281 and Cr-37 for seed
multiplication (Figure 5)

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Figure 5: Teff Varieties Yield Performance (kg/ha).

Teff varieties yield performance (kg/ha)

1488
1471
1500 1456
1450
1369
1400
1350
1300 1246

1250
1200
1150
1100
Cr-37 Dz-1281 Dz-1681 Dz-255 Local

13. Wheat

• The wheat varieties were introduced only in Meskan woreda due to its agro-ecological
suitability. All the varieties are durum wheat and they have shown better yield
performance (Figure 6).

Figure 6: Wheat Varieties Yield Performance (kg/ha).

Wheat varieties yield performance (kg/ha)

3000 2650
2479
2500
2032
2000

1500

1000

500

0
Asasa Foka Ude

Farmers selected Ude and Foka variety for seed production.

14. Scaling-up

• Scaling-up of process, innovations and products have a significant contribution to

institutional development, biodiversity and farmers livelihood (Figure 7).
• Scaling-up is a process of reaching large number of people. Specific innovation and
methodologies accepted by conventional research, development and policy framework
should be scaled up.

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Figure 7: Scaling-up framework

15. Scaling-up in Operational Research

• Community based seed production scheme:

– Local seed production scheme should be seen in the context of enhances linkage
among research-development continuum stakeholders,
– The FRG organized at PA level has taken the responsibility for starter seed
multiplication; and at the moment seed increase work has been done on two
varieties of haricot bean, wheat and teff and on three varieties of soybean,
– This year the FRG groups are up-graded into community based seed production
organization and currently it has 50 members in each woreda.

16. Issues in Community-Based Seed Production

1. Choice of crop(s) and variety,

2. Source of seed,
3. Training of seed producers,
4. Quality control/inspection,
5. Need for credit to produce the seeds,
6. Cleaning, packaging, and marketing of seed,
7. Sustainability issues.

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Figure 8: Community-based production scheme framework

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SECTION 4

ANALYSES FROM AN INTERNATIONAL VIEWPOINT

4.1 Ethiopia: Innovation and Growth in international
comparison
4.2 Illustrated cases
4.2.1. Linking University Research to Production Systems within
the Context of a Poverty-Reduction Strategy: Case Study
of Cameroon
4.2.2. The Incubator as Organizational Training Method
4.2.3. The Renewal of the African University: Towards a “Triple
Helix” Development Model
4.2.4. An Assessment of the University Industry Relations in
Israel: The Experience of the Magnet Program and
Implications for Ethiopia
4.2.5. Mobilizing University Resources to Create and Support
Firms - the Case of University of Zambia’s Computer
Centre and Technology Development and Advisory Unit
4.2.6. The Oxfordshire Economic Observatory project:
Relevance of the model to Developing Countries
4.2.7. Universities as Innovators in the Israeli Biotechnology
Industry
4.2.8. Management of Technology Transfer Offices: Lessons
for Brazilian Universities
4.2.9. ICT Business Incubation: Evidence from Mauritius
4.2.10. Academia-Industry-Government Relationship: Experience
of the College of Engineering and Technology, University
of Dar es Salaam Tanzania
4.2.11. Research Institutions and SMEs: Trust Mechanism and
Partnership
4.2.12. Emergence of the Entrepreneurial University and the
Future of Higher Education in China

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ANALYSES FROM AN INTERNATIONAL VIEWPOINT

4.1 Ethiopia: Innovation and Growth in international comparison

Ethiopia: Innovation and Growth in International

Comparison

Sara Johansson de Silva

Advisor IKED - International Organisation for
Knowledge Economy and Enterprise Development

Thomas Andersson
President IKED – International Organisation for
Knowledge Economy and Enterprise Development, President of Jönköping University, Sweden

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Introduction and Background17

With technical progress and, notably, the advance in information and communications
technology (ICT) allowing for access to information at rapidly declining costs, societies around
the world encounter new opportunities for development. At the same time, it is becoming more
difficult for any society to compete and lay the foundation for an acceptable level of living based
simply on standardized production, low wages, and low costs. Increasingly, innovation is
recognized as key to economic transformation, growth and poverty reduction. A country’s ability
to tap the creativity of its population and foster new, commercially relevant, ideas and products is
becoming critical. Many countries find it urgent to upgrade the institutions and economic
activities that are essential for making use of the new tools. Yet, progress with respect to new
technology and knowledge cannot be commanded from the top. A formula for success must
critically include the adoption of policies and instruments that allow each society to advance from
within.

The innovation systems approach (Freeman, 1987; Lundwall 1992) views innovation as resulting
from a constructive interplay between different but complementary spheres of expertise, and
between key players. More specifically, innovation and better knowledge use is dependent on
capabilities and initiatives undertaken by actors within three spheres: academia, the private sector,
and government. Interactions between them are influenced by the role of each entity, and the
incentives and means that drive their behaviour, as laid out by the theory of triple helix.
Increasingly, the success of innovation systems depends on what integration and collaborative
interaction develop between these entities. The triple helix model illustrates how relations
between policy makers, scientists and business must be framed in order to account for healthy
linking of research and technological and commercial opportunities (Etzkowitz et al., 1998).

With technical breakthroughs and the ongoing globalization process, despite continued market
integration and barriers to liberalization in many markets, product and factor markets are
nevertheless inevitably becoming more accessible more or less across-the-board. Countries are
very differently placed to capture the opportunities, however. Most developing countries have
not yet paid sufficient attention to the importance of innovation and entrepreneurship for
generating growth. Developed countries, meanwhile, have so far not sufficiently considered the
role of international cooperation in fostering technical and non-technical innovation (Juma et al.,
2001). Numerous regulations and governance practices tend to standardise universities and
hamper their dynamism, confine entrepreneurship, and account for lock-in of knowledge flows
and innovative efforts.

The problems of turning knowledge creation and use into a driving force for local, economic
development are particularly stark in Africa. Whereas each country needs to learn how to master
and upgrade its own specific assets, it is important to study and draw lessons from the experience
of others. So far, there have been relatively few in-depth considerations of the African context.
Against this background, the present paper provides an overview of the growth and innovation
performance of one individual country, namely Ethiopia, while adopting an international
perspective and drawing on multiple comparisons with other relevant countries, including in
Africa.

17.Extensive input was provided by colleagues at IKED. The authors are grateful to Boyan Kostadinov for assistance with
graphical material and to Karin Helene for editing and formatting the document.

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Ethiopia is a country with a long, proud history, and which has remarkable and impressive
institutions in many respects. In recent years, economic growth has increased significantly.
However, after decades of both political and economic problems, Ethiopia is one of the poorest
countries in the world, and an impetus to sustained and equitable income growth is needed. An
analysis of the potential and problems inherent in its national innovation system could help
identify outstanding issues and point to opportunities for growth-friendly reforms. An
application of the triple helix concept can further contribute to essential understanding how the
various key societal actors can be engaged so as to facilitate effective implementation of such
reforms.

This benchmarking exercise takes its main thrust and structure from two important points. First,
drawing on the entities outlined in the triple-helix model – government, university and industry -
it focuses on the importance of allowing all these three spheres to be dynamic and able to
develop and excel in their own agendas, while also demonstrating how the interface between
them could be either hampering or facilitating progress. On this basis, the paper moves towards
pinpointing basic ingredients needed for a successful innovation system. Second, it recognizes
that fostering science and technology and innovation more broadly is especially challenging in
low income countries.

To this end, the paper is organized as follows: The next section suggests some specific issues
related to innovation systems in low income countries. The third section looks at the challenges
facing Ethiopia specifically, while the fourth section focuses on its international competitiveness.
The fifth section looks at the national innovation system, especially aspects of relevance to the
triple helix, and indicators that measure its outputs, inputs and, to some extent, its linkages. The
sixth and final section concludes.

1. Innovation in Low Income Countries: Opportunities and Challenges

The World Bank defines low income countries as countries in which (2004) GNI per capita was
$845 or less – i.e., an average income of less than two per cent of that of the United States. This
groups together many geographically, culturally and structurally very diverse countries. In spite of
vast differences, many of these countries are likely to face similar opportunities and challenges
with respect to innovation. What hopes does innovation hold for the poorer countries, and what
challenges need to be addressed for its promises to be realized?

• The promise of income growth. The literature on endogenous growth has developed a
strong case for the role of innovation and ideas more broadly in spurring higher income
growth. Innovation is a process that can raise productivity; higher productivity is, over
the longer run, essential to higher income per capita. Clearly, poor countries have most to
win, if innovation can spur a growth process that can bring the majority of the population
above minimum standards of living. High growth dynamics in small firms, which
dominate the private sector in low income countries, can result in better spread of wealth.
• The promise of better health and more food. The role of innovation in raising growth can
be seen as an “indirect” - albeit extremely important - effect of innovation on wellbeing.
There are also many areas where science and technology advancements could directly
improve the lives of millions of people, with potentially dramatic effects especially in low
income countries. There is a dire need for drugs against pandemic diseases like malaria
and HIV/AIDS. New fertilizing techniques to raise crop productivity would help small
farmers feed their families and raise incomes. Technology can help provide clean and safe
water (see Box 1). Indirectly, improved health and higher farm productivity would

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increase both the quality and quantity of labour supply, which in turn could feed back
positively into growth.
• The promise of indigenous knowledge. Developing countries and development agencies
are increasingly recognizing the knowledge base in developing countries, including
traditional medicines, farming methods, etc., and the need to focus not only on
appropriate technology transfer, but on integrating and adapting indigenous knowledge in
the innovation system (Finger and Schuler, 2002).

Box 1: The Role of Science and Technology in Improving Access to Water and
Sanitation in Developing Countries

Sound water management is one of the key pillars to sustainable development. It is essential for agriculture
and food, energy, biodiversity, health, and poverty reduction. One of the Millennium Development Goals,
agreed on by the international development community in 2000, focuses on halving by 2015 the proportion
of people without sustainable access to safe drinking water and sanitation.
Investments in science and technology and their application can directly help improve sustainable water
management in developing countries. One the one hand, it is a matter of applying current knowledge to the
field. This needs to be coupled with intensified research efforts, however, to meet existing challenges in safe
water use and distribution.
Existing knowledge in water science includes the technological hardware for providing drinking water and
sanitation in poor countries (boreholes, hand pumps, improved latrines) and improving irrigation service
delivery for small-holders (the bamboo tube well, on-demand canal regulation systems). There is also a body
of experience on the institutional “software” for implementation and scaling up, such as decentralized
community systems for operational management, health and hygiene education, and participatory
management systems for small-holder irrigation. With a concerted effort from the international community,
the knowledge base can be successfully applied to help promote equitable access and adequate supplies of
water. But inefficient water use in agriculture together with climate threats (both variability and long-term
changes) means that water availability will remain limited.
Research avenues to pursue include the development of technology and institutional set-up for increasing
access to sanitation, especially through eco-sanitation approaches, develop further new institutional
approaches to water management (legal reform, partnerships), increase water productivity in agriculture, e.g.
through innovations in molecular biology, and increase climate information and improve forecasting. Such
advances would help develop consistent water management strategies at all levels, and ultimately, would help
the world reach the millennium goal.

Source: Lenton (2002)

But the challenges of adopting and adapting science and technology to local systems are also
daunting. The foundations that need to be in place to build a strong national innovation system
tend to be much weaker in low income countries (Table 1). Similarly, the linkages between the
different entities in the system itself are often more fragile and ineffective than in more
developed countries.

• The challenge of low demand. Low income levels mean less demand for new products
and services, meaning that entrepreneurs may operate in a low-profit, high-risk
environment, which creates a vicious circle.
• The challenge of human capital. Overall levels of education tend to be low and education
systems foster few researchers and scientists. Health problems are pervasive, which
considerably reduces the productivity of labour and the ability to create or absorb
technological change. Brain drain – the flight of educated people to more developed
countries where returns on education are higher – can also constitute a risk, although

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migrants abroad can also increase the international connectivity of local business men and
research elite (World Bank, 2005a).
• The challenge of physical infrastructure and communications means. Lower income
countries are often geographically challenged – indeed, difficult geographical conditions,
lack of access to sea transportation, etc., are in themselves important obstacles to
economic growth, and more of the population lives in remote, rural areas. Physical
isolation is exacerbated by lack of physical infrastructure, for lack of resources, for lack of
technology, or for lack of policy priority. Information and communications technology is
much less spread and has fewer potential users.
• The challenge of institutional capacity and set-up. Low income countries tend to be
characterized by worse governance systems and more corruption, and often lack
institutions and regulatory frameworks to support an effective innovation system.
• The challenge of the economic structure. Triple helix relations have a special character in
many low income countries. Perhaps precisely because they tend to have less innovation
taking place, these countries are also less diversified in terms of economic sectors and
ownership. More often than in the case of richer countries, larger state-owned companies
have an important role in production and exports, but the private sector tends to
undertake very little research activity. Government bureaucracies are typically heavy and
themselves less well adapted to a flexible innovation system, and FDI operations may be
confined to isolated islands with little spill-over effects. Universities may be the only
natural forum for research in the early stages, but are often bureaucratic and striving to
primarily fulfil traditional criteria for academic excellence which may leave little incentive
for triple helix interface.

Table 1: Low Income Countries Have Weaker Foundations for Building an Innovation
System
Fixed line
Average by country Secondary school Government
Paved roads 1/ and mobile phone
group enrolment 3/ effectiveness 4/
subscribers 2/
LIC countries 16 40 46 -0.90
OECD high income 88 1240 106 1.59
1. % of total roads, 1999. 2. per 1,000 people, 2002. 3. % gross, 2000. 4. -2.5 =completely ineffective, 2.5 =
fully effective (2004)
Source: World Development Indicators and World Bank Governance Data

Again, the above characterization is not well fitted to such a diverse group of countries. While the
challenges are real, progress is being made in areas like increasing education enrolment rates and
investment climate reforms. And some countries, including among others Vietnam and India,
have worked to address some of these challenges head-on and have seen high growth rates. This
suggests that there is much to be learned from different countries’ experiences, also in a low-
income setting.

Finally, a caveat: innovation bridges all new ways of doing things. This includes not only
technological change but just as often innovation related to management and organization, or
with respect to entrepreneurial efforts to carve out new ways to reach markets with low-cost
products. This applies to more or less all sectors, although the specific opportunities and hurdles
vary. The non-technical types of innovation tend to be harder to capture than technological
advances, but are just as important.

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2. Challenges for Ethiopia: Growth and Competitiveness

Ethiopia faces a monumental challenge to raise income levels and pull its population out of
extreme poverty. With a GNI per capita of only 110 USD in 2004, Ethiopia is one of the poorest
countries in the world (Table 2). Growth levels were moderate in the 1990s, especially in relation
to the continued high population pressures. Reflecting the low income levels, about four fifths of
the population presently lives on less than two dollars per day.18 Hunger and health risks are
pervasive, also in an international perspective: almost half of all children under age five are
undernourished and child mortality rates are forbiddingly high. An overwhelming share of the
population is located in rural areas, and agriculture – mostly small-scale farming – accounts for
some 40 per cent of output and 80 per cent of employment. On the positive side, four out of five
two-year-olds are now immunized against diphtheria, whooping cough and tetanus.

As a land-locked country exposed to extreme weather conditions, Ethiopia faces severe

environmental challenges as witnessed in serious droughts. There are also important regional
differences in economic structure and actual and potential income growth. The geographical,
climate and economic conditions vary greatly between highlands and lowlands, east and west.

This said, the last decade saw some important market oriented reforms in Ethiopia. Among other
things, trade and foreign exchange controls were overhauled, the agricultural sector was
liberalized, and a privatization process was initiated, including the financial sector, and foreign
debt was reduced. From 1993 onwards, growth was above Africa average in spite of the armed
conflict with Eritrea. The services and industry sector have increased their share of the economy
at the expense of agriculture (Figure 1), and the private sector has increased its share of output.

18 In a regression of $2 poverty rates on average income levels for 74 developing countries, Ethiopia is right on the regression
line, neither over nor underperforming relative to its income levels. [Percentage of population living on less than USD 2 per day =
266 – 28 ln (per capita GNI in international USD) + ε].

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Table 2: Ethiopia’s Challenges in an International Perspective

GNI per capita Real GDP growth Population growth 2$ poverty 1/

% p.a., % p.a., Latest
US$, 2004
1995-2004 1995-2004 1999-2004
Low income
countries average 507 4.0 2.0
Ethiopia 110 5.0 2.4 78
Uganda 250 6.2 3.2
Tanzania 320 5.2 2.2 90
Kenya 480 2.5 2.3
Vietnam 540 7.1 1.3
India 620 6.0 1.6 80
Indonesia 1140 2.4 1.4 52
China 1500 9.0 0.8 47
1. Population living on less than two PPP dollars per day, as share of total population.

Child Under five DPT Immunization Rural

Agriculture
Malnutrition 2/ mortality rate 3/ population
Latest Per 1,000 % of total % of GDP
2004
1999-2004 2004 2004 2004
Low income
countries average 43 122 67 69 23
Ethiopia 47 166 80 84 47
Uganda 23 138 87 88 32
Tanzania 29 126 95 64 45
Kenya 20 120 73 60 27
Vietnam 28 23 96 74 22
India 47 85 64 71 21
Indonesia 28 38 70 53 15
China 8 31 91 60 13
2. Percentage of children under 5 who are malnourished (weight for age). 3. Percentage of children under age 2 who had
received adequate vaccination for diphtheria, whooping cough and tetanus in their first year of life.

Source: WDI (2005)

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Figure 1: Ethiopian Growth vs- African Average and Evolution of the Agriculture-Based
Economic Structure

Agricultural and non-agricultural growth 1995-2004 (left), economic structure (right), Ethiopia
and comparison countries.

Source: WDI (2005)

Figure 2: Swings in Agricultural Output

Non-agricultural and agricultural GDP per capita growth (left), exports structure, % total (right).
100
Other
90 Gold Other

80 Chat
Gold
70 Leather

Oilseeds Chat
60 Pulses
Leather
50
Oilseeds
40
Pulses
30 Coffee

20
Coffee

10

0
1998/1999 2002/2003

Source: WDI (2005) and IMF (2005)

But in spite of some structural transformation, the economy remains focused on agriculture and
traditional exports. Ethiopia is largely an agricultural economy, and exposed to important
volatility through agricultural output and international coffee prices. The public sector retains an
important role in economic production and the economy is dependent on foreign aid. Coffee
continues to dominate exports although its share of total exports has given way to leather, gold,
textiles, spices, and oils. (Figure 2).

3. How Internationally Competitive is Ethiopia?

How internationally competitive is Ethiopia? The low income levels, high rates of poverty, and
traditional economic structure of the Ethiopian economy, are themselves basic indicators of lack
of competitiveness, low productivity and little dynamism in the economy from a longer term
perspective. Ultimately, low income per capita reflects low labour productivity. But conversely,
higher productivity is needed to raise income levels.

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Ethiopia has several factors speaking in favour of its growth potential (UNCTAD, 2002):
Ethiopia’s assets include a large domestic market – with a population of 75 million, Ethiopia is
the second largest country in Africa – a location with proximity to both East and North Africa
and the Middle East, a well-educated and English-proficient elite, a growing and respectable
private sector, and at least until recently, a comparatively safe business and social environment,
among other things.

But productivity has fallen over time. There is relatively little information available on
productivity developments, especially labour productivity, but what is available does not speak
favourably of productivity developments. A growth accounting exercise for 1960-2000 suggests
that total factor productivity has been contributing a smaller share to total growth over time. The
World Bank’s estimates of crop productivity suggest that it has fallen over the past 20 years: a
result of soil erosion, increasing incidence of droughts, and continued high population pressures.
(World Bank, 2005b).

Figure 3: Total Factor Productivity

Temporary Crop: Yields, Yields per Capita & Production per

Capita, in Qt, 1982-2003

Source: World Bank (2005)

Other measures of competitiveness confirm and partly explain Ethiopia’s low productivity and
income levels. The World Economic Forum’s (WEF) competitiveness benchmarking exercises
approach the issue of competitiveness from a different perspective using industry surveys and
hard data to compare country standings. As expected, Ethiopia performs poorly also in these
rankings. According to WEF’s 2004 African Competitiveness Report, Ethiopia ranks number 19
out of 25 sub-Saharan economies. In a global ranking of 117 countries, Ethiopia is the twelfth
least competitive country in the world, and its rank has fallen over time. (Appendix 1).

Relative to its low income levels, Ethiopia has a fairly stable macroeconomic environment and
acceptable public institutions according to WEF’s international comparison. The growth
competitiveness index is composed of three sub-indices related to the quality of public
institutions, the macroeconomic environment, and the capacity to produce and adapt technology.
Importantly, it is in the area of technology that Ethiopia performs worst. In particular, in this
ranking, the quality of Ethiopia’s public institutions appears to be high relative to the country’s
average income level. Ethiopia’s public institutions rank above Mozambique, Mali, Uganda,
Zimbabwe, and Chad, countries that are all richer than Ethiopia.19 The macroeconomic
environment is also more favourable than in Mali, Mozambique, Chad, Zambia and Zimbabwe.

19 Using GNI per capita in international PPP dollars.

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But shortcomings in terms of technology production and absorption leave Ethiopia at the
bottom in WEF rankings. Only Chad ranks lower with respect to its technological capacity.
Given the way the technology ranking is calculated this low standing reflects three problems in
Ethiopia: a very weak ICT infrastructure, a low capacity to absorb foreign technology, and an
unfavourable perception in the private sector of the national innovation system.20 This suggests
that a specific focus of Ethiopia’s national innovation system is warranted.

4. Benchmarking Ethiopia’s Innovation System

The WEF rankings suggest that Ethiopia’s low competitiveness is due not only to unfavourable
broader framework conditions - at least in consideration of its very low income levels, Ethiopia
appears to have made important strides in improving its investment climate. Rather, limitations in
the broad investment climate appear to be compounded by specific weaknesses related to the
innovation and technology system. This section therefore concentrates on some aspects of
Ethiopia’s innovation system and how they compare to other countries. It starts off by looking at
some more standard measures of innovation output. Weaknesses in these may be due to the lack
of appropriate innovation inputs, the quantity and quality of the entities that make up the
innovation system, and finally and perhaps most importantly, the strength of the linkages within
this system. The distinction between these different indicators is blurred – e.g. information and
communications technology is a measure of both innovation input and system linkages. The
division below is therefore not an absolute classification but a way of organizing the information.

Lack of data for benchmarking the innovation system is a serious problem in the case of
Ethiopia. This is reflecting the limited collection of data in poor countries on the one hand and
the low level of development of the innovation system in Ethiopia on the other. A great deal of
the information below is based on “soft” and not necessarily representative data, i.e. the
impression that (parts) of the local business community has of the innovation climate, as revealed
in surveys.

To make a useful benchmarking exercise of Ethiopia against what could be considered as its
potential, we use as reference point three sub-Saharan African low income countries – Kenya,
Tanzania and Uganda, and two Asian low-income countries – India and Indonesia, which have
been experiencing relatively high growth in recent years.

Traditional Innovation output indicators – not very relevant

A wide set of indicators can be applied to measure the competitiveness of the national innovation
system in terms of what it produces. Some of the more common (see OECD, 2003) include (i)
the share of high-technology products in exports, as a measure of the ability to compete
internationally in technology; (ii) registered patents, as a measure of the output of possible
marketable new innovations; and (iii) scientific publications, as a measure of how competitive the
academic community is. A common problem with these indicators is that they are more
appropriate for more developed countries with modern economic structures and institutions.

Unsurprisingly, Ethiopia’s exports have no high-technology content. In this regard, Ethiopia is

not different from other African low-income countries, but behind India and Indonesia. It is
perhaps noteworthy that some of these countries have increased their share over time, showing

20 The technology index is calculated from three sub-indices: an innovation index, a technology transfer index, and an ICT index.
Each of these sub-indices is in turn calculated from both quantitative data on e.g. ICT use together with qualitative data from
private sector surveys.

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some evidence of dynamism (Figure 4). The case of Indonesia is particularly impressive, but also
Kenya has doubled its share of high-technology exports, albeit from a very low level.

Figure 4: Competitiveness in High-Technology Products

High-technology exports as share of total exports
2002 Average 1990-1992, and 2000-2002

Source: WDI (2004)

Other more traditional indicators like patents and scientific articles similarly indicate very little
effectiveness of Ethiopia’s innovation system. Resident and non-resident applications to the
national patent office are scarce, and in the past 10 years there have been no applications from
Ethiopian nationals to the US patent office, compared to almost 200 from Kenya and nearly
1300 from India (Table 3). While resident applications are scant in other African (and non-
African) low-income countries, the lack of non-resident patent applications is noteworthy
compared to other countries. This could, of course, reflect several problems, including
insufficient property right protection, lack of foreign investors, the use of “strategic” patenting in
other countries and so on.

Table 3: Standard Innovation Indicators in International Comparison

Patent applications, per million Patent applications Scientific and technical journal
people, 1999 to the US PTO articles, per million people, 1999
Residents Non-residents 1993-2003 1/
Ethiopia 0.05 0.10 0 1.5
Kenya 0.07 4895 192 8.4
Tanzania 0.06 4318 2 2.7
Uganda 0.08 6287 5 2.5
Indonesia 0.0 370 57 0.7
India 0.23 76 1271 9.1
OECD 586 47396 -- 499
1. Scientific and engineering articles published in the following fields: Physics, biology, chemistry, mathematics,
clinical medicine, biomedical research, engineering and technology, and earth and space sciences.
Source: WDI (2004) and USPTO (2005)

The above indicators, while conventionally used, are not a complete or perhaps even good
illustration of the strength and weaknesses of the innovation system and especially not so for a
low-income country. Patents are losing their relevance as a “true” indicator of innovation or
economic development, often representing instead strategic protection against unwanted

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competition and/or lacking “real” economic value (Griliches, 1990; Desrocher, 2001).21
Conversely, many innovations are not patented because they are of an intangible sort, or because
patents are not valuable – in many developing countries, insufficient protection of intellectual
property rights makes it less meaningful to seek patents, because they cannot be enforced.
Patents are also best suited to protect technology and less so “softer” innovations in
management, organizational structures, etc., which may be at least as important as technical
innovations in raising productivity. According to Finger and Schuler (2002), patenting may in fact
be damaging for the cultivation of traditional values, e.g., in rural areas, and must take second seat
to long-term capacity-building in early stages. Publications, further, may have a different
significance for the innovation system as a whole depending on whether the researchers live in
their home country and the extent to which articles are co-authored with foreign scientists
(Andersson et al., 2006). The fact that Indonesia has seen high growth and an increase in high-
technology exports while displaying the weakest academic output of all the comparator countries
in table 3, also shows that this indicator can be irrelevant (though there seems to be a positive
relationship between patents to the USPTO and academic achievements).

A complementary approach in order to gauge the potential of the innovation system is therefore
to examine its inputs and linkages.

Inputs – the Entities for an effective Innovation System

What ingredients are important for innovations to happen? A potential indicator can be the
amount of financial resources that companies and the government allocate to research and
development activities, although again, this is more related to formal and technology-oriented
innovation in larger enterprises, rather than smaller incremental innovations which may be just as
important. From a more general perspective, a key factor is the human capital available in the
country. Another area concerns the physical and financial infrastructures which serve as a basis
for entrepreneurial activity. And governance framework conditions – corruption, government
effectiveness, rule of law, and others – are another important aspect of the innovation system.

There is no “hard” data available on the level of expenditures on research and development in
Ethiopia. Surveys of the private sector indicate that the perception in the Ethiopian business
community is that there is very little spending on research and development taking place. This
perception is lower than in Africa as a whole and in South Asia, and much lower than in East
Asia where, on average, the local private sector considers that there is quite a lot of spending on
research and development taking place.

Human capital provides the perhaps most important pillar for a dynamic innovation system.
Without people who are able to invent or adapt new ways of doing things, be they technology or
non-technology related, innovation cannot happen. And this ability is honed through literacy,
education, and exposure to new ideas, but also through good health and overall well-being. In
Ethiopia, education outcomes are low, however. Less than half of the adult population is literate,
compared to over 90 per cent in East Asian low and middle-income countries, on average.
Enrolment rates are far behind competitor countries and regions – in particular, secondary
enrolment rates are much lower than the African average.

21 Corporations are increasingly patenting the results of "thought experiments", before the innovation has been realized.

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Figure 5: Private sector spending on R&D

(indicator 1-7, 1=nonexistent, 7=very high)

Source: WBI KAM (2005)

Further, the quality of science and math education, as measured by scores in international tests, is
inferior. Relatively speaking, science and engineering enrolment at the university level is not lower
than elsewhere (some 26 per cent of total tertiary enrolment, compared to 28 per cent in East
Asia). Given the low overall university enrolment rates, at 2 per cent compared to 29 per cent in
East Asia, the resulting supply of scientists and engineers inevitably becomes very low, however.
Yet, the problem appears not to be spending per se, but the efficiency in its use, as public
spending on education is higher in Ethiopia compared to comparator regions (Figure 6).

Figure 6: Spending on and Outcomes inEducation:

Literacy and enrolment (left) and quality of science Public spending on education as percentage of GDP,
and math education (right) 2001/2004

Source: WDI (2004) and WBI KAM (2005)

But the availability of human capital is also dictated by health. Ill health, apart from the obvious
direct negative effects on well-being, also means a smaller and less productive work force. In
Ethiopia as in many other Sub-Saharan countries, life expectancy has fallen over time, from 45
years in 1990 to 42 years in 2002 (WDI 2004), with the onset of HIV/AIDS – which hits young
persons at their prime working age – armed conflict, and several famines as important causes.
One in twenty adults aged 15-49 has HIV, and almost half a per cent have contracted
tuberculosis. From these perspectives, Ethiopia is not far from the – highly alarming – health
situation in some other African countries. Instead, Ethiopia stands out for the remarkably low
access of its population to clean water and sanitation, which can be part of the explanation for
the high child mortality rates shown in Table 1 earlier. With the exception of TBC, the low

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outcomes in health in Africa stand in stark contrast to those of India and Indonesia, where life
expectancies were already higher in 1992 and have increased over time (Table 4).

Table 4: Effects of Ill Health on the Population

Life Life Tuberculos Population with access to

HIV
expectancy expectancy is -an improved water
prevalence, -improved sanitation
at birth at birth prevalence source
% 2/
1992 2002 1/ Urban % Rural % Urban % Rural %
Ethiopia 45 42 440 5.0 81 12 33 7
India 60 63 431 0.8 95 79 61 15
Indonesia 63 67 742 <0.1 90 69 69 46
Kenya 57 46 462 12.3 88 42 96 82
Uganda 46 43 544 5.8 80 47 93 77
Tanzania 49 43 439 7.1 90 57 99 86
1. Per 100,000. 2. Among 15-49-year-olds.
Source: World Health Report (2004)

Access and reliability of physical infrastructure is another key feature of the innovation system.
How can entrepreneurs access new ideas, if they are not exposed to them, and how can they
implement and produce them, if there is no electricity to run machines and computers, roads to
transport products and perform services, or phone lines to talk to customers and suppliers?
Infrastructure access and effectiveness appear to be critical deficiencies in Ethiopia (as evidenced
by the low access to water and sanitation services shown above). The country has less developed
physical infrastructure, higher costs, and more service delivery efficiency problems than other
countries, also compared to low income countries within Africa. The low road density and long
delays in service delivery through phone and electricity connections are particularly remarkable.
Ethiopia is clearly disadvantaged by its geographical conditions. Yet, in a country with large
distances, low urbanization rates and rough terrain, the conditions of physical infrastructure,
including telephone connections, become all the more critical for improving the
interconnectedness of the population.

Table 5: Physical Infrastructure

Ethiopia Kenya Tanzania Uganda Africa Indonesia India OECD

Electric power transmission and
10 21 25 n/a 23 13 27 8
distribution losses (% of output)
Television sets (per 1,000
6 26 45 12 45 153 83 657
people)
Aircraft departures (X 1,000) 28 26 5 0 7 152 242 618
Road density (km/km2) 3 11 10 14 13 19 112 131
Fixed line and mobile phone
5 30 17 14 22 66 44 1303
subscribers (per 1,000 people)
Telephone average cost of call
7 6 5 4 4 .. 3 1
to US (US$ per three minutes)
Telephone average cost of local
0.02 0.07 0.12 0.21 0.11 0.03 0.02 0.11
call (US$ per three minutes)
Delay in obtaining an electrical
116 39 82 15 57 55 49 n/a
connection (days)
Value lost to electrical outages
5 6 9 4 6 .. 9 n/a
(% of sales)
Delay in obtaining a telephone
155 33 87 27 74 23 99 n/a
connection (days)

Source: WDI (2004) and World Bank Investment Surveys (2005)

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The financial system is a key feature of the general investment climate, and is particularly
important for the creation of new firms. The availability of microfinance, and for financing of
more risky, but potentially innovative enterprises, is key. As an immature financial system, the
Ethiopian financial structure is dominated by banking. The banking sector has seen some
improvements in recent years, as the government has opened up the sector for private banking.
Public banks still account for 75 per cent of the assets and deposits, and they remain closed to
foreign investors, however. Ethiopia has a relatively deep financial market compared to other
low-income countries in Africa, but financial deepening has largely been driven by an extension
of credit to the public sector (IMF, 2005). The loans-to-deposit rate is higher than in Tanzania or
Uganda, suggesting some success at financial intermediation. But slower progress on financial
reform is reflected in a much higher share of non-performing loans and lower capital adequacy
ratio (Figure 7). Moreover, survey based information indicates that firms distrust the national
banking system relatively more than do firms in Africa on average or in other regions, although
the differences are not remarkable.

A recognized problem is that banks generally lack experience in implementing methods for risk
analysis. As a result small firms, in particular in rural areas, are locked out of the formal finance
sector. The formal banking system is also focused on short-term credit based on collateral only
which needs to reach over 100 per cent of a typical loan’s value. The demands on collateral are a
problem for small innovative firms who may have the potential to grow but whose main assets
may be intangible.

Figure 7: Financial Soundness

Finance indicators Soundness of Banks.1

Source: IMF (2005) Source: World Bank Investment surveys

1. Answers the question: are banks generally sound in
your country (1=insolvent, 7=generally healthy)

There are currently some 22 microfinance institutions active in Ethiopia. These institutions are
largely rural and a majority (57 per cent) of clients is women. Although the sector has expanded
and counts two of the largest MFIs in Africa, estimates suggest that the rural poor’s demand
remains largely unmet (IMF, 2005).22 Given the relatively limited outreach of small-scale lending,
it is perhaps not surprising that venture capital appears to be virtually unavailable in Ethiopia
(Figure 8). Informal sources of capital remain crucially important for supporting new business
activities, including remittances from diasporas consisting of Ethiopians living abroad. Some of
these funds could become more productive, and informal ventures to a higher extent enter the
formal economy, given less red tape in the bureaucracy and regulatory framework.

22 MFIs and commercial banks cover only some 30 per cent of total demand for credit (IMF, 2005).

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Figure 8: Venture Capital Availability

Note Survey-based. Answers the question: Can entrepreneurs with innovative but risky projects
generally find venture capital in your country (1= not true, 7=true).
Source: WBI KAM (2005)

The government has an incontestable role in building and supporting the innovation system. At
the same time, the government has limited access to experts and skilled officials that can service
strategic functions in development projects. Rather than evaluating the specific public innovation
policies in place in Ethiopia23 this paper provides an overview of the more general capacity and
quality of Ethiopia’s public institutions, as revealed in the governance system. These general
conditions are important: for example, where legal frameworks are weak, corruption tends to
reduce the incentives to invest in innovation. In WEF rankings discussed earlier, the quality of
Ethiopia’s public institutions was rated low, but higher than other countries at a similar income
level. Other governance indicators give a mixed picture. Figure 9 below presents data for three
different aspects of the quality of governance (Kaufmann, 2005):

• The process by which those in authority are selected and replaced, as illustrated in
voice and accountability, and political stability.
• The capacity of the government to formulate and implement policies, in government
effectiveness and regulatory quality.
• The respect of citizens and state for institutions that govern interactions among them,
measured by the degree of rule of law and control of corruption.

Ethiopia is among the lowest twenty per cent of all low and middle income countries in terms of
governance. At first sight, this could perhaps be attributed to the country’s low income levels, but
there is, to date, little evidence that low-income levels cause bad governance; instead, bad
governance structures are an important cause for low income levels.24 Ethiopia scores
consistently lower than most comparator countries and always lower than average for the whole
group of low income countries. The comparative situation for Ethiopia is worst regarding
government policy capacity, and low regulatory quality appears to be a particular concern.
Ethiopia appears to have made relatively good progress on the control of corruption, however.

23 An overview of the government of Ethiopia’s National Science and Technology Policy (dating from 1993) can be found on:

http://www.telecom.net.et/~estc/policy/national1.htm.
24 See, e.g., Kaufmann and Kraay (2003).

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Figure 9: Governance Systems in International Comparison (country percentile

rankings).
A. Voice and accountability B. Political stability
INDIA 54 TANZANIA 35

KENYA 39 LIC 27

TANZANIA 38 INDIA 24

INDONESIA 36 KENYA 18

UGANDA 31 ETHIOPIA 16

LIC 28 UGANDA 11

ETHIOPIA 18 INDONESIA 9

0 10 20 30 40 50 60 0 10 20 30 40 50 6

C. Government effectiveness D. Regulatory quality

INDIA 56 UGANDA 55

INDONESIA 41 INDONESIA 37

TANZANIA 40 KENYA 36

UGANDA 39
TANZANIA 29

KENYA 22
INDIA 27

LIC 22
LIC 25

ETHIOPIA 16
ETHIOPIA 12

0 10 20 30 40 50 60
0 10 20 30 40 50 60

E. Rule of Law F. Control of Corruption

INDIA 51 INDIA 47

TANZANIA 40 TANZANIA 36

UGANDA 26 UGANDA 30

LIC 23 LIC 24

INDONESIA 21 ETHIOPIA 22

KENYA 17 KENYA 19

ETHIOPIA 16 INDONESIA 18

0 10 20 30 40 50 60 0 10 20 30 40 50 60

Source: WB governance indicators (2005)

Linkages

An effective government, good climate for private investment, and strong academic performance
will not necessarily result in a good innovation climate. The way in which these entities are linked
and interact is crucial to building relationships and identifying opportunities for collaboration, so
that scientific research can be put to practical use and be commercialized in the private sector, so
that ideas flow from the private sector to academia, so that government provides the framework
and institutions that can help bridge the gap between the two and so that all can be linked to the
global system. Unfortunately, the strength of such innovation system linkages is notoriously

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difficult to measure, especially informal interactions which may be most important. A few aspects
of system linkages are outlined below.

The spread of information and communications technology provides a means of measuring

potential interconnectedness between national and international innovation stakeholders.
Ethiopia’s ICT infrastructure is clearly underdeveloped and its use very limited, also compared to
other African low-income countries. There is less than one Internet user in one thousand, the
regional distribution is very unequal, and there are very few personal computers. There is little
commercial use of ICT (Figure 10).

Figure 10: ICT Infrastructure and Use

ICT infrastructure % of firms that interact with customers via web

WDI (2004). Latest available 2001-2002. World Bank Investment Surveys (2005)

Collaboration between firms, and between firms and universities, appears also to be weak. A
number of studies have underlined the potential importance for local development of
establishing local exchanges of information and joint efforts in knowledge upgrading. The so-
called cluster literature points to various ways forward, but also to the presence of pitfalls and
what tends to be required for supporting success, including that various local players are able to
specialize and combine incentives for co-operation and competition (Andersson et al., 2004).
Survey-data indicate that there is very little cluster development in Ethiopia, compared to the
average for the African, South Asian, and East Asian regions. And, importantly, local universities
and private companies do not collaborate in research and development to any great extent. In
this respect, the difference between Ethiopia and the East Asian region is particularly stark.

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Figure 11: Linkages in the Innovation System – within Private Sector, and between
University and Private Sector
Cluster development 1/ University-private sector collaboration 2/

1. Survey based, answers the question: How common are 2. Survey based, answers the question: Do companies
clusters in your country: 1=limited and shallow, collaborate closely with local universities in R&D activities?
7=common and deep. 1=non-existent, 7=intensive and on-going
Source: WBI KAM (2005)

Foreign direct investment is one potential source of technical and non-technical know-how,
depending on the nature of linkages established between foreign companies and local actors and
on the type of foreign investment taking place. FDI has increased from nil in the beginning of
the 1990s to one per cent of GDP in 2000-2002 (Figure 12). In absolute numbers (US$),
Ethiopia’s inflows in 2000-2003 represented less than 25 per cent of the resources going to
Uganda or Tanzania, and only two per cent of the resources going to India, however. FDI tends
to be concentrated to Addis Ababa; most is directed to the primary sector, although one single
project in the hotel sector accounted for about one third of all accumulated FDI in Ethiopia
between 1992 and 2000 (UNCTAD, 2002).

Figure 12: Foreign Direct Investment in International Comparison

FDI inflows as percentage of GDP Total FDI inflows (US$ millions), 2000-2003

Source: UNCTAD (2005) and WDI (2004)

Firm Size and Innovation

The strong presence of small firms in Ethiopia can under the right circumstances work to its
advantage. Small firms are potentially more flexible and able to introduce innovations, especially
those requiring genuine experimentation and that fall outside the domains of established core
business in big firms. Innovation in small firms is nevertheless tilted towards gradual, or
incremental, changes. Small firms are unlikely to undertake any significant investments in R&D

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and, while their innovations may draw on and use technology in new ways, they are often of a
non-technological kind. As a result, R&D investments, patent statistics and other more
conventional innovation indicators are unlikely to illustrate the extent of innovation taking place
in small firms in the services sector. There is indeed some evidence that small firms do innovate
in Ethiopia. A special survey of 71 manufacturing enterprises in chemicals, food processing,
leather, metal working, and textiles, predominantly (88 per cent) in the private sector, suggested
that small and medium sized enterprises were more likely to innovate than larger firms (Table 6).

Table 6: Innovation and Firm Size

Per cent of firms that introduced Per cent of firms that introduced
minor technological new products or
changes production processes
Small 44 18
Medium 51 20
Large 22 0
Source: UNCTAD, 2002. Based on a survey of 71 manufacturing firms.

In most countries, small firms face more problems in undertaking their business than larger firms
do. These difficulties appear to be pronounced in Ethiopia, however. According to the World
Bank investment climate surveys, SMEs in Ethiopia have less access to infrastructure and land
and believe themselves to be worse affected by corruption than larger firms (Table 7). It is also
very costly to register a new firm, and there are long delays in other typical start-up activities
including electricity and telephone connections, which are likely to hamper the birth, growth and
flexibility of innovative firms.

Table 7: SMEs Face Disproportionate Challenges

Small (1-49 Medium (50- Large (250+

Ethiopia
employees) 249 employees) employees)
Percentage of surveyed firms citing indicator as a major obstacle to business
Corruption 39 42 33 22
Access to land 57 62 36 24
Tax administration 60 64 42 51
Percentage firms that
Share/own a generator 17 10 41 40
Offer formal training 22 10 57 64
New investment from internal funds
70 72 53 73
or retained earnings (%)
New investment from banks (%) 21 18 41 23
Delay in days for obtaining an
116 118 77 63
electrical connection

Source: World Bank Investment Surveys (2005)

5. Conclusions and Recommendations

This paper has provided an overview of relevant data sets and ongoing trends for the purpose of
estimating Ethiopia’s competitiveness relative to other comparable countries, and to identify and
examine key issues that need to be addressed in order to strengthen Ethiopia’s competitiveness
and national innovation system. It elaborates only on some of the main issues, however, and does

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not address in detail some key aspects such as the role of human networks or social capital in
innovation. Nonetheless, the available data suggests that, in order to increase economic growth
rates and make a lasting dent in poverty, Ethiopia faces important challenges with regard to:
literacy, educational enrolment and quality; health, infrastructure, use of technology (including
ICT), the investment climate (especially for smaller firms), and addressing critical weaknesses in
the governance system.

Some of these issues may take a relatively long time to resolve. Higher enrolment rates may result
in a better educated work force, but only in the future, as these children enter the labour market.
Better vaccines and less hunger for children have an immediate positive impact on children’s
well-being; its effects on labour productivity may take longer to realize. Physical infrastructure
can take time to develop, even if the resources are forthcoming. The fact that these are long-term
adjustments does not imply that they do not need immediate attention, only that they are not a
silver bullet for success in the short term.

Action in other areas might bear fruit in the shorter run, however. Some governance issues can
be addressed and improved if the political will is there, and if there is domestic and international
support for needed measures.

Moreover, apart from the fact that investments in education and health pay mostly in the longer
run, they will not necessarily result in more innovation, productivity or growth. A strategic and
more immediate challenge for Ethiopia will be to create more autonomy and room for
specialisation in universities, to improve conditions for entrepreneurship, and to enhance the
network and mobility linking different capabilities and actors in the innovation system through
mechanisms and institutions that allow them to interact in a mutually rewarding manner. This
implies working towards a system where pluralism of initiatives is cultivated. Conditions must be
put in place for the key actors to fulfil their roles, without top-down intervention.

In a sense, academic researchers should not only be in a position to focus on science and
education but they, along with government officials, need to have a better understanding of
entrepreneurship. Entrepreneurs, on their part, should be more able to work with universities.
There need to be fora for academic and industrial researchers to meet, and where government
institutions can take on a variety of roles to facilitate and foster a dynamic interface. Agricultural
productivity represents one such area where research and business links can make significant
advances through joint, interrelated efforts. For these advances to be useful to, and for them to
reach, small-scale farmers in remote areas, the public sector can make important contributions
through the provision of infrastructure, reforms of conditions for micro credit and the registering
of new firms, etc.

What role is there for Ethiopia’s universities – one of the Triple Helix pillars – in the institutional
build-up? The national strategy recognizes the important role that universities can have in
fostering science and technology, in adapting advanced technologies to solve local problems, and
in supporting economic development more broadly. But in the right circumstances, the
universities could take a stronger lead in encouraging innovation in ways that are conducive to
economic development. Their role could potentially extend from providing educated workers and
entrepreneurs and undertaking research, to enhancing integration, cross-fertilization and
collaborative action between academia, private sector and government. The undergoing
expansion of the number of universities could inject such impulses in different regions,
industries, and social spheres.

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In order to fulfil such roles, universities need to adapt and adjust to specific structures and
circumstances. They need to specialize and prioritize their roles, and be able to build local
connections as part of a striving to excel in their special areas of expertise. They need to use
scarce human and financial resources strategically, and develop specific competences instead of
spreading their efforts thin across multiple areas. Regional features do, in fact, already constitute
more of a focus in university expansion in Ethiopia. In order to advance further, however,
universities need to meet with stronger driving forces that promote appreciation among their
constituents for social alliances and impacts, along with the perfection of traditional academic
merits. In order to achieve this, there is a need of adjustments to the mechanisms for funding
universities, so to become more performance-based and responsive to the whole range of
relevant performances.

Whereas universities matter, the triple helix model clarifies the interactive role and the
significance of all the relevant parties. Government and public authorities matter crucially
through their rule-setting and financial roles. On top of that, government officials act as human
beings, to a considerable extent led by their knowledge, perceptions, and values. The business
sector, supposedly the research partner and actor in commercialization processes, is likewise
bonded by traditions, available skills, and vested interests along with financial constraints. If
universities are to become more dynamic, governments and businesses must be induced to play a
role in the interface, and assist in the formation of linkages in the triple helix from their end.

In terms of realms for action, a “laundry list” of functions to consider includes:

• Reviewing the direction and selection criteria for research funding, so as to promote
pluralism, specialization and the range of relevant performances;
• Participating actively in the build-up of science parks and incubators, and ensure that
they are able to accumulate competences, and meet with objectives, that orient their
efforts to fulfilling a bridging role;
• Providing a knowledge-base (perhaps through intermediation with other actors
abroad) for science and technology challenges specific to Ethiopia – water, disease
control, etc.;
• Eliminating excessive bureaucracy, reducing red tape and putting in place tax
incentives and better mechanisms for the diffusion of venture and seed capital, so as
to remove impediments to the establishment of new firms, and strengthen the
incentive for informal business to enter the formal economy;
• Using ICT, notably cellular technology, for demanded and currently under-supplied
services to be better articulated and mobilized, to spur and commercialise innovations
in for Ethiopia instrumental areas, such as the provision of informal capital and
micro-credit, health, sanitation, ecological sustainability, education, and so on;
• Developing and maintaining alumni- and other networks in order to broaden human
linkages between the spheres of the triple helix;
• Strengthening links with academic institutions abroad;
• Expanding linkages with migrant networks abroad and put in place mechanisms that
ensure safe remittances, so as to provide an interface that can exploit complementary
pools of skills and help increase market access and funding.

Expanding synergies between the actors of the triple helix with respect to these tasks,
institutional upgrading is also required, including a strengthening of management and governance

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mechanisms, and a streamlining of priorities for research focus in parallel with decentralization of
decision making on how to shape the linkages between the actors.

What role, then, for the international community? Ethiopia receives substantial foreign aid
(amounting to some 20 per cent of GNI in 2001 and 2002). These resources, both in the form of
technical assistance and financial inflows, could support the strengthening of an innovation
system in Ethiopia, by:

• Recognizing the role of science and technology in international cooperation;

• Institutional capacity building and twinning with institutions in developed or other
developing countries, facilitating scientific and academic exchange on issues that are
socially relevant, improving conditions for interchange through diasporas, etc.;
• Putting in place, or upgrading, regulations and institutions that support technology
transfers as well as healthy and competent approaches to intellectual property rights
protection;
• Where applicable, help identify best practice experiences abroad in those areas where
Ethiopia is in the greatest need of improvement, and facilitate communicating and
adjusting them to the local conditions.

One area for action, in relation to this particular study, is for Ethiopia as well as other low-
income countries to strive to develop indicators of relevant tangible and intangible assets, of
interaction and of linkages between the different entities, in order to heighten awareness of key
issues in an international and/or regional perspective, and provide benchmarks for improvement.
Where appropriate, the methods and types of indicators used by the OECD and the European
Community can be emulated, but there is also clearly a need for introducing other indicators
better suited to capture the specifics of the low-income economic structure and its medium-term
potentials. The information should be designed to reflect opportunities inherent in the tangible
and intangible assets of local culture and traditions, given the predominance of agriculture and
the rural setting. It should also take into account the kinds of health and education issues
prevalent in the country, and the way that ICT can fill gaps and articulate basic needs.

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References

Andersson, T., A. Djeflat, and S. Johansson de Silva (2006), The innovation system and related policy issues in
Morocco, mimeo, IKED, Malmö.

Andersson, T., E. Hansson, S., Schwaag-Serger, and J. Sörvik, (2004), The Cluster Policies Whitebook, IKED,
Malmö.

Desrochers, P. (1998), “On the abuse of patents as economic indicators”, Quarterly Journal of Austrian
Economics 1(4).

Etzkowitz, H., A. Webster, and P. Healey, (1998), “Introduction”. In Etzkowitz, Webster, Healey (Eds.),
Capitalizing Knowledge, SUNY Press, Albany.

Finger, J.M., and P. Schuler, (Eds)., (2002), Poor People's Knowledge: Promoting Intellectual Property in Developing
Countries, World Bank, Washington.

Freeman, C. (1987), Technology Policy and Economic Performance: Lessons from Japan, Pinter, London.

Griliches, Z. (1990), “Patent statistics as economic indicators. A survey”. Journal of Economic Literature 28.

IMF (2005), Ethiopia: 2004 Article IV Consultation, Washington, D.C.

Juma, C., et al., K. Fang, D. Honca, J. Huete-Perez, V. Konde, S. H. Lee (2001), “Global Governance of
Technology: Meeting the Needs of Developing Countries,” International Journal of Technology
Management 22.7/8, 629-655.

Kaufmann, D. (2005), Governance, Security and Development, presentation, July 11,

http://www.worldbank.org/wbi/governance/pdf/DCD_DIR_22.pdf

Kaufmann, D., and A. Kraay (2003), Governance and growth – causality which way? –Evidence for the world, in brief,
mimeo, World Bank, Washington, D.C.

Lenton, R. (2002), “Water”, presentation prepared for the World Summit on Sustainable Development,
http://www.earthinstitute.columbia.edu/cudkv/wssd/water.html

Lundwall, B-Å. (1992), National Systems of Innovation, Pinter, London.

UNCTAD (2002), Investment and Innovation Policy Review, Ethiopia, Geneva.

United States Patent and Trademark Office (2004), Patent counts by country, state and year, Washington, D.C.

World Bank (2005a), International migration, remittances and the brain drain, Washington, D.C. (2005b), Ethiopia:
A strategy to balance and stimulate growth. A country economic memorandum, Washington, D.C.

World Economic Forum (2004), African Competitiveness Report, Geneva. (2004), Global Competitiveness Report,
Geneva.

World Health Organization (2004), World Health Report, Geneva.

Data bases

OECD, Science, Technology and Industry Scoreboard, 2003:

http://www1.oecd.org/publications/e-book/92-2003-04-1-7294/

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UNCTAD online database for FDI flows and stocks:

http://www.unctad.org

WB Governance Indicators 1996-2004:

http://www.worldbank.org/wbi/governance/govdata/

WBI Knowledge Assessment Methodology data, 2005:

http://info.worldbank.org/etools/kam2005/

World Development Indicators (CD-ROM), 2004, World Bank, Washington, D.C.

World Bank on-line investment climate surveys:

http://rru.worldbank.org/InvestmentClimate/

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Appendix 1. Ethiopia’s Ranking in WEF GCR and ACR

African Competitiveness Report 2003 Global Competitiveness
25 countries Report 2005-2006

GNI per capita Growth

1/ Competitiveness Public Institutions Macro Economy Technology 117 Countries
South Africa 9810 Botswana (1) Botswana (1) Botswana (1) South Africa (1) Tunisia (40)
Botswana 7740 Tunisia (2) Tunisia (2) Tunisia (2) Tunisia (3) South Africa (42)
Tunisia 6440 South Africa (3) Malawi (3) South Africa (3) Botswana (4) Botswana (48)
China 4520 Gambia (6) Gambia (4) Gambia (5) Zimbabwe (9) China (49)
Indonesia 3070 Tanzania (9) South Africa (5) Ghana (11) Uganda (10) India (50)
India 2650 Ghana (10) Tanzania (9) Uganda (12) Gambia (11) Ghana (59)
Zimbabwe 2180 Malawi (12) Ghana (10) Tanzania (14) Tanzania (12) Tanzania (71)
Ghana 2080 Uganda (14) Zambia (13) Ethiopia (18) Ghana (14) Indonesia (74)=
Gambia 1660 Zambia (17) Ethiopia (14) Mali (19) Zambia (16) Uganda (87)
Uganda 1360 Ethiopia (19) Mozambique (16) Mozambique (20) Mozambique (17) Mali (90)
Chad 1010 Mozambique (20) Mali (17) Chad (21) Malawi (19) Mozambique (91)
Mozambique 990 Zimbabwe (22) Uganda (18) Malawi (22) Mali (23) Gambia (94)
Mali 860 Mali (23) Zimbabwe (19) Zambia 23) Ethiopia (24) Malawi (105)
Zambia 800 Chad (25) Chad (25) Zimbabwe (25) Chad (25) Ethiopia (106)
Ethiopia 780 Zimbabwe (109)
Tanzania 580 Chad (117)
Malawi 570
1. PPP (current international $)

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4.2 Illustrated cases

4.2.1. Linking University Research to Production Systems within the Context of a Poverty-
Reduction Strategy: Case Study of Cameroon

Linking University Research to Production Systems within the

Context of a Poverty-Reduction Strategy:
Case Study of Cameroon

Félix-Marie Affa’a
Maître de conférences (Université de Yaoundé I, Cameroun) adnd PhD. Candidate, Department
of Management, Laval University, Quebec, Canada

Kimiz Dalkir
Professor of Knowledge Management, McGill Graduate School of Information and Library
Studies, Montreal, Quebec, Canada

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Abstract

The university and the entire Cameroonian system of knowledge production are under
transformation in order to better support economic development and to contribute to the
National strategy of poverty reduction. More specifically, university research is becoming more
targeted to societal needs, particularly those of the informal production system where 80 % of the
poorest people of the country are to be found. In this study we analyse published research articles
on the domestication and the development of the products of two multipurpose traditional plants
Ricinodendron heudelotii and Canarium schweinfurthii.

The study identifies the different perspectives demonstrated in the selected research articles in
order to examine the arguments used by the researchers to: 1) justify the societal relevance of
their work when they constructed their research object; and 2) determine the consequence of the
researchers’ choice on the interactions between their potential partners. The study incorporates
two different theoretical approaches. The fist is historical and cultural activity theory in which the
unit of analysis is an activity system. The second approach is triple helix theory in which the unit
of analysis is the set of interactions between the university, industry and government.

The arguments used by the authors to justify the social context of their research or the
importance of their study were classified and analysed from both theoretical perspectives: as a
research object construction and as an interaction between actors. The dual definition of the
research object which distinguishes between a research and an application object (Miettinen
1998) was adopted and adapted to demonstration how researchers developed simplified
technology and procedures different from those used by industry. Two types of application
objects can therefore be distinguished: one destined for industry and one destined for the rural
population (and eventually the informal sector). The second type of application object is
reputedly possible to accomplish at minimum cost using locally available materials. Researchers
have produced artefacts and product processing techniques but only under laboratory conditions.
The transfer of application objects from the university laboratory to rural communities has not
yet taken place, nor has there been an appropriation of technologies, even simplified ones.

Researchers from another type of institution identify the participation of rural farmers in the
research process as a critical element for their strategy. One of the institutional objectives is to
integrate scientific data with traditional know how for the development process. This institution
is a branch of an international organization that is funded by a multilateral fund to promote the
commercialization of research in the rural sector. According to our findings, university research
does not seem to be integrated in this process.

This study shows that research initiatives demonstrate a change in attitude concerning informal
economic actors in general and farmers in particular. An organizational mechanism is required in
order to be able to transfer knowledge and technologies produced by the research to the targeted
users. The incubator appears to be an ideal organizational structure for professional training
outside the context of formal courses and may be a good candidate for the needed organizational
mechanism for knowledge transfer. A well thought out adaptation of the participatory process
for the development of research goals and for the dissemination of research results is also a good
candidate to form the basis of good research management practices.

Introduction

The university, like other Cameroon State institutions, is called upon to contribute to the
National poverty reduction strategy, in addition to fulfilling its traditional roles of education,

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research, socioeconomic development support, and professional training. These roles are defined
and refined by the Council of Graduate Education, Scientific and Technical Research (“Conseil
de l’enseignement supérieur et la recherche scientifique et technique”) (Ministère de l’éducation
nationale, 1974; 1982). It has already been shown that the Cameroon University is not sufficiently
transformed in order to be able to assume some of these roles (Affa’a and Des Lierres, 2002) as
reinforced by publications stemming from the 1993 reform (Ministère de l’enseignement
supérieur, Cameroun, 1993). This reform divided the public university system into six
institutions, of which two are situated in the political capital Yaoundé and four were in the
provinces. Finally it can be noticed that university research is becoming more targeted to societal
needs and that the institutions are taking on these new roles. This brings us to presume that the
following formula proposed by Etzkowitz (2002: 7) can be roughly applied to the Cameroon
University system:

The university is undergoing a dual transformation: an expansion of missions to include economic

and social development as well as training, cultural reproduction and research and a shift from an
individual to an organisational focus in each mission.

The knowledge production conditions are, in effect, changing everywhere. Some don’t hesitate to
treat this as a generalized revolution which will change and subsequently transform the university
(Arocena and Sutz, 2001; Etzkowitz, 22-03-2005; Etzkowitz and Carvalho de Mello, 2004). It is
therefore not surprising that these transformations are the subject of an international debate on
the role the university should play in the production and transfer of knowledge and technologies.
The analytical methods used to study this phenomenon and the models developed to understand
them are also changing at the same pace making it a significant challenge to study these
developments.

Given that the university and the entire Cameroon system of knowledge production is changing
in order to support economic development and reduce poverty, this study is limited to some
research case studies that address a combination of knowledge production and the development
of technologies, products or services. The study examines research articles published on the
processing of two types of African plants that have multiple traditional uses: Ricindendron heudelotii
and Canarium schweinfurthii. The research involved with these plants addresses their domestication
and the development of their products.

Two types of research institutions served as the sources of articles selected for analysis: Public
Cameroon Universities and the ICRAF (International Centre for Research in Agro-Forestry) in
Yaoundé. ICRAF is a satellite of the World Agro-Forestry Centre, an international organization
that makes use of applied research in agro-forestry to contribute to poverty reduction,
improvement in nutritional security and the growth and rebuilding of tropical ecosystems. The
organization works in partnership with national research units in agriculture such as universities,
NGOs and private organizations in both the South and the North (ICRAF, 2001), which makes
ICRAF a good source of research articles for this study.

Although a variety of products of these two plants have been used in the regions extensively in
the past, it is still necessary to persuade potential users to integrate the oils extracted from the
fruits and seeds of these plants into their dietary habits. They will also have to learn the
domestication procedures, how to transform products and commercialize them as well as how to
establish production standards in order to ensure quality end products. Researchers will also have
to convince the industry to invest in the transformation of these seeds and the fruits as they have
not been involved in the development of these new products up until now (Silou and Massamba,
Internet document 28 September 2004). What sorts of arguments are used by researchers in the

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formulation of the object of their articles? What are the consequences of their choices with
respect to the development of a research object and the interactions between potential partners?

This study is based on two theoretical approaches that serve to identify the different perspectives
demonstrated in the selected research articles. The historical and cultural dimensions of activity
theory are used to study the construction of a research object (Engeström, 1987; 1999; Miettinen,
1998; Miettinen, 1999; Hasu and Engeström, 2000; Miettinen and Hasu, 2002). Activity analysis
of scientific research and technological development activities allows the differentiation of a
research object from an application object (Miettinen, 1998). It is hypothesized that an
application object can be characterized in terms of its complexity and inherent difficulties in its
appropriation by potential users.

The study also examines the interactions between actors using the triple helix theory (Etzkowitz
and Leydesdorff, 2000; Etzkowitz, 2003; Etzkowitz, 22-03-2005; Etzkowitz and Carvalho de
Mello, 2004). It is proposed that the specific characteristics of the target population, such as the
literacy level together with inherent challenges in appropriating new technologies justifies the
division of the of the application object into two categories: one for the industry and a more
simplified version for the informal population sector. This requires the addition of a fourth
component, the informal system, to the triple helix model.

It should be noted that in activity theory, the unit of analysis is an activity system whereas in
triple helix theory, the unit of analysis is the set of interactions between the university, industry
and government. The two hypotheses in this study stem from these two different perspectives.

1. Data Collection Methodology

Publication abstracts on Ricinodendron heudolotii and Canarium schweinfurthii that originated from
Cameroon were extracted from the Cab database Pour in order to examine the arguments used
by the researchers to justify the relevance of their subject matter and their articles. Each selected
article had at least one author who was affiliated with a research institution in Cameroon. Two
research institutions were predominantly due to the subject matter addressed: “École nationale
des sciences agro-industrielles of Ngaoundéré University, a public institution, and ICRAF in
Yaoundé, which is part of an international organization. ICRAF intervenes within the program
Diversification of Smallholder Farming Systems in West and Central Africa through Cultivation of Indigenous
Trees funded by International Fund for Agricultural Development (IFAD) (FIDA, 1999).

The titles of the selected abstracts were compared to those extracted from other databases such
as Science Citation Index-Expanded, Kluwer Academic, Biological Abstracts, as well as
documents published on the Internet. The full text articles were then retrieved from
ScienceDirect, Kluwer Academic, Wiley InterScience, Bioline International, etc. A few texts
found from Asian and African sources have not yet been obtained. To date, 15 articles on
Ricinodendron heudolotii and 13 on Canarium schweinfurthii have been retrieved as full text articles.

Those articles which address the different processes of transformation, conservation and
commercialization of the products of these two plants were analysed. Articles which addressed
participatory inventories and the domestication of plants with multiple traditional uses for natural
forest populations were also included in this study.

Each article was analyzed to identify the arguments underlying what Locke and Golden-Biddle
(1997) refer to as the “intertext.” These are arguments that are used by the authors to justify the
social context of their research or the importance of their study. This is a mosaic of citations that

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represent the eclectic choice of the authors. In the introductory section of the article, this mosaic
of citations is reorganized in such a way as to emphasize the relevance of the published work. As
stated by Locke and Golden-Biddle (1997: 1030): we can say that each research study places itself in an
intertextual field of its own making.

The arguments used by the authors themselves in their discussion or conclusions were also
analyzed. These arguments described the interactions between the researchers and the informal
sector, primarily research that was produced by ICRAF. Table 1 shows examples of arguments
extracted from articles of both case studies. The arguments have been placed in three categories
that enable their analysis from the two different theoretical perspectives: as a research object
construction or as an interaction between actors.

Table 1: Examples of Arguments used by Researchers to Demonstrate the Social

Relevance of their Work on Ricinodendron Heudolotii and Canarium Schweinfurthii

Reference in text Arguments related to a Arguments that address the Arguments related to
government program need for industrial traditional uses or
/Arguments describing commercialization addressing the
interactions between actors informal sector

Kapseu and Tchiégang, (p. 94) Djansang seed oil may (p. 88) These seeds are
1995. Journal of Food serve as a valuable component important ingredients in
Lipid 2: 87-98. to coating industries similar to culinary usage.
tungseed oil, which contains
similar trienic conjugated (88) They are known as
bonds. Djansang, Nzonel,
Ezezang.
(p. 94) This seed oil represents
a versatile edible oil source (p. 94) Djansang seed oil
from which it is possible to may serve as a valuable
make a tremendous number of component for inclusion
products. in infant formula due to
its high polyunsaturated
fatty acid content
especially in developing
countries.

Tchiégang et al., 1997. (in the title) Potential primary (p. 9) The high level of
Journal of Food Engineering material for tropical agro-food azotic materials in R.
32: 1-10. industries…. heudelotii, as well as a
good balance of amino
(p. 1) The identification of the acids makes it possible to
nutritional value of the use them in certain infant
proteins show a chemical formulas.
index that is inferior to that of
soya or cotton but it presents a
good chemical equilibrium
with respect to amino acids
that can serve nutritional
needs.
(p. 2) The lack of detailed
information on the chemical
characteristics of almonds is a
serious handicap for the
development of a technology
to extract the oleaginous oil to
serve human nutritional needs.
(p. 8) R. heudelotii contains
more oil, salts, minerals and
azotic materials than cotton or
soya. Its oil can be used in
paint and stain manufacturing,

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Reference in text Arguments related to a Arguments that address the Arguments related to
government program need for industrial traditional uses or
/Arguments describing commercialization addressing the
interactions between actors informal sector
and as a table oil It can also be
used in soap-making.
(p. 364) In addition to its rich
Tchiégang et al., 2003. oil, Moundipa et al. (1998) (p. 364) … with respect
Journal of Food Engineering showed that the consumption to its triple interest in the
58: 363-371. of the raw oil increased the food, technology and
level of HDL cholesterol while nutritional sectors, the
decreasing the amount of LDL extraction of its oil can
cholesterol, which is in constitute a good source
contrast to palm oil. This of revenue for the
important property makes the population and can
oil of Njansang a good dietary contribute to the fight
supplement to combat against poverty.
cardiovascular illness and (p. 370) The craft-based
arthrosclerosis, due to it hypo approach on a small scale
cholesterol and hypo can be used to extract
triglyceride activities. the virgin oil of R.
(p. 364) Polyunsaturated fatty heudelotii …at a minimal
acids are popular with cost with the use of local
pharmaceutical nutraceutical materials available to all.
and food industries as natural
sources that can be produced
in good quantity and quality
(Ackman & Dha, 1996;
Ackman, 1999).

Aboubakar Dandjouma (299) Due to the presence of (p. 299) Given the
et al., 2004. La Rivista the acid α-elaeostearic, the oil widespread poverty in
Italiana Delle Sostanze of Njansan can be used in the Africa since the
Grasse 81: 299-303 manufacture of stains, paints devaluation of the franc,
and impermeable materials. the populations don’t
always meet their
(299) Despite its potential for nutritional needs. In
technological, industrial and Cameroon, the rate of
nutritional industries, there has coverage of lipid needs is
been little work on the around 49%. These
extraction and populations have
commercialization of this oil. available to them a
number of oleaginous
plants that have been
under-utilized.

Kapseu and Parmentier, (p. 326) in the case of (p. 330) The fruits appear
1997. Sciences des aliments diversification of lipid more promising than the seeds
17: 325-331 resources and the marking of – the oleaginous fruits
oleaginous agro-resources in constitute a source of primary
Cameroon, we have materials for the cosmetic and
determined the composition pharmaceutical industries.
of fatty acids and the
commercialization of
oleaginous agro-resources
.......of the seeds and fruits
consumed by the
population….

Tchiégang et al., 2001. (p. 64) In Nigeria, in the (p. 64) A fruit is said to
Journal of Food context of commercialization be ripe if by a simple
Engineering 47: 63-68. of non-conventional pressure between the
oleaginous materials, Ajiwe, thumb and index finger,
Okeke, Ogbuagu, Ojukwu and the pulp detaches

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Reference in text Arguments related to a Arguments that address the Arguments related to
government program need for industrial traditional uses or
/Arguments describing commercialization addressing the
interactions between actors informal sector
Onwukeme (1998) completely and easily
investigated the possibilities of from the pod. This
manufacturing paint, wax, method of determining
beauty milk treatments, and ripeness is used
shampoos from the oil of traditionally and does not
Canarium. require any training. In
this way, the number of
ripe fruit can be easily
determined and we can
then calculate the
percentage of ripe fruit
for each sample lot.
Ngo Mpeck et al., 2003. (p. 257) The domestication (p. 257 abstract) Kernels from (p. 257 abstract)
Food, Agriculture and programme at World the fruit of the species, Ricinodendron heudelotii, an
Environment 1(3-4) : 257- Agroforestry Centre is based commonly known as indigenous fruit tree
262. on vegetative propagation of “ndjanssang”, constitute one species to humid
trees identified as “superiors” of the most traded non-timber lowlands of West and
by farmers collaborating with forest products in Cameroon Central Africa, has been
scientists. (p. 257) Ricinodendron heudelotii identified through user
(p. 258) With the assistance is among the economically surveys to have high
of farmers in all villages, most important indigenous potential for improving
Ricinodendron heudelotii trees fruit species, accounting for a the nutrition and income
were identified, mapped and significant proportion of local of rural poor.
located and Cameroon border trade in (p. 257) Genetic
(p. 261) The Domestication NTFPs. In Europe, its kernels variability in this species
Program of high-value are frequently found in the needs to be determined
multipurpose indigenous stalls of shops specializing in for traits of nutritional,
trees from West and Central tropical products. medicinal and
Africa at ICRAF is based on (p. 257) The kernels, used as a economical importance
cultivar development using flavouring agent in local food to end-users (farmers
vegetative propagation as the dishes, are also a good source and market). Because of
means to capture the of oil (49.25 to 63.18% oil the domestic and market
characteristics of trees content) 8 that can be used to importance of the
identified as “superiors” by make soap and varnish. kernels, farmers in the
farmers collaborating with humid lowlands of
scientists. Cameroon have
identified the following
(p. 262) ICRAF-West Africa characters for selection:
is developing nurseries at fruit size, reduction of
village-level, based on time to bearing,
vegetative propagation of reduction of tree height;
“plus trees” identified by so justifying the need for
farmers collaborating with domestication.
scientists.
Ngo Mpeck et al., 2004. (p. 197) World Agroforestry (p. 197) The increasing (196 Abstract) The
Reviewed papers Centre (ICRAF) in nutritional and commercial results obtained here
presented at ANAFE collaboration with the Institut importance of the kernels and highlight the possibility
Symposium on Tertiary de Recherche Agricole pour other products of this valued for researchers and
Agricultural Education, le Développement has fruit tree has led to several farmers to produce
April 2003. ICRAF, initiated a participatory tree domestication initiatives in planting material that
Nairobi, Kenya. pp 196- domestication programme Cameroon (Nguele, 2000; fulfils the dual aims of
206. based on the vegetative Shiembo et al., 1997; high genetic variation
propagation of tree identified Mapongmetsem, 1994) (p. and reasonable
as “superior” by farmers 197). To be successful, the performance to farmers.
collaborating with scientist domestication of indigenous (p. 197) Studies
(Tchoundjeu et al., 1998). fruit species should be linked conducted in the humid
This programme aimed at to commercialisation and forest zone of Cameroon
investigating the potential of market expansion (Leakey et in recent years on the
these species for agroforestry. al., 2000). uses and
(196) In collaboration with commercialisation of
farmers and national research Non-Timber Forest

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Reference in text Arguments related to a Arguments that address the Arguments related to
government program need for industrial traditional uses or
/Arguments describing commercialization addressing the
interactions between actors informal sector
partners in Humid Lowlands Products (NTFP’s) have
of West and Central Africa shown the potential of R.
(Cameroon, Gabon, Ghana heudelotii to improve the
and Nigeria), ICRAF livelihoods of rural
conducted a priority-setting populations and urban
exercise identifying the poor (Ndoye and Ruiz-
following indigenous species Perez, 1999; Ayukandal.,
for domestication through 1999).
participatory household (p. 197) … new initiative
surveys: Irvingia gabonensis; in agroforestry are
Dacryodes edulis; Ricinodendron seeking to promote
heudelotii; Chrysophyllum albidum poverty alleviation and
and Garcinia kola (Fanzel et environmental
al., 1996). rehabilitation in
developing countries,
(p. 197) The use of this through the integration
diversity for the selection of of indigenous trees into
‘elite trees’ by farmers and farming systems … in
researchers (Tchoundjeu et order to provide
al., 1998), is seen as the marketable products that
starting point for the wider will generate cash for
domestication of this species, resource-poor rural and
because the quantification of peri-urban farmer
the species variability (ICRAF, 1997).
available at farmer level can
be used for the identification
of “ideotypes” to guide
cultivar’s development.

There is an unequal distribution between the three categories – there is little that addresses the
interaction with the State. A survey of the different expressions used shows a pronounced
emphasis on arguments that address the informal sector in general and the rural milieu in
particular. One has however to notice that arguments addressing the interactions between the
administration of ICRAF, its researchers, organized in multidisciplinary team, and traditional
agriculture introduce a model of good practices that have been tested and successfully used in
other countries.

2. A Re-reading of Miettinen’s Dual Definition of a Research Object

Research that has as its stated objective the solution to practical problems faced by society often
consists of highly complex objects. The construction of such objects requires the intervention of
researchers from different disciplines who work together in a network and collaborate with other
actors who share the same research object (Miettinen, 1998). In this perspective, the object is a
research object and an application object. The research object aims to develop methods,
instruments, and looks at facts and theoretical models that are transferred as explicit knowledge –
often published in scientific journals.

The application object, aims to develop industrial processes, production system models, pilot
production systems, and industrial manufacturing methods. The application object is ideally
simultaneously developed by a network of innovations that is composed of researchers,
manufacturers and users of the end product, service, procedure or technology. These two
objects, the research and application object, don’t, however, always go hand-in-hand. They are
produced by different activity system networks that have different goals, motivations and time

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perspectives. The duality of the definition of a research object by Miettinen (1998) is revisited by
Gopalakrishnan and Santoro (2004) who distinguish between the two at the level of processes of
knowledge and technology transfer.

In order to situate the object in the cited article Miettinen (1998) draws upon a number of studies
that have already analyzed the different complex processes involved in developing a research
object. The construction of intertextual coherence (Locke and Golden-Biddle, 1997) shows that
different cited studies share a common orientation: they analyze the emergence of facts or
artefacts as a social construction instead of as a mirror image of reality. This type of research is
usually completed when a fact or an artefact is accepted by the research community concerned.
The publication of the results of the research is the end result of the research activity. The
knowledge produced is, at best, accessible to members of the scientific community. In other
words, the result research does not reach the actual potential user in a product or service
development systems.

Figure 1: Dichotomous Representation of Research and Application Objects

Based on the dual definition of Miettinen (1998: 452)

Miettinen adds to the publication of new scientific facts a second phase that addresses the
relationship between the creation of an object with society’s use of the research results, outside of
the scientific community. This results in a dual definition of the research object that is depicted in
Figure 1, which allows us to distinguish between a research and an application object.

3. Adapting the creation of a research object to the case studies

How does this dual definition of a research object apply to the research activities on Ricinodendron
heudelotii and Canarium schweinfurthii? The comparative analysis of the arguments extracted from

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articles on Ricinodendron heudelotii (Table 1) show that the attitudes of researchers have changed
during the research activities. In 1997, Tchiégang et al., state that the seeds of Ricinodendron
heudelotii represent a potential primary material for tropical agro-food industries. The authors state
in the French version of their abstract which lightly different from the English one:

This study shows the nutritional potential of R. heudelotti (Bail.) which is attracting the attention of
tropical agro-food industries who recognize the importance of integrating it in tropical food industries
(Tchiégang et al., 1997: 1).

This confirms that industry cannot help but be interested in the transformation of this primary
material. There are many arguments used that validate this. Most of the scientific data establishes
that the research results of the article address industrial commercialization concerns. The authors
don’t lack for opportunities to emphasize the potential importance of the seeds studied for
diverse industrial sectors.

Due to its richness in polyunsaturated fatty acids (79.4% of the total fatty content), and the fact that
it can be used in a variety of different meals, the oil of R. heudelotii can be an important table oil
used to season raw food as well as in the cooking of diverse meals. As with other similar oils, it can
also be used in the manufacture of paints and stains. (Tchiégang et al., 1997: 6).

Tchiégang et al. (2003), also refers to industries, but with less emphasis than the preceding
articles. The authors cite references that show the seeds of this plant contain materials sought by
industrial companies in developed countries. Here is an illustrative excerpt:

The polyunsaturated fatty acids are currently popular due to their nutritional value and their
potential use by pharmaceutical, nutraceutical and food industries that are particularly interested in
natural sources that can be produced in both quantity and at a high level of quality. (Ackman &
Dha, 1996; Ackman, 1999). (Tchiégang et al., 2003 : 364).

The industrial reaction appears to have been fairly muted. In fact, there does not appear to have
been any reaction by industry. In the subsequent articles Canarium schweinfurthii the term
“industry” makes only very few appearances:

1) These oleaginous fruits constitute primary materials for the cosmetics industry. (Kapseu
and Parmentier, 1997: 330).
2) The major research on the oil of the fruit pulp were carried out to improve the extraction
by enzymatic addition, and the use of this oil in the manufacturing of shampoos, wax or
as a biocarburant. (Kapchié et al., 2003: 1 citing previous studies).
3) … knowledge of the behaviour during the drying of solid products is an essential element
for the calculation of the size of industrial dryer and/or to define conditions of use
(Noumi et al, 2004: 71).

The enthusiasm of the researchers appears to diminish. They become less optimistic on the
eventual commitment of industry in the transformation of the products studied. Very few articles
propose in their results prototypes for industrial transformation of those products. Only a few
make such statement (e.g. Noumi et al., 2003; 2004). The presentation of knowledge is often
associated with its potential industrial exploitation. The researchers show that they consider
industry to be an intermediate user of their results – which they need to transform the knowledge
produced by the research into a technology, product or procedure.

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The researchers worked however towards an application object. They developed extraction
procedures for the oil of Ricinodendron which is destined for rural user and not for industry. It is
stated that:

With respect to its application in a rural context – it has a number of advantages due to the quality
of the oil and the extraction and pressing technique that can be used. The extraction of the oil from
the seed of R. heudelotii needs to be further studied in order to identify conditions where a high
quantity and quality of yield can be obtained.… (Tchiégang et al., 2003: 364).

The idea is to develop a simplified technology that is different from that which can be used by
industry. There are thus two types of application objects: one destined for industrial
commercialization (not within the scope of this study) and one destined for the rural population.
The authors of one article speak of a craft-like approach on a small scale (Tchiégang et al., 2003:
370). These researchers seem to assume that the rural population will find it difficult to
appropriate more complex technologies. Platt and Wilson (1999) describe technology
appropriation by rural populations. The appropriation process is leaning by doing as we are
working with tacit knowledge. We therefore need to distinguish 2 levels of an application object,
as shown in Figure 2: one for principal actors in an informal rural system and a second level for
industrial actors. Only the first level is addressed in the articles analysed.

It is suggested that Figure 2 be read from left to right. The full line represents researchers who
have met their objectives whereas broken lines represent research that has remained at the
abstract or idea stage. The researchers have produced explicit knowledge that has been published
in scholarly review (mainstream journals). The users of this knowledge are limited to members of
the scientific community. Potential production system users have difficulty in accessing such
vehicles of knowledge transfer.

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Figure 2: The Applied Research Object and the Assumed Use of Knowledge and
Technologies in the Informal Sector

The broken lines represent objectives that have not yet been attained.

Research Object Application Object 2

(Explicit knowledge, theories (protected knowledge destined
and public models) for experimental development)

Application Object 1 Intermediate users

(Procedures, technologies, and (industries, incubators,
products that have been universities)
simplified)

Final users Technological, societal

Research system throughtout the informal and organizational
sector innovations

For application object 1, the researchers have produced an artefact, a manual press for the
extraction of the oil from seeds of Ricinodendron. They have also tested a number of procedures
for the optimization of oil extraction in order to ensure storage at room temperature but only
under laboratory conditions.

For the fruit of Canarium, researchers developed oil extraction and conservation procedures.
Simple fruit storage procedures were also tested. They carried out oil extraction from fruit in a
number of different states in order to minimize loss after harvesting. In all cases, the technology
and the proposed procedures were simplified in order to be cost-effective in the rural context.
The formula used by the authors can be applied to all application objects to make use of the
craft-like approach on a small-scale: that can be carried out at a minimum cost using locally available
materials (Tchiégang et al., 2003: 370).

The modalities and the organizational structures also play a role in the transfer of application
objects to potential users. The broken line represents these gaps – cases where the transfer of
application objects from the university lab to rural communities have not yet taken place, nor the
appropriation of technologies, even simplified ones, have not occurred. It is likely that a
mediation process and structure are required here. This process can be broken down into two
phases: promotion and dissemination. Promotion refers to making the information or the
technology known by those that can then disseminate it. Dissemination consists of increasing the
level and accelerating the pace of the uptake of research results in order to develop them into
applications for targeted end (Garforth, 1998). We are still labouring under the assumption that

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rural users are handicapped in the appropriation of any technologies due to illiteracy (Kapseu et
al., 2002).

Consider the application object 2. The researchers have remained at a speculative level with few
concrete products based on what they proposed. They have multiple citations concerning
potential industrial commercialization of primary materials studied but without any prototyping,
for example. Our understanding is that they consider development at this level as not being part
of their objectives nor of their contribution to the economic development goal or mission. This
is shared by other authors and societal actors such as industry and researchers in other
disciplines. They are late in joining the activities initiated by the research and have not
contributed to their commercialization. Does the government have a role to play here?

4. University Researcher Initiatives that Seek to link Research to the Informal Sector

The arguments shown in Table 1 were distributed in order to highlight the researchers’ initiatives
directed to the informal sector, the industry and the government. In many of the analyzed
articles, the authors have used a variety of different means of linking their research to the
informal sector.

The simplest form of link between research and the traditional production sector is in the names
of the plants using one of the official languages of Cameroon: They (the seeds) are known as
Djansang, Nzonel, Ezezang (Kapseu et al., 1995: 88). The terms are used to introduce the research:
In this paper, the fatty acid composition of pulp, shell, membrane and kernel of “mbeu”… (Kapseu et al.,
1996: 78). Other examples are shown in Table 1. It is assumed that the researchers use these
terms in order to demonstrate their willingness to link their knowledge production to the
activities involved in traditional production systems.

In another text, the research objective is linked to the fight against poverty (Noumi et al., 2003: 317).
Many articles point out that the population of Cameroon can meet only 49% of their lipid
requirements and the proposed research purports to correct this deficit. This argument
emphasizes a goal of reducing malnutrition, perhaps by improving the distribution channels. This
would permit the distributors and retailers to generate more profit (Jiokap Nono and Kapseu, 1999: 21
and 22), which in turn will improve the general quality of life.

More explicit goals are stated by researchers who describe initiatives to profit the poor and the
informal sector such as ….these transactions will feed the informal economy… (Jiokap Nono and Kapseu,
1999: 21). The same authors identify women as the principal beneficiaries of the improved
informal economy. Here are two excerpts: 1) Fresh or heat-processed fruit can be sold in baskets by
women... (Jiokap Nono and Kapseu, 1999: 21). 2) These products bring a greater value and allow women to
not just conduct small businesses but to increase their family revenue (Jiokap Nono and Kapseu, 1999: 26).

The proactive approach makes research results available to the traditional production sector: In
other respects the black olive producers live in rural areas mainly. Small-scale techniques are
available to enable people of rural areas to process their own oilseed locally (Tchiégang et al.,
1998: 566). There are also less direct means such as: the technique of conservation using humidity
was studied in the context of simplifying this so that it lends itself to a craft-like approach ….this
technique requires only know-how, organic acids and locally available sites (Tchiégang et al.,
2002: 303).

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On the other hand, certain research appears to have been inspired by traditional practices which
they have attempted to systematize and enrich. Examples are methods of determining fruit
ripeness for Canarium (Tchiégang et al., 2001).

5. Government Initiatives to promote a Participatory Process

A participatory process is a key requirement of the International Monetary Fund and the World
Bank, as introduced in the document, The Poverty Reduction and Growth Facility (PRGF). An extract
from this demonstrates this requirement clearly:

Crucially, the new framework rests on a departure in the way objectives and policies are chosen. The
country and its people will need to take the lead. PRSPs [poverty reduction strategy papers] will be
prepared by the government, and based on a process involving the active participation of civil society,
NGOs, donors, and international institutions. (IMF and WB, 1999 Internet document).

This requirement was introduced during the reform of programmes which at the time could be
considered a management fad (Gibson and Tesone, 2001: 22). Management fads are innovative
organizational practices designed to improve certain aspects of their performance. Management
fads may evolve to become new management practices or be abandoned altogether if they fail.
The appropriation of these fads and their conversion into stable management practices requires
time, effort, organizational learning, political willingness and a follow up on the part of the
directors at all levels of the State and the organization.

The participatory process has been used by the government to prepare a national strategy for
poverty reduction. This strategy should then serve to orient university research as discussed in
the preceding paragraph. On the other hand, many government programmes were created and
implemented in order to promote and sustain user need driven research themes. Among these
programmes is the Programme stratégique du gouvernement en matière de Science et de Technologie pour le
Développement implemented in 1997. The aim of this programme is to

… promouvoir au Cameroun la maîtrise de la science et de la technologie au plus haut niveau de

l’excellence, de favoriser la mobilisation par les Camerounais des connaissances scientifiques et
technologiques mondiales nécessaires pour la lutte contre la pauvreté, l’amélioration rapide et durable
des conditions de vie des populations et le développement économique, social et culturel de la nation
(MINREST, Internet document)25

Another programme of interest is the Programme national de vulgarisation et de recherche agricole which
is made of six components: agricultural commercialization, research, training and the
development of human resources, support to organizations and rural associations, participatory
development of village communities and a follow-up of commercialization activities. These two
programmes both advocate objectives of support, promotion and brokering between university
research and potential users to which the research is targeted.

While the analyzed articles do not explicitly state a recognition of support or interactions between
university research and one or both of these programmes, there are quite a few analyzed articles
where the co-authors were researchers of the Agricultural Research Institute for Development

25….promote in Cameroon the mastery of science and technology of the highest level of excellence, to promote the leveraging of
world scientific and technological knowledge by the people of Cameroon to fight against poverty, to rapidly improve the quality
of life in a sustainable way and to develop the social and cultural economy of the nation.

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(IRAD), which heads the national agricultural commercialization programme. Perhaps the IRAD
researchers collaborate with university researchers as they were former students.

These interactions are highly desirable in promoting the participatory process in the definition of
research problems as well as to promote and diffuse the results of internal university research.
Could this be a case of an omission based on the assumption that it is taken for granted? An
omission of this sort will not help integrate university research in development processes and
public university researchers will be obliged to act as sub-contractors or consultants for other
researchers who are directly supported by these government programmes and by international
fund loan officers. This is the case with the International Centre for Agroforestry Research which
benefits from financing from the International Agricultural Development Fund (FIDA) which is
a specialized agency of the United Nations.

6. Researchers that have Participation from Actors from the Informal Sector

Many articles by researchers from ICRAF (Tchoundjeu et al., 1999; Ngo Mpeck et al., 2003 and
2004; Leakey et al., 2003) discuss collaboration between scientists and traditional farmers. The
participation of rural farmers in the research process is presented as a critical element for the
institution. They make use of expressions such as: With the participation of subsistence farmers; the first
step in the domestication process involves household interviews to determine farmer preferences (Leakey and
Tchoundjeu, 2001: 279 and 281).

In the domestication of indigenous trees program, ICRAF’s strategy is to ensure that the farmers
themselves indicate which trees are the most important for them and the best way in which to
improve them (Tchoundjeu et al., 1999). One ICRAF objective is to develop domestication
techniques that integrate both scientific data in agro-forestry and traditional know how for the
plants judged to be the most important by the rural sector.

The initial research problem is then defined in collaboration with a multidisciplinary team
composed of economists, forestry experts, agronomists, sociologists, and traditional farmers
from the informal sector. Illiteracy, which is often presented as a limiting factor in such contexts,
does not seem to impede the collaboration between rural workers in a participatory inventory of
plants with multiple traditional uses. This step of the process which ends with a list of priority
species in terms of their domestication becomes a stage of research problem formulation that is
situated in highly specific and local contexts of application (Gibbons et al., 1994: 30). This is also applied
research where the application object is the development of plant cultivars to be domesticated.

With the preceding example, we find different dimensions of the triple helix model become fused
(Etzkowitz and Leydesdorff, 2000): namely, government, university, and industry. We propose
the addition of a fourth component, the informal systems, which are distinct from industry (see
Figure 2). Figure 3 summarizes the assumed relationships in the adapted triple helix model.

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Figure 3: Relationships between Government, Research System, Industry (designated

Private Sector in the document on the Strategy to Reduce Poverty), and the Informal
Sector.

This model is a modification of the triple helix model of Etzkowitz and Leydesdorff (2000: 111).
ICRAF: International Center for Research in Agroforestry.

Government
(Political and Research programs orientations -
promotion of the participatory processes)
Programme national de vulgarisation et de
recherche agricole (PNVRA)

Private Sector
(Industries) Informal Sector
Principal production system For (Traditional agriculture, small
economic development business) - subsistence activities

Research System
I
National research C
institutions
(universités, instituts et R
centres de recherche) A
(Universities, institutes and
research centres) F

The government initiatives are represented as addressing a national strategy for poverty
reduction. Political orientations and programs within this context are presented in the document
Strategy for Poverty Reduction. This document is endorsed by the members of the UN in
Cameroon during the signature of the Executive Plan of the UN for Development Aid in
Cameroon for the period 2002/03 – 2006/07 (UNCT, 2002). Promotion of participatory
processes was, in principle, carried out as required by the Sazdadoh papka international fund
sponsors. But what about the rest of the participatory process which addresses the interactions
between the public and para-public administration personnel and the NGOs, the private sector,
civilian society members and the universities?

If we look at university research results that have not been conveyed to targeted users in the rural
milieu, we would have to say that these modalities have not been transformed into stable
management practices. The same can be said for collaboration between universities and
industries. We have shown these unrealized interactions as broken lines. University research
initiatives intended for the informal sector do, however, represent a significant step forward in
the right direction. They signify a certain alignment between the national poverty reduction
strategy with societal actors from the informal sector. But these initiatives can also help better
recognize the importance of the informal sector in the economic system of a country.

The relationships developed by ICRAF with the informal sector are far more relevant for the
acceleration of the integration of research to economic and social development processes than
those developed by the university research. The strategy communicated by this institution which
aims to promote collaboration between multidisciplinary research team and traditional farmer

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associations to define research problems and the transfer of research results to targeted end users
is an excellent example of interactions between actors engaged in a research process within the
context of an application. Our recommendation is to adopt and adapt this good practice for all
the relationships between all the actors involved in the process.

Conclusions and Further Work

To conclude this exploratory study, we propose that given the number of initiatives, university
researchers need to start assuming the role of contributing to the economic development of
Cameroon – more specifically, to contribute to the strategy of poverty reduction. Research
initiatives show a change in attitude concerning informal economic actors in general and farmers
in particular. In addition to producing knowledge, researchers develop technologies and simple
processes that take into account assumed limitations of actors the research results are destined
for. Knowledge produced is published but the technologies and procedures developed are not
transferred to potential end users. It is not due to a lack of a model of good practices because the
ICRAF represents such a model at the national level.

What appears to be the problem is the organizational mechanisms required to transfer knowledge
and to transfer developed technologies to the targeted user population (Figure 2). It is therefore
necessary to begin a change process that will be accompanied by an organizational change of
equally large magnitude. The association of students to the process of knowledge and technology
transfer and the development of structures such as incubation offices can help establish links
between researchers and end users of university research results. Etzkowitz (2002: 14) proposes
that this organisational training occurs outside the classroom setting and for purposes other than education. The
incubators, such as those used in Brazil, are very versatile. They have been adapted it to a
multitude of uses that are quite different from the original intent. The incubator appears to be an
ideal organizational structure for professional training outside the context of formal courses. A
well thought out adaptation of the participatory process for the development of research goals
and for the dissemination of research results should form the basis of good management
practices.

The data from this exploratory study form part of a larger project that targets the strategic
analysis of research conducted in Cameroon following the university reform in 1993. The
research described here addressed the work done by researchers that was destined for rural
workers, their systems and their production practices, in order to conserve and manage agro-
ecological ecosystems. Two subsequent studies are currently in preparation and will serve to
complement the present study. These two studies comprise 1) the dynamic analysis of research
conducted over two periods spread out over a span of six years and 2) the factors that affect –
either positively or negatively – the formation of a critical mass of national researchers, as well as
the process of innovation in this sector. We intend to continue testing our research hypotheses
by postulating the rural sector and the informal system as elements of the triple helix in these
future research studies.

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4.2.2. The Incubator as Organizational Training Method

The Incubator as Organizational Training Method

Mariza Almeida
IBMEC’s Business School, Rio de Janeiro, Brazil

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Abstract

This paper presents a model of the cooperative incubator created in Brazil in 1995, whose aim
was the creation of cooperatives, and not firms, in the classical sense. It was an initiative of the
universities, directed at creating jobs for the marginalized social sectors, increasing their income,
bettering their living conditions and providing educational opportunities. The Brazilian
universities have always been concerned about the country’s social inequality. The consolidation
of this process through collaboration amongst industry, government, universities and civil society
– the triple helix, has transformed this experiment into public policy.

Keywords: incubator, cooperative incubator, triple helix

Introduction

The first Technological Incubator of Popular Cooperatives was established at Coppe/UFRJ

(Graduate Program and Research Coordination in Engineering/ Federal University of Rio de
Janeiro)26, in 1995. This was a time when a number of civil entities had come together in order to
organize a series of activities to combat poverty. This movement called itself “Citizens in Action
against Hunger and Misery and in favour of Life” (Ação da Cidadania contra a Fome, a Miséria e
pela Vida). This movement started by a non -governmental organization – Ibase – encouraged
solidarity and was organized in a decentralized and autonomous manner, with approximately
3,000 groups set up through local initiatives.

The precarious unofficial markets created in Rio de Janeiro - a mega-city within a developing
country – have been losing their capacity to absorb all the workers seeking employment, from
various different sectors, such as personal and domestic services and various types of odd jobs. A
pyramidal occupational structure can be observed, with the service sector gaining predominance
over the industrial sector – a phenomenon already witnessed in the developed countries – but
with one major difference: the lower tertiary sector is swollen by the loss of mobility in the
unofficial economy, leading to a fortifying of criminal tendencies and a fragmentation of the
metropolitan social fabric.

It is within this context that the cooperative incubators attempting to fashion a new kind of
worker who will take on the guise of a collective entrepreneur, linked with other workers in
cooperative networks, associations and/or cooperative micro-enterprises, requiring the mastery
of new information tools in productive environments. This methodology is attempting a new
qualitative leap in the direction of fulfilling the processes of social and economic insertion
(Bocayuva, 2000).

1. Method

The approach adopted in the data collection for this study has been qualitative. This article is
based on a review of the literature, analysis of the ITCP network’s documents and interviews27
conducted with incubator coordinators, federal government science and technology policy
officials, and customers and members of the cooperatives, as well as participation in events
organized by the incubators and their networks.

26 COPPE/UFRJ is a major graduate engineering school and research center. Besides ITCP, it shelters also a Technological
Incubator and a Science Park.
27 Furthermore, the author analyzes the evolution of the Brazilian Incubator Movement in her PhD thesis, including the
Cooperative Incubators, and worked for one year at the Technological Incubator for Popular Cooperatives at Coppe/UFRJ.

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2. Invention of the model

One of these groups, called “Committee of Public Bodies against Hunger and in favour of Life”
(COEP - Comitê de Entidades Públicas no Combate à Fome e pela Vida), aimed to reflect on the
social responsibility of public bodies and to mobilize these institutions to participate in this
campaign. At this time, the idea of incubating cooperatives still hadn’t been clearly formulated.
The view was that the Federal University of Rio de Janeiro - UFRJ would carry out work similar
to that being done by the Oswaldo Cruz Foundation (Fiocruz). This public health institute,
supported by the federal government, ran a project called “Open University”, by means of which,
through a local cooperative, it hired cleaners from amongst people living in the Manguinhos
slum, that is located not far from the Foundation.28

From this initial discussion, the group decided on a different proposal: to utilize the university’s
potential as a fomenter of jobs rather than merely acting as an employer. The proposal was, in the
manner that Coppe/UFRJ was already doing with technology based companies – to incubate
projects based on the knowledge resources available at UFRJ, that would become tools for
transforming the university’s outreach efforts, directed at popular sectors that find themselves
socially, economically, culturally and spatially marginalized.29 The university received financial
resources from COEP, an NGO, from Banco do Brasil Foundation and from National
Innovation Agency (FINEP) (Guimarães, 1998).

3. The development of Brazilian incubators

Incubators started to be organized in Brazil in the mid-1980s. Significant political and cultural
changes were taking place in the country during that period: direct election of the state governors
and the mayors of the state capitals, the campaign for direct election of the country’s president,
the end of the military regime, the appearance of new social agents, such as the MST – Brazil’s
Landless Rural Workers Movement, the first resistance1 against the devastation of the Amazon
forest, the organization of Afro-descendents communities to claim the lands where former slave
havens were located. Taken as a whole, these manifestations signaled the advent of civil
representation30 in Brazil.

The military government that took power in 1964 continued to apply, in the Science and
Technology (S&T) field, the same policies that had been adopted after the Second World War,
directed towards national security, technological autonomy and the development of institutional
infrastructure and human resources for the universities and state-owned companies.

In spite some good results were obtained in developing endogenous technology in fields like oil
energy (off-shore technologies), telecommunications, informatics and aviation, the project of
technological autonomy was circumscribed mainly to state industry in strategic sectors. The
private sector, as a whole, was outside that project and wasn’t benefited by transfer of technology
from universities and public laboratories, without any R&D policy of their own and generally
acquiring mature technologies from sources outside the country (Coutinho and Ferraz, 1995).

28 This first contract involved providing cleaning services on the premises of Fiocruz, which was able to cut its cleaning bill, while
at the same time increasing each worker’s wages by 250%. Statement from Paulo Buss, Director of the National College of Public
Health, in the book “Ossos do Ofício”.
29 Statement from Prof. Luiz Pinguelli Rosa, Vice-Director at Coppe/UFRJ, in the book “Ossos do Ofício: cooperativas
populares em cena aberta”, Rio de Janeiro, May 1998.
30 Interview with the anthropologist Alfredo Wagner for the ‘O Globo’ newspaper, ‘Prosa e Verso (Prose and Verse)’
supplement, on February 15, 2003.

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The military government came to an end in 1986 and the country returned to democratic rule.
The reorganization of civil society allowed a whole new set of policies to be developed. In a
climate of increased political freedom, following debate over the transfer of technology from
universities to industry, it was proposed that incubators be established. As civil society learned to
express itself and the bottom-up policy for creating incubators was consolidated, so different
kinds of institutions became involved in the organization of incubators.

The emergence of this civil society space, associated with the S&T infrastructure build-up by the
military regime propitiated conditions for the appearance of a huge incubator movement in a
triple helix model of overlapping spheres.

In the Brazilian case, in a first move, academics, in alliance with officers from state and municipal
governments, created technological incubators. Incubators were easier to be establish because
fewer resources was required than were necessary to set up technology parks and the
administration was less complex.31 The first two incubators came into operation in 1986. One
was collaboration between the university sector and the government of the State of São Paulo
and was located in the town of São Carlos, where a technology park was in the process of being
set up (Souza and Garcia, 1999). The Technology Business Incubator was an integral part of the
Florianópolis Technology Park project, an initiative of the UFSC – Santa Catarina Federal
University and the government of the State of Santa Catarina (Cavagnari, 1987).

At the end of the military regime, industrial associations revived, as part of the renewal of civil
society. This political change coincided with a crisis in employment, due to the laying off of large
numbers of workers in medium and low-tech industries, as the Brazilian economy opened up to
international competition. In response Industrial associations have applied the incubator concept
to create firms in so-called traditional industrial sectors such as fashion, shoes, furniture and
agricultural equipment (Fonseca and Kruglianskas, 2000).

New types of incubator emerged in the Brazilian incubator scenario in the decade of 1990s. The
cooperative incubators, whose aim was the creation of cooperatives. It was an initiative of the
universities, directed to create jobs. Initiatives like the incubators of cooperatives are the fruits of
the reaction of the social movements to the unemployment problems of the early 1980’s, which
were aggravated by the opening up of the domestic market to imports after 1990 (Singer, 2002).

It was only towards the end of 1999, with the internet phenomenon already at its peak that
private enterprise incubators started to appear in Brazil. These incubators are concentrated in the
area of information technology, particularly in businesses involving the internet. Since the end of
the year 2000, this segment has suffered the effects of the strong contraction of the internet
market and in 2003, only five incubators of this kind were still in business (Botelho and Almeida,
2001).

Starting off at the universities, with expansion in the number of incubators determined by the
initiatives of local social agents, the movement was organized at a national level by means of
associations that, little by little, gained representativeness, as well as the respect and support of
government and industrial sectors.

There are currently 318 incubators in Brazil, of which 155 are incubators of technology based
companies; 55 for companies from traditional economic sectors; 51 mixed, for both technology

31 Almeida, M. Interview with Maurício Guedes, director UFRJ Science Park on April 16, 2001.

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based and traditional businesses; 41 for cooperatives, five cultural, three agribusiness, three social
and five private.32

4. How the Model Works: Role of the University in Organizational Training

As examples of the experience in this area, we present below two case studies: the first involving
the first cooperative incubator created, the ITCP/COPPE/UFRJ, based at the engineering
research center in Rio de Janeiro, Brazil’s second largest city; and the second focusing on one of
the incubators set up through the transfer of methodology, INTECOOP, at the Federal
University of Juiz de Fora, located in a large town in the south of Minas Gerais state.

4.1. ITCP/COPPE/UFRJ

The ITCP/COPPE is the pioneer in developing this kind of incubator and in the ten years that it
has been functioning it has created 48 cooperatives, plus a further 13 that are in the process of
incubation33, in response to the growing unemployment in Brazil. Its aim is to make a
contribution towards the social integration of economically marginalized sectors.

The ITCP arose from an innovative concept. Although COPPE/UFRJ already had previous
experience in technological incubation, it was necessary to develop new methodology, due to the
unusual nature of the work. For this reason, a new methodology was created, modified and
evaluated at the same time as the first cooperatives were being set up. As a result, the managers
and staff, and also the members of the cooperatives themselves, went through a continuous
learning process together.

The structure of this type of Incubator is unusual, while its headquarters are in the University
campus; the incubated cooperatives have their own space, located in the very neighborhood
where their members live. Incubated cooperatives pay no fee to ITCP. The process of incubating
the cooperatives takes place within the community itself, and it is there that the specialists
perform their continual monitoring of activities and provide legal, administrative, management
and planning advice.

One of the first incubated groups was the Cooperativa Mista dos Trabalhadores do Parque Royal,
created in December 1996, during the implementation of projects aimed at generating work and
income, carried out by the municipal council (City Hall) of Rio de Janeiro in the Parque Royal
slum. A group of local residents applied to the ITCP to set up a cooperative of seamstresses to
operate in the clothing industry. This cooperative is in full operation today, participating in a
group of 13 cooperatives, with 150 seamstresses, which do regular business with firms in the
sector.34

Another cooperative, set up in 1997, the Cooperativa dos Trabalhadores do Morro da Mangueira
Ltda, is in operation and working mainly in the area of hospital cleaning, through contracts
signed with UERJ (State University of Rio de Janeiro). There are other components that work
with garbage recycling. Researchers from the National Institute of Technology decided to

32 http://www.anprotec.org.br/arquivo-pdf/panorama%20final.pdf accessed on June 20, 2005.

http://www.portaldovoluntario.org.br/site/pagina.php?idclipping=6509&idmenu=45 accessed on March 23, 2005,
Almeida, 2004.
33 Finep. 2005. Folha Inovação, n 21, May, pp. 7
34 http://www.comerciosolidario.com.br/publique/cgi/cgilua.exe/sys/start.htm?sid=28&UserActiveTemplate=_br, accessed on
April 30, 2005.

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provide technical support to this cooperative, developing new recycled product from Pet
bottles.35

The work of the Technological Incubators of Popular Cooperatives has been extended to
organizing cooperatives among other marginalized social sectors. In some cases, it was necessary
to adapt the original methodology. The first example occurred within the mental health system,
with the creation, in 1996, of a cooperative at the Philippe Pinel Hospital in Rio de Janeiro – the
Cooperativa Especial da Praia Vermelha. The idea came from discussions that took place at the
1996 State Conference on Mental Health. The concept involves combining the carrying out of
manual work with productive insertion of the user, as part of their psychiatric treatment.

Following the privatization of many state-owned sectors, large numbers of workers lost their
jobs, due to the restructuring of those sectors, and in 1999 their trade unions looked to
incubators to organize cooperatives among these groups, which were then frequently sub-
contracted by their former companies. And lastly, there has been the organizing of special
cooperatives, such as those involving the operators of the prison and garbage collection systems.

In 2004, ITCP/COPPE/UFRJ was chosen to receive resources from the Infodev program,
destined to extend the use of information technology among the cooperatives and to develop
cooperatives in this field. The Dinamicoop was organized and directed towards teaching courses
and selling services in the field of information and communication technology.36

In practice, the creation of a new working relationship – cooperative member instead of

employee – has been observed in the cooperative incubators. This involves a process of learning
to work in a group, discussion and development that needs to be encouraged by the organizers of
the incubator so as to avoid the appearance of conflicts among the members. The tools that are
utilized include periodic meetings and the setting up of a council of ethics in each cooperative,
thus enabling the democratic discussion of the problems and difficulties that arise in the normal
course of their activities.37

According to the nature of the activity performed by the cooperative, there may be a need for
additional know-how, in order to perform the activity. For example, the cooperative COOPAMA
(Cooperative of the Friends of the Environment) operates within an experimental waste
treatment plant called Usina Verde located at the Rio de Janeiro Biotechnology Park and training
is provided by the owners of the plant as well as by the incubator.38

4.2. INTECOOP/UFJF

In the period from 1995 to 1999, the ITCP simultaneously concentrated its efforts in two main
activities: (a) the development and experimentation of a suitable methodology to support
cooperatives, grounded in basic education, the strengthening of cooperativism and the
development of citizenship; and (b) the dissemination of the cooperative incubation concept
among municipal authorities and other Brazilian universities. One of the outcomes was the
INTECOOP/UFJF.

The Vice-Chancellor for Extension at the Federal University of Juiz de Fora invited the
ITCP/COPPE/UFRJ coordinator to visit the university in 1997 and explain the concept of

35 http://www.canalciencia.ibict.br/pesquisas/pesquisa.php?ref_pesquisa=124 accessed on April 30, 2005.

36 http://www.cdi.org.br/boletim/boletim016C_site.htm, accessed on March 24, 2005.
37 Interview with João Guerreiro, member of the Coppe Incubator of Popular Cooperatives team, on October 28, 2001.
38 Almeida, M. Interview with Luis Carlos Fernandes and Fabio Alves, members of COOPAMA on February 16, 2005.

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cooperative incubators. Subsequently, other meetings were organized to explain the methodology
and how to organize the incubator. At this time, eight professors from different fields
(economics, social services, history and journalism) decided to participate in the cooperative
incubator activities.

The group decided to adapt the methodology according to the needs of local social groups. This
incubator methodology comprises certain principles that guide the actions: group participation,
democracy in decision making, respect for the knowledge of others, the construction of dialogue,
the dialectic between ‘what I know’ and ‘what the others know’, and respect for popular culture.
INTECOOP/UFJF uses an open model of action: while its headquarters are on the university
campus, the incubated cooperatives have their own space, located in the very neighborhood
where their members live.

At this university, the professors participate greatly in the incubator and the cooperatives. They
take care of the specific demands of their technical area and advise the trainees: the production
engineering professor handles the office layout; the architecture professors work on the visual
identity of the cooperatives; the nursing professors take care of occupational illnesses; and the
accounting professor looks after the cooperatives’ accounting and taxation.

INTECOOP/UFJF is financed from the resources of FINEP (Funding Agency for Studies and
Projects) and the Federal University of Juiz de Fora. The university has a scholarship programme
to enable undergraduate students to work with the cooperatives. INTECOOP looks for students
who are interested in giving service and applying their talents and knowledge to improving the
lives of cooperative members. The students that work in the incubator are looking for answers to
social questions, regarding misery and exclusion, and this experience helps them, as professionals,
to be more sensitive to social issues.

The graduated cooperatives maintain an ongoing relationship with the Technological Incubator
of Popular Cooperatives that allows the incubator access to the technical, administrative and
financial information that serves them as a competitive differential. One example is Coopdef
(Cooperativa de Portadores de Deficiencias Ltda), one of the first incubated cooperatives, a
group for the handicapped, who share special physical needs. It has been operating since 1998
and in 2005 has 330 participants, all of them working as office boys at government institutions.
The subsequent monitoring takes place at the work venue or offices of the graduated
cooperatives and involves discussing new contracts and planning.39

The profile of cooperative participants is generally the following: the associate members have a
low educational level, are aged around 40, and are predominantly female (60%), and are
unemployed or under-employed. The majority of them don’t have professional skills. One such
group is the Cooperativa de Matias Barbosa, whose participants know how to cook and decided
to produce cookies and cakes.40

5. The Diffusion of the Model

Ever since the first popular incubator was created by Coppe/UFRJ, various factors have
stimulated other universities to organize this kind of incubator. In 2001, the mayor of Campinas

39 Almeida, M. Interview with Ana Lívia Coimbra, Coordinator of the Technological Incubator for Popular Cooperatives at UFJF
on July 2, 2005.
40 Almeida, M. Interview with Ana Lívia Coimbra, General Coordinator of the Technological Incubator for Popular Cooperatives
at the Federal University of Juiz de Fora on July 2. 2005.

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asked Unicamp to create a Popular Cooperative Technological Incubator. The cooperative’s field
was to be: garbage recycling, school meals and street conservation.41

At USP (SP) the Popular Cooperative Technological Incubator is considered to be a model of

university action against unemployment and social exclusion, which is seen by those involved as a
practical, theoretical and methodological challenge.42

The Technological Incubators of Popular Cooperatives began, in 1999, to organize their own
national network, called the University Network of Technological Incubators of Popular
Cooperatives (Rede Universitária de Incubadoras Tecnológicas de Cooperativas Populares –
Rede de ITCPs). Its principal objectives are to stimulate intercollaboration and the spread of
knowledge among the incubators and throughout the university environment; to encourage the
development of similar incubators in other universities and to work towards the setting up,
consolidation and integration of Popular Incubators affiliated to the network.43

This network is organized on a national basis, holds an annual general assembly, and produces an
on-line newsletter in order to facilitate the exchange of information among the incubators.

There has been no tendency for the incubated cooperatives to organize themselves on an
independent basis, but for the national assemblies each incubator generally tends to pay the
participation expenses of one representative member of one of the cooperatives, in order to
reinforce the level of interaction between them.

This initiative subsequently expanded to embrace 34 other not-for-profit universities44 and has
become an important means of extending the activities of Brazilian universities.

There are 41 cooperative incubators in Brazil sponsored by universities, often with the backing of
local government. There are 350 incubated cooperatives, which have generated a total of 8,000
jobs.45

A survey of the incubators and their enterprises is still under way, but the partial results,
presented in Table 1, show the regional distribution of the cooperative incubators, the total and
regional numbers of cooperatives and the total and regional numbers of cooperative members
(i.e.: jobs created).

41 http://www.preac.rei.unicamp.br/itcp/programa-itcp.htm.
42 http://www.cecae.usp.br/itcp accessed on March 18, 2002.
43 Interview with Gonçalo Guimarães, General Coordinator of the Technological Incubator for Popular Cooperatives at
Coppe/UFRJ, February 15, 2001.
44 Almeida, M. Interview with Teodoro Koracakis, Finep, on July 13, 2005.
45 http://www.portaldovoluntario.org.br/site/pagina.php?idclipping=6509&idmenu=45 accessed on March 23, 2005.

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Table 1: Regional Distribution of Cooperative Incubators and Cooperative Economic

Activities

Region Number of Number of Number of Cooperatives

Incubators Cooperatives Members
North 3 5 (a) 82 (a)
Northeast 9 21(b) 601 (b)
Central-West 2 6 (c) -
Southeast 17 82 (d) 1.975 (d)
South 10 34 (e) 1.453 (e)
Total 41 148 4.111
(a) The figures relate one incubator.
Source: www.ufpa.br/cursoecomia/extensão/relatorio_parcial_proint.htm accessed on July 15, 2005.
(b) The figures relate three incubators. Source: Finep/Proninc, 2005.
(c) The figures relate one incubator. Source: Finep/Proninc, 2005.
(d) The figures relate nine incubators. Source: Finep/Proninc, 2005.
(6) The figures relate six incubators. Source: Finep/Proninc, 2005; www.ucpel.tche.br/Intecoop/Intecoop.htm, accessed on July
15, 2005.

Table 2: Regional Distribution of the Cooperative Economic Sectors

Region Agricultural Food Clothing Civil Garbage Handi- Services Others

industry construction recycling crafts
North - - - - 5 -
Northeast 5 2 6 1 3 4 - -
Central- 2 - - 1 - 1 - 2
West
Southeast 15 11 10 2 10 13 18 3
South 4 1 3 - 16 4 1 5
Total 26 14 19 4 29 22 24 10
Sources: Finep/Proninc, 2005; www.ucpel.tche.br/Intecoop/Intecoop.htm, accessed on July 15th, 2005 and
www.ufpa.br/cursoecomia/extensão/relatorio_parcial_proint.htm accessed on July 15th, 2005.

The link between social incubators and universities makes it easier to bring together different
social segments in support of the incubators. The universities help the incubators to maintain
their independence from the government and also contribute to the participants’ education by
awakening their political awareness, in the broadest sense. The universities also help to
disseminate this experience to other interested institutions (Pereira, 1998).

The university is the main cooperative’s knowledge source. With the aim of providing access to
knowledge for these groups, the universities have given courses on cooperativism and how to
organize and register a cooperative. Another activity of the universities is to carry out feasibility
studies for each cooperative, making use of the workers’ knowledge acquired from their previous
work experience.

This learning process involves the assimilation of new process and product technologies, as well
as new institutional and cultural structures that facilitate cooperation among these new worker
entrepreneurs. In order to make use of and develop the knowledge, skills and vocational leanings
already acquired and utilize them in a variety of ways, a method of instruction is employed that
integrates a critical awareness of the globalization process and its impact on the labour force with
a transformation of the previous work experience (Bocayuva, 2000).

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6. Organization Cooperatives’ Challenges

Although there are methodological differences between the two incubators cited in this paper,
the analysis of the difficulties encountered by both in each phase of the incubation process will
be presented together, with any specific differences pointed out where appropriate.

6.1. Selection of the cooperatives for incubation

At the ITCP/COPPE/UFRJ, the selection of cooperatives for incubation is carried out by an ad-
hoc committee of outside experts in a public process that confers transparency to the procedure.
The notification is broadly disseminated, through correspondence with a variety of social
organizations (trade unions, resident’s associations, NGOs, etc), inviting them to recommend
groups that may be interested in setting up a cooperative. When they register, among other
information, each group will state the number of participants, the address and the intended
economic activity. Interviews are carried out with each of the interested groups, in order to assess
the level of maturity of the proposed activity and the organizational preparedness of the group
for collective labor.46

The INTECOOP/UFJF intends to adopt the same procedure for its next selection process. Up
till now, groups have been chosen through weekly meetings held to publicize cooperativism or
through the recommendation of other civil society organizations. The assessment of the groups is
similar to that outlined above.

Pre-incubation

This phase begins with an evaluation of the participants’ skills, previous professional experience
and educational levels, together with an assessment of the venture’s economic and financial
feasibility. They are encouraged to organize their basic civil documentation (ID Card, Taxpayer’s
Registration [CPF] and Voter Registration). The awareness, motivation and preparation of these
groups, in terms of organizing themselves into cooperatives, are assessed and discussed with the
participants, as difficulties sometimes arise over getting together to define the type of undertaking
to pursue, thus affecting whether or not they remain with the incubator.

Incubation

During this phase at the ITCP/COPPE/UFRJ, two courses are held for all the group members.47
The first is “An Introduction to Cooperativism”, addressing issues such as what a cooperative is;
the principles of cooperativism; self-sustained management and business ethics. The second is
“The Cooperative as a Business”, which aims to broaden the knowledge about how a cooperative
works and especially about the products/services to be offered, the preparation of cost table and
a list of the equipment needed. These courses lead to a refining of the initial project for the
enterprise.

A procedure known as “Support for the legalization of the cooperatives” is conducted right from
the start of the incubation process, involving the discussion and preparation of the legalization
documents: by-laws; charter; records of the meeting that approved the founding of the
46 Almeida, M. Interview with Paulo Leboutte, member of the Coppe Incubator of Popular Cooperatives team, on February 16,
2005.
47 Computer courses are available to the participants at the ITCP/COPPE/UFRJ, covering text editing, the preparation of

spreadsheets and access and utilization of the Internet (30 hours), so as to encourage them to use computers in their work.
Almeida, M. Interview with Paulo Leboutte, member of the Coppe Incubator of Popular Cooperatives team, on February 16,
2005.

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cooperative; formal approval of the charter; formal approval of the organization of the social
funds48; and election of the board and statutory audit committee. In this way, the enterprise will
be formally registered with the responsible federal, state and municipal authorities and will be
able to operate as an official business.

This incubator also helps to insert the cooperatives within the market: in making contact with
new customers; preparing work proposals/estimates/equipment certification/quality
management/work safety norms; organizing the work and controlling the quality of the
services/products provided, in order to improve the cooperative’s methods/processes.

Following the first step, of defining and formally legalizing the venture’s economic activity, there
is day to day monitoring of operations. Another important feature is the professional training of
the workers, which aims to stimulate discussion of issues such as work and a caring economy;
democracy, participation and citizenship; cooperatives, associations and supportive networks;
planning and management. The INTECOOP/UFJF is equipped with pedagogical support
materials (educational booklets and videos). The process of incubating the groups includes
addressing the economic aspects of the enterprise in a way that is linked to its social character.

The work with each enterprise goes through the following stages: evaluation of the venture’s
stage of productive and administrative development; training of the members in cooperative
entrepreneurism, planning and management; development, as a team, of the group’s strategic
planning and business plan, with the aim of obtaining third party resources for the expansion and
consolidation of the undertaking.

At both incubators, these activities are carried out by students under the guidance of a social
worker and, when necessary, of a lawyer and an accountant. The greatest problems encountered
during this phase are: a) the number of cooperative participants, since Brazilian legislation
requires that a cooperative has a minimum of 20 participants; b) lack of personal documents; c)
doubts regarding the Credit Protection Service; and d) the financial expense involved in the
legalization process. The duration of this phase depends on the group’s capacity to gear up to the
challenge and some are able to get through it quickly, while others get bogged down and end up
quitting the incubation process.

Inserting the cooperatives into the market is another challenge for the incubators, which
encourage the participants to seek out potential clients and help them to prepare work proposals
and define their prices. When the cooperative quickly manages to attract its first client this
facilitates the learning of administration, accounting and management49, since these functions take
on a tangible form. Some cooperative members, who were previously self-employed, are unable
to adapt to working in a team, with defined functions, hours, etc. If they leave the cooperative for
this reason then they are replaced.

Other problems that arise during this phase are generally related to the democratic management
of the enterprise, with authoritarian attitudes on the part of the management not being tolerated
by the members, who seek the help of the incubator in order to reorganize and replace the
managers concerned.

48
Interview with João Guerreiro, member of the Coppe Incubator of Popular Cooperatives team, on October 28, 2001.
49
Courses on accounting, the drawing up of minutes and the functions of the audit committee are provided for those cooperative
members who are responsible for these activities.

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7. Cooperative Incubator and the Triple Helix Model

The incubators of cooperatives adopted a strategy for developing a network of support. This
enhanced their feasibility and financial support, as well as facilitating the incorporation of the
incubators and their cooperatives within the activities of the universities.

In the analysis of the cooperative incubators, based on the Triple Helix Twins Model (Etzkowitz
and Zhou, 2006) is presented at the Figure 1.

Figure 1: Cooperative Incubator and Triple Helix Twins Model

CNM: Metallurgist National Confederation; CUT: Workers Union;

COEP: Committee of Public Entities in Action against Hunger and in Favour of Life
Senaes: National Secretary of Solidarity Economics; BB: Banco do Brazil
Senac: National Commercial Training Service; CEF: Federal Savings Bank
Sebrae: Brazilian Micro and Small Business Support Service
Senai: National Industrial Apprenticeship Service; FIOCRUZ: Oswaldo Cruz Foundation
Finep: Projects and Studies Financing Agency; RTS: Social Technology Network
Infodev: The Information for Development Program; USP: São Paulo University
CDI: Committee for Democratization of the Information Technology
GTZ: Deutsche Gesellschaft für Technische Zusammenarbeit
NOVIB: Oxfam Novib; UFRJ: Federal University of Rio de Janeiro

The university becomes the source of knowledge for groups that do not possess formal access to
this institution, which assumes a similar role to that adopted regarding technological incubator
firms, with a differentiation in the content of the knowledge transmitted to the incubated
cooperatives. Moreover, the university’s social responsibility is channeled in the direction of
reducing inequality and increasing social inclusion.

Other actions are included, as a result of triple helix recursive effect in function of the relation
established with the other spheres, as well as of the recursive effect of the own performance of
the university: professors and researchers supply specialized advising to the cooperatives;
incubators financial management; search of mechanisms of credit for the incubated cooperatives.

In the industrial sphere, action relating to its own area of activity may be noted: financial support
for the incubators50; the passing on of specialized knowledge to the cooperatives51; the use of new
support mechanisms, such as the principle of social responsibility, to help in setting up new

50 Sebrae.
51 Sebrae, Senai, Sesi, Senac (ITCP network, 2001).

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cooperatives52; participation in specific partnerships for the organization of new cooperatives

(Etzkowitz, Mello and Almeida, 2005).

Municipal and state governments have established partnerships with the ITCPs, in order to
organize cooperatives, so as to provide an alternative to unemployment or the informal job
market for excluded sectors or socially disadvantaged groups.

In addition to incubating popular cooperatives, ITCPs also perform two other main activities:
they participate in the development of public policies regarding cooperativism, and they dedicate
themselves to cooperative education. With respect to the former, ITCPs fulfil the role of
consultant or advisor to state governments in the conception and implementation of public
policies directed to fostering economic development involving the social and economic insertion
of the poor.

In 2003, the National Cooperative Incubator Program (PRONINC), organized by FINEP in

1995, was expanded, with the aim of providing support to this kind of cooperative sponsored by
Brazilian universities. New resources were approved for 33 incubators in 2004/2005, supported
by the following partners: Banco do Brazil, Banco do Brasil Foundation and the National
Secretariat for Economic Solidarity, within the Labor Ministry of the Brazilian federal
government (Secretaria Nacional de Economia Solidária - SENAES).53

These incubators in general keep a relation with institutions to the civil society and establish
partnership with trade unions partnership for cooperative creation among the dismissed
metallurgist in ABC region (REDE DE ITCPs e UNITRABALHO, 1999), or with NGOs.

Conclusion: Implications for other Developing Countries

Analysis of the incubator experience in Brazil points to the following conclusions:

The Brazilian incubator is a creative reinterpretation of a model imported from an advanced

industrial society and the process of implementation reflects the local problems and
opportunities.

Incubation evolved from the original model, with the objective of assisting the creation of high-
tech firms by universities, in order to raise the technological level of low-tech industries in
traditional sectors, create employment opportunities for marginal populations and, very recently,
as a mechanism to create non-governmental organizations (NGOs) – local organizations
dedicated to the protection of natural resources or to cultural and artistic ventures.

A considerable benefit from the taking off of the Brazilian incubator movement has been the
mobilization of civil society and institutions from the triple helix in support of the project. The
National Incubator Association (Anprotec) was set up to share experience, help to raise the
quality level, gain respect from the authorities and spread the movement throughout the country.

The cooperative incubators provide targeted support to a small select group, often having only a
marginal effect on the huge problem of unemployment. Nevertheless, if the cooperative
incubators form part of a public policy to fight poverty that includes other support programs,
addressing credit and education, the combined results will help to expand the local economy.

52 Eletrobrás (ITCP/Coppe/UFRJ, 2003).

53 http://www.acompanhamentoproninc.org.br/historico.htm accessed on June 20, 2005.

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The cooperative incubators are a mechanism that enhances social capital, democracy and self-
government among their members and this leads to the development of citizenship and of
society itself.

The establishment of cooperatives was intended to strengthen the existing social capital, in order
to encounter solutions for the marginalized social sectors. Consequently, the incubator has
collaborated in breaking the cycle of social fragmentation and labour market precariousness, with
its cultural components of marginalization and criminalization of this element of the population.

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References

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– special edition World Conference on Business Incubation.

Bocayuva, P.C.C. (2000), Rio de Janeiro: Incubadora Tecnológica de Cooperativas Populares –

Coppe/UFRJ.

Botelho, A.J.J. and M. Almeida (2001), “Incubadoras Privadas: Perspectivas no Brasil”. In: World Conference
on Business Incubation, 17 p. CD-ROM. Rio de Janeiro, Out.

Cavagnari, G. (1987), “A Experiência do Certi”. In: Anais do Seminário Internacional de Parques Tecnológicos, p.
307-312. Rio de Janeiro, Dez.

Coutinho, L.E. and J. Ferraz (1995), Estudo da Competitividade da Indústria Brasileira. 4ª ed. Rio de Janeiro,
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Policy, V.33, N. 1, pp. 77-83.

Etzkowitz, H. J. Mello and M. Almeida (2005), Towards “meta-innovation” in Brazil: The evolution of the
incubator and the emergence of a triple helix. Research Policy, 2005, vol. 34(4), pp. 411-424, May.

Fonseca, S.A. and I. Kruglianskas (2000b), “The partnership among the university, local governments and
non-profit organizations to promote the creation of small firms incubators”. In: Third Triple Helix
International Conference. 10 p. CDROM. Rio de Janeiro, May.

Guimarães, G. (Org) (1998), Ossos do Ofício Cooperativas em Cena Aberta, Incubadora Tecnológica de
Cooperativas Populares/ COPPE/UFRJ, Rio de Janeiro.
Peraira, R. S (1998), “A criação de Cooperativas como instrumento de geração de trabalho e renda: o caso
da Incubadora Tecnológica de Cooperativas Populares da Coppe/UFRJ”. In: VIII Seminário
Nacional de Parques Tecnológicos e Incubadoras de Empresas, p. 265 – 277. Belo Horizonte, Set.

REDE DE ITCPS e UNITRABALHO (1999), “Integrar Cooperativas”.

Singer, P. (2002),“A recente ressurreição da economia solidária no Brasil”. In: Santos, B. S. (org.) Produzir
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Souza, M. C. and Garcia, R. (1999), “Sistemas Locais de Inovação em São Paulo”. In: Cassiolato, J.E. e
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4.2.3. The Renewal of the African University: Towards a “Triple Helix” Development Model

The Renewal of the African University:

Towards a “Triple Helix” Development Model

James Dzisah
Department of Sociology, University of Saskatchewan, Canada

Henry Etzkowitz
Business School, Newcastle University, United Kingdom

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Abstract

Traditional development models envision a staged series of steps, typically to be followed in

sequence, that replicate the development experience of the industrialized countries in the West.
Invented in an increasingly superseded industrial era, stage models may no longer be relevant to
an increasingly knowledge-based society. Evolutionary models based on Schumpeter’s thinking
emphasize the recombination of elements in order to create new forms of economic
organization. The triple helix model takes this process further by looking at the polyvalent nature
of knowledge and to institutional sources outside of the economy, in particular the university, as
a source element for recombination and innovation.

Keywords: triple helix, polyvalent knowledge, spiral model of development, the African university

Introduction

Invented in an increasingly superseded industrial era, stage models may no longer be relevant to
an increasingly knowledge-based society. Evolutionary models based on Schumpeter’s thinking
emphasize the recombination of elements in order to create new forms of economic
organization. The triple helix model takes this process further by looking at the polyvalent nature
of knowledge and to institutional sources outside of the economy, in particularly, the university,
as a source element for recombination and innovation.

Though universities are established, nurtured and fueled with public funds to serve as conduits
through which scientific research is transformed to enhance the socio-economic interests of their
respective countries and regions, this has not typically been the case in Africa. African universities
have yet to take up the challenge of encompassing an economic development function in
addition to teaching and research as their main mission. The slow nature of the triple helix
transformation in Africa is understandable since in African development policies and strategies,
universities are not usually considered as critical players and are thus relegated to the background.
This stems from the fact that conventional development models envision a staged series of steps,
typically to be followed in sequence, which replicates the century old development experience of
the industrialized countries.

The process of globalization has resulted in a diminishing gap between scientific research and
utilization. This has resulted in the recognition of the dual theoretical and practical uses for
scientific research (Etzkowitz, Schuler and Gulbrandsen, 2000). We argue that in the current
situation, it may be possible to leap-frog stages of industrialization that are now disappearing in
the traditional countries of origin. Perhaps ironically, many advanced industrial countries, such as
the UK, have lost much of their traditional industries and are now pursuing a science and culture
based strategy of redevelopment based on universities and artistic quarters. By following the
strategies of a century ago, the least developed world may be left behind again.54 The thesis of this
paper is that a development strategy for Africa can be fashioned by realizing the potential of
universities for economic and social development.

54 Certainly there can be a balance between the two approaches as, for example, in China and India that have pursued dual
strategies of industrial and post-industrial development.

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From Stage to Spiral Model in Education

Some observers expect that least developed countries like Ethiopia need the chance to build
dams and develop according to the same path as the advanced industrial countries did a century
ago. The alternative thesis is that developing countries could pool their technology resources to
take the lead in developing alternative energy technologies, such as photovoltaics, without
disturbing the natural environment that is the basis for unique tourist industries such as the one
that was emerging at Tis Abey adjacent to the Blue Nile Falls. When a new power station reduced
the falls to a trickle, destroying their natural beauty and the livelihoods of local tourist operators,
this opportunity was lost (Robinson and Island, 2006).

The form and content of education in the least developed world tend to mirror the prevailing
concept of development underwritten mostly by Western actors. Most African countries
inherited a colonial educational system that was oriented to the developmental needs of the
colonial master. The goal of the educational system was to turn out clerks for the purchases of
traditional agricultural export commodities, missionary proselytizing activities, and the colonial
civil service. Technical education geared towards innovation and creative purposes was not on
the colonial agenda. As Julius Nyerere wrote in 1967, colonial education was not designed to
prepare young people for the service of the country. It was rather motivated by the desire to
inculcate the values of the colonial society, and to train individuals for the service of the colonial
state (see Davidson, 1990:187). For instance, until 1987, Ghana the first sub-Saharan country to
attain political independence did not alter its educational structure modeled after the British
system of education.

In Africa, the largest financier of education is the World Bank. As such, educational policies and
strategies often mirror the bank’s policy direction. The underlining presumption especially in the
educational policy recommendations of the World Bank has been that mass primary and
secondary education should precede the extensive development of tertiary educational
capabilities. Though the bank is fully aware of the role of universities in economic growth and
innovation, its educational policies in Africa have overly focused on basic education. This
approach as we will argue ignores the role of universities, as a source element for recombination
and innovation. The World Bank is aware that the contribution of universities to economic
growth may increase with levels of technology and as countries achieved universal primary and
secondary education (World Bank, 1995).

However, beyond calling for privatization and the introduction of fees and user charges,
universities do not feature prominently in the priorities and strategies of the World Bank. To the
bank, basic education ought to be the priority for public spending on education in those
countries that have yet to achieve near-universal enrolment at the primary and lower-secondary
levels (World Bank, 1995). This policy regulation underlies the stage model where growth is a
discontinuous and dialectical process until a take-off stage of self-sustained advancement is
reached (Rostow, 1960).

In fact, in recent times, countries such as Singapore and South Korea that pursued the basic
education strategy approach to create a manufacturing work force have realized the limits of this
approach and have recently shifted to a knowledge-based strategy, focused on creating research
institutes and new universities as the basis for future development. This spiral model of
education, which is emerging as an academic reform strategy in a number of developing countries
is refocusing on undergraduate and graduate education. Some examples are the University for
Development Studies in Northern Ghana, and the State University of Rio de Janeiro (Friburgo
Campus). The University for Development Studies, for instance, focuses its efforts on topics that

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will help address issues of rural poverty and community development, including field work
projects as well as classroom training in its curriculum. Thus, rather than developing
undergraduate programmes focusing on existing industries, developed a graduate research
programme based on information technology (IT) that could be utilized to raise the level of a
variety of local industries as well as create a new IT industry, the programmes were projected to
follow as a second step in the development of this campus (Juma, 2005).

It is clear that a continuous flow of science to the economy does not need to be achieved slowly
through traditional staged development models but can occur more rapidly by expanding and re-
orienting universities. The triple helix development model that we propose takes the
Schumpeterian endogenous development model further by looking at institutional sources
outside of the economy, in particular the university, as a source element for recombination and
innovation. In Ethiopia, these efforts typically attempt to upgrade traditional industrial clusters by
connecting them to foci of government funded research located at universities and research
institutes that are encouraged to become more entrepreneurial (Ethiopian Herald, 2006). Based
on these transformations, we argue that the Newtonian linear model whereby, the site of
knowledge production is entirely separated from that of application (Gibbons et al., 1994) is
outdated and no longer relevant to Africa’s search for strategies to unleash the potential of its
universities. We call for a triple helix development model that incorporates basic education with
university led economic development.

Universities as the Locus of the Third Industrial Revolution

Different types of knowledge were effective in different periods of the three industrial
revolutions. Science in the way we came to understand it was by all accounts quite modest in the
classical industrial revolution. Similarly, the tight interaction, for instance between scientific
knowledge and engineering postdate the middle of the nineteenth century (Mokyr, 2003). Much
of the technological progress before 1850 (in the steam engines, textile, and wrought iron) came
from practical know-how generated by engineers. There was little inference from empirical
mental models in the form of laws of nature. Scientific contribution came mainly from empirical
accidental generalizations. There was not much collaboration between scientists and engineers.

In the second industrial revolution, great macro-inventions such as the advances in organic
chemistry were based on pivotal breakthroughs in the laws of nature, for example, the discovery
of the structure of benzene molecule by the German chemist, August von Kekulè in 1865. Other
inventions, like the steam engine or salicylic acid were generated by empirical generalizations and
technical pragmatic schemes discovered by trial and error. The steam engine and the salicylic acid
were originated mainly by engineers and professional chemists detached from the university. In
any case even a macro-invention like the telegraph that was based on the discovery by Hans
Oersted of electro-magnetism required many other micro inventions to become a concrete
innovation, for example the technology for the transmission of the electric impulses. In the case
of telegraphy or organic chemistry the micro inventions stemmed from the close collaboration
between science and technology.

The first phase of the third industrial revolution is exemplified by such macro inventions as
recombinant DNA and monoclonal antibodies, nuclear power, semiconductors and antibiotics
based on important scientific discoveries. The collaboration between science and technology is
intense. The centre of gravity of this collaboration is inside the university, with a supporting role
of industry. However, government typically plays a role in encouraging, structuring and funding
these discoveries. Even the micro-inventions that brought about the development of

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biotechnologies and information and communication technologies were generated mainly by

university-industry relations. The reason why the centre of gravity is inside university is not only
caused by the increased scientific density of the inventions, but also stems from change in
academic functions from teaching and research to economic development.

This is even more imperative in the least developed world where universities seem to be stronger
in terms of human resources than the other two institutional partners-government and industry.
The entrepreneurial university makes science, technology and increasing innovation possible and
readily accessible. Given that the technology base in Africa is narrow and most industries are
basic, the triple helix model is flexible enough to accommodate other knowledge brokers such as
those in the informal sector as exemplified by the development of the Internet in Zambia
(Konde, 2004).

In the twentieth century there was a change of the process of innovation with the emergence of
corporate, university, and government sponsored research and development (R&D), referred to
by Mowery and Rosenberg (1998) as the “institutionalization of innovation”. Moreover there was
the birth of a new type of scientist (the entrepreneurial scientist) who interfaced basic knowledge
with the innovation agenda. Like the two faces of Janus, she was able to integrate two different
and diverging perspectives the epistemological and the industrial one. It is plausible that in the
future, we will see the reinforcement of the integration between different emerging generic
technologies (second phase of the third industrial revolution). The acronym NBIC (Nano Bio
Info Cognitive) of the new “converging technologies to improve human performances”
introduced by National Science Foundation in 2002 in its technological foresight exemplifies the
phenomenon. Integration means more than collaboration between researchers in different fields
and between university and industry. It also means the reinforcement of the global role of
universities (from basic science to innovation and production), the development of less
specialized universities with a wider disciplinary scope, and the birth of a new scientist who
integrates knowledge and innovation, as in the entrepreneurial model (Viale and Etzkowitz,
2005).

The Emergence of Polyvalent Knowledge

In a science-based global economy, a flow of commercializable knowledge is the ultimate

condition for long-term success. The emergence of polyvalent research fields with simultaneous
theoretical, technological and commercial potential provides a substrate for the growth of science
based clusters.55 The recognition that knowledge is imbued with multiple attributes encouraged
the multiple roles of academics and their involvement in biotechnology firms and of industrial
researchers in academic pursuits.

Univalent knowledge follows a sequence from basic to applied research typically carried out in
different time periods, at different sites, and by different people. The emergence of polyvalent
knowledge called forth the concept of translational research (a less defined notion than applied
research) and an activity that is closely associated with fundamental investigation and likely to be
conducted in tandem. One hypothesis is that the presence of an entrepreneurial university, which
generates new fields of research with theoretical and commercial potential, can make a significant
difference to economic organization.

55 In contrast to the division of knowledge into divergent epistemological spheres e.g. Pasteur, Edison and Bohr’s Quadrants
(Stokes, 1997); the polyvalency thesis holds for the unity of knowledge, with complementary aspects. Indeed, even the namesakes
of these Quadrants spill over into others. For example, the “Edison effect” might well fit into Bohr’s space. See also Viale and
Etzkowitz, 2005.

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Polyvalent science was institutionalized in the U.S. during the post-war, along with funding
agencies that offered diverse opportunities. Universities became involved in a closer relationship
with government, whether the funds were provided by basic or applied funding agencies, by peer
review or program officer initiative. When international competitiveness became an issue in the
1970’s, government-funded science was expected to contribute to industrial renewal. Closer ties
were forged between university and industry in order to overcome impediments to innovation.

As the triple helix evolves, institutions, organizations and roles are transformed. New tasks are
often defined as conflicts of interest and obligation when viewed in relation to old. For example,
when research was introduced as an academic task in the late 19th century, some said it diverted
teacher’s attention from students. A process of normative change takes place as controversies are
resolved and new and old tasks are reinterpreted as complementary. Academic patenting is
currently undergoing this transformation as professionalization of technology transfer creates an
organizational search, marketing and business development capability.

As individual academics become involved, they perceive their findings in a new way, seeking out
the practical as well as the theoretical implications of their work. Though the process is uneven,
the persistence of pre-modern social structures may explain resistance to change in academia just
as feudal relations impeded the transfer of modern technology to Southern Europe in the 19th
century (Mazotti, 2004). Indeed, similarities in the social relations of feudal agricultural and
academic systems may explain similar resistance to creation of formal mechanisms for inventions
that could not be transferred through informal university-industry ties.

The transition from univalent to polyvalent knowledge also brings forth new issues and
opportunities to be puzzled out (Beesley, 2003). The entrepreneurial university and the
entrepreneurial scientist combine multiple purposes and sources of funding to support their
research enterprises, helping to create the conditions for the emergence of polyvalent knowledge.
A portfolio of overlapping basic research agency, industry supported, strategic research
foundation, applied research agency and start-up firm supported projects is the underpinning of
the contemporary academic research group.

At the macro-level, a diversity of potential sources of support is a pre-condition for the

combination of resources at the micro-level. The insertion of a series of quasi-public research
agencies in between the classic research councils and industry in Sweden, during the 1990’s,
exemplifies this transition. New organizational arrangements for collaborative research, formerly
conducted at a distance, stem from the passage to polyvalent knowledge. The establishment of a
research center, focused on an emergent field, integrating several research groups along with
industry and government scientists is the next step to encompass the multiple tasks presented by
polyvalent knowledge (Viale and Etzkowitz, 2005).

Since polyvalent knowledge is often produced in triple helix contexts such as the “incubator of
centers”, evolutionary models based on Schumpeter’s idea of recombining elements in order to
create new forms of economic organization may no longer be sufficient to engineer development
and redevelopment in the least developed world. It is on this basis that we argue that there is the
need to take the process of development and redevelopment further by looking at the polyvalent
nature of knowledge. This demands that we turn particular attention to institutional sources
outside of the economy, in particular the university, as a source of elements for recombination
and innovation. Therefore, by bringing together academic, industry, and government researchers,
we can develop broad-based theoretical knowledge with multiple utilities resulting in a dual
transition of knowledge and organization (Etzkowitz, 2002).

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Science and Technology Policy in Development and Redevelopment

Although technology has been a permanent feature in human progress since the period of
hunting and gathering in bands, in a science-based knowledge economy, modern science and
technology transformations have brought universities to the centre of innovation. While
technological advancement is spurred by the competition and incentives of the global economy,
the new tools of techno-science, based upon advanced knowledge, reinforce the need for
development and redevelopment through university led innovation (Dzisah, 2003).

Many African countries face major obstacles expanding their economies beyond agricultural and
mineral production, not only because they lack skills and institutions, but also because they have
failed to integrate their universities into science and technology development and redevelopment
policies. The result is that they are unable to take advantage of their universities as sources of
recombination and innovation. As Richard Manning asserts, using the potential of biotechnology
as a benchmark, one way to feed the increasing world population is to work with “third world
scientists to feed their own people, while ensuring sensitivity to culture and environment that we
missed in the first green revolution” (quoted in Machuka, 2001: 16).

For us, a triple helix of university-industry-government interactions is particularly crucial to

developing organizational innovations that help reinvigorate a depressed regional economy.
Bottom up initiatives led by universities are crucial for a science and culture-based development
and redevelopment. This explains why in the United States, knowledge-based development
represents a new initiative for state governments, beyond a relative few like Massachussetts that
have been active for some decades. Virtually every state now has a S&T agency and at least one,
and usually more than one, program that attempts to raise the level of S&T in the state and
attract resources from elsewhere. A seemingly self-generating industrial sphere of high-tech
business activity has its roots in academic and governmental initiatives (Etzkowitz and Dzisah,
2006).

Again looking at the US, it was not until 1980 that patent law emanating from constitutional
authority was elaborated into an “indirect industrial policy”, utilizing the universities as an
intermediary between government and industry (Etzkowitz, 1994). In subsequent years, a variety
of regional strategies have evolved to promote knowledge-based economic growth. The process
is multilayered, with significant inputs from states and local governments, academia and industry.
This arrangement not withstanding, the federal government for decades has emerged as the
foremost sponsor of basic research and of applied research in specific areas such as agriculture,
health and the military. The states have especially been active in the transformation of basic
research into practical and commercially viable applications (Feller, 1997; Geiger and Sá, 2005;
Rees and Bradley, 1988).

In spite of this, a common perception is one of shortfall due to the increased competition for
funds. As such, enhancing an academic focus at a local university with possible future relevance
to local economic development is now viewed as similar to traditional physical infrastructure
development. State governments view these intellectual capacity building efforts as akin to
building highways and bridges to improve transportation and encourage business. In the past,
state S&T efforts were typically funded through regular legislative appropriations, making them
subject to cuts and even closure in an economic downturn. This is especially the case due to
requirements that states, in contrast to the federal government, maintain a balanced budget.
However, when the problem is framed in terms of science-based regional development, a
research university becomes a necessity. This explains why the state of California recently passed

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through a ballot measure a $3 billion stem cell research initiative called “proposition 71” to
strengthen the biomedical research capacities of its universities (Etzkowitz and Dzisah, 2006).

In the African context, despite the diversity of local circumstances, university led development
and redevelopment could overcome the problem of weak governments since the global
orientation of higher education makes the university system more stable than political regimes.
Government initiatives in the short term can be oriented toward providing economic incentives
for science-based industrial development and the expansion of the resources of educational
institutions to develop programs that will link scientific research to business development. In
addition, given the limited human resource base, most of the relatively skilled personnel may be
located in universities at the initial stages of the development of technologies rather than in
industry (Konde, 2004).

Since African public universities have grown from about eight in 1960 to over one hundred in
2006, the time has come to increase their S&T, transfer and innovation efforts in order to further
economic development and redevelopment. The formation of science-based firms from
university research should be the centerpiece of this strategy. As the development of the internet
in Zambia has shown, even poor universities can adapt, innovate and commercialize advanced
technologies to benefit their populations (Konde, 2004).

The Renewal of African Universities

African countries reeling under massive external debt turn to the Bretton Woods institutions for
help. The World Bank and the International Monetary Fund (IMF) responded by asking that they
undergo economic restructuring and reform under the Structural Adjustment Programme (SAP)
policy framework. This reform affected most African universities whose budgets are entirely
dependent on national governments. However, this period of retrenchment and decline in
funding was followed by an unexpected renewal phase initiated by a half dozen African
universities. University reforms included the admission of private fee-paying students, permission
for faculty members to retain a share of incomes generated from private consulting income, and
the introduction of night classes and private universities (InterAcademy Council, 2004).

But these reforms did not just happen but were part and parcel of larger economic, political and
social reforms. For example at Makerere University in Uganda, the Innovation at Makerere
program reorganizes its academic programs to contribute directly and immediately to national
development within the framework of the government's decentralization process. It aims to train
cohorts of public servants in health, agriculture and administration, to staff district offices. It is
achieving this through major changes in curriculum and through “sandwich training” programs
whereby students undertake fieldwork in the districts throughout their academic training
(InterAcademy Council, 2004).

In response to these internal transformations, many donors have rediscovered universities. It

must be stated, however, that even with this new vision, which sought to explicate the role of
African universities in economic development and redevelopment, the overriding interest of
donors such as the World Bank was not totally removed from economic growth and
productivity. The emphasis changes though from investment in basic education to universities in
order to achieve the goal of human capital development. However, the recognition of the role of
universities as a source element for development and redevelopment culminated in a refocusing
of higher education policies and strategies based on the concept of the knowledge society (see
Constructing Knowledge Societies: New Challenges for Tertiary Education, World Bank, 2002).

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In addition, a new USAID global initiative was also introduced to increase the number of
scholarships for postgraduate study in the United States and capacity-building grants to retrain
university faculties especially those in Agriculture. Four U.S. foundations have played a critical
role in supporting the renewal phase of African higher education. In 2000, the Rockefeller, Ford,
Carnegie, and MacArthur Foundations launched The Partnership for Higher Education in Africa.
With a 10-year time frame, the foundations have committed US$100 million over the first five
years to support universities pursuing reforms in Ghana, Mozambique, Nigeria, South Africa,
Tanzania and Uganda. During the first two years (2000-2001), the four foundations together
contributed US$62 million to higher education in the above six African countries (InterAcademy
Council, 2004).

Information and Communication Technologies and African Universities

The World Bank financed establishment of the African Virtual University (AVU) in 1997 to
provide quality higher education in science and engineering. The AVU has offered courses but
does not yet offer full degree programs. The Institute for Food Laws and Regulations at
Michigan State University has created six distance education courses on food laws and regulations
(InterAcademy Council, 2004).

Another recent ICT application is the use of teleconference in providing lectures and seminars.
Now African students can listen, and indeed interact with, global leaders in their fields while
remaining in their home settings. Cornell University professors now provide lectures on cutting-
edge topics in breeding and biotechnology to students participating in a regional Ph.D. program
offered by the University of Natal, with support from the Rockefeller Foundation. There is scope
to enlist more support from private sector ICT companies in these areas of initiatives
(InterAcademy Council, 2004). There is in motion a process of the renewal of the African
university. African universities have desire as well as the potential to lead Africa’s development
and redevelopment if the appropriate triple helix relations are created.

Towards a Triple Helix Development Model

Traditional development models are dualistic in nature and are either exogenous or endogenous.
Such models envisioned the process of socio-economic growth promotion and regeneration to
be wedged in a circular flow. In these accounts, development and redevelopment is seen as
consisting of series of historical stages where each particular stage is based on preceding ones. In
their original formulations, and as has been replicated in the least developed world, the key actors
have been central governments. The current inclination is to promote the private sector as the
engine of growth. While this is laudable, it still omits the most critical agent in development and
redevelopment--a university that is willing and able to be entrepreneurial by adopting economic
development functions in addition to teaching and research (Etzkowitz, 2005).

As such, our thesis is that the traditional stages and evolutionary models of development may no
longer be relevant in engineering economic growth and innovation in an increasingly knowledge-
based society. For us these models are based on an increasingly superseded industrial era where
socio-economic growth was premised on the abundance of arable land and the availability of a
large pool of labour. If African countries continue in this vein, they may be left behind again. In a
science-based knowledge society, these staged and evolutionary models do not go far enough.

Schumpeter (1934 and 1954) attempts to create new forms of economic organization by
employing existing resources in different ways. According to him, the overall development of the

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economy is derived from emergent processes that arise from the developments of its constituent
sectors. Central to this formulation is the fact that these developments are endowed with their
own laws and principles. As a result, the development of the economy as a whole is a
phenomenon emerging on the basis of the interaction among its constitutive sectors (Becker and
Knudsen, 2002). Schumpeter (1934 and 1954) anchors his model of endogenous economic
development around a major actor-the entrepreneur. He uses this to explain his idea that changes
in the social structure emerges from the actions and social interactions of the individual
entrepreneurs living in distinct and yet interacting sectors of social life (Becker and Knudsen,
2002). While the Schumpeterian entrepreneur is the driving force in industrial society, we
propose an entrepreneurial university led development model, in cooperation with other
institutional spheres, in an increasingly knowledge-based society.

The triple helix development model is derived from Boston regional organizing experience in the
1930’s and 1940s and comprises three basic elements: First, a more prominent role for the
university in innovation. Second, a movement toward collaborative relationships among the three
major institutional spheres in which innovation policy is increasingly an outcome of interaction
among university-industry-government. Thirdly, in addition to fulfilling their traditional
functions, each institutional sphere it also “takes the role of the other” (Etzkowitz, 2005).

In a knowledge-based society, a triple helix development model in the current situation, may lead
the way in assisting least developed countries to leap frog stages of industrialization that are now
disappearing in their countries of origin. Critics have argued that that the university systems are
academically oriented and industries are either non-existent or too weak and governments too
bureaucratic to play respective roles envisaged by the triple helix model. However, as Konde
(2004) has revealed, the problem does not lie with the model, but the fact that in Africa, these
triple helix entities seem to be weak because their elements tend to work in isolation. The
development of the internet in Zambia demonstrated that when these entities work together; they
represent a significant force for change, similar to those found elsewhere.

Each institutional sphere maintains its core identify as it interacts intensively with the others.
While the triple helix institutions at their nodes are active and recursively selective according to
their own specific functions and institutional constraints, the network system of university-
industry-government relations provides the transaction spaces needed by these development
actors to translate policies into goals. As such, a triple helix development model cannot be reified
into a neo-corporatist arrangement because of its implied emphasis on the dynamics of change
and the appreciation of differences in opinion, position, and interests of their partners (Etzkowitz
and Leydesdorff, 2001).

A triple helix development model is based on the following trends:

(1) The transition from an industrial society to a knowledge-based society in which

knowledge producing institutions, like universities, potentially play a greater role in
innovation and development.
(2) The transition from large scale physical technologies that mandate bureaucratic forms of
organization to increasingly flexible smaller scale high technologies that can be utilized by
smaller scale organizations.
(3) The emergence of polyvalent knowledge, in such areas as biotechnology, computer
science and nanotechnology, that is at one and the same time theoretical and practical;
patentable and publishable.

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(4) The rise of an entrepreneurial university model that incorporates classic ivory tower and
Humboldtian elements with a culture of entrepreneurship, innovation and technology
transfer.

The Endless Transition

The triple helix of university-industry-government relations is emerging as a common format that

transcends national boundaries. As this takes place there is a shift from bilateral to trilateral
interactions from single and double helixes to university-industry-government joint projects. For
instance, in Ethiopia this involves the upgrading of traditional industrial clusters by connecting
them to foci of government funded research located at universities and research institutes. This is
aimed at making them more entrepreneurial. Other regions have also responded to these changes
with similar but different approaches. Examples include the land grant universities in the US, the
research schools program in Sweden and the incubator movement in Brazil. It is clear that
whether one starts from a statist or a laissez-faire regime, the movement is to a midpoint of
relative autonomy of institutional spheres, on the one hand, and stronger interrelations and
creation of new hybrid formats embodying elements of two or more institutional spheres, on the
other. (Viale and Etzkowitz, 2005).

Nevertheless, practical knowledge continues to arise from the context of discovery in the
“meandering stream of basic research” just as theoretical knowledge appears in the context of
application. In countries where the government has previously dominated the other institutional
spheres, there is a need for differentiation of institutions and the establishment of clear
boundaries among the institutional spheres so that they can begin to interact from a position of
independence and relative equality. The emergence of university-industry-government relations (a
tri-institutional model of society) is the great transformation of late 20th and early 21st centuries.
This transformation includes a shift from: manufacturing to service occupations, the individual
firm to strategic alliances, tacit to codified knowledge, technical to organizational innovation.

The triple helix transition followed from the emergence of government-industry relations, (a bi-
institutional model of society) that constituted the great transformation of the 19th century
(Polanyi, 1957). The Speenhamland law in England placed limits on exchange relationships in
wage labor, guaranteeing workers a living wage. On one hand, the market became the organizing
principle of social relations. On the other hand, the government moderated exchange
relationships to guarantee a living wage. Government-industry relations thus created a
compromise that ensured social stability in the wake of an industrial revolution that opened up
new social chasms and conflicts. It also encouraged a shift in social relations from status to
contract, Gemeinschaft to Gesellschaft, mechanical to organic solidarity and the invention of the
social sciences to elucidate these transitions (Durkheim, [1893] 1997).

All societies are in transition in the 21st century, with no fixed endpoint to change in sight. The
functional differentiation of institutions in the early modern era is being displaced by integration
and hybridization of functions in the post-modern era. Although this process begins from
different starting point of relationships among institutional spheres, a secular trend toward a
common triple helix can be identified. An open civil society paves the way for triple helix actors
to organize and overcome blockages to the transformation of knowledge into innovation. The
university will become ever more central to the innovation process and it will supersede many
functions of the industrial enterprise. This transition reinforces the global role of universities; it
brings with it the development of less specialized universities with a wider inter-disciplinary
scope, and the birth of a new scientist who integrates knowledge and innovation.

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The first and second academic revolutions introduced research and then economic and social
development as academic missions. These revolutions fundamentally changed the nature of the
university from its medieval foundation focused solely on the conservation and reproduction of
knowledge (Rashdall, 1896). The third academic revolution integrates forward and reverse linear
models in a programmatic and regulatory framework, synthesizing knowledge, organization and
institutions: the endogenous, exogenous and mesogenous drivers of innovation. The university
thus becomes an increasingly important platform for societal transformation (Viale and
Etzkowitz, 2005).

Conclusion: The Renewal of the African University

The notion that African development and redevelopment has to follow traditional staged
development models by replicating the development experience of the industrialized countries
has affected the ability of African universities to take up the challenge of encompassing an
economic development function into the mission of universities. We propose a triple helix
development model that moves away from staged to a spiral model of education because a
continuous flow of science to the economy can occur more effectively under a triple helix of
university-industry-government relations. This model takes the Schumpeterian endogenous
development model further by looking to institutional sources outside of the economy, in
particular the university, as a driver of innovation.

For us, a triple helix of university-industry-government interactions is especially crucial to

developing organizational innovations that help reinvigorate a depressed regional economy. The
formation of science-based firms from university research should be the centerpiece of this
economic development and redevelopment strategy. This stems from our observation that
traditional development models do not take into account the unique role of universities in
generating innovations. A triple helix development model based on a spiral process that is
university led, in cooperation with other institutional spheres is necessary to leap-frog trajectories
of industrialization that are now disappearing in their countries of origin. The triple helix model
provides a flexible framework for the transition of the African university from educating post-
colonial elite to playing a more direct role in development, pointing the way for least developed
countries to make the transition to a knowledge-based society.

Rather than development and redevelopment being the sole responsibility of central
governments, a meta-innovation system is emerging from bottom up, top down and lateral
initiatives in which science, technology and innovation policy is the outcome of the interaction
among university, industry and government. A triple helix of university-industry-government
relations is emerging as a common format that transcends national boundaries. The first and
second academic revolutions have brought research, economic and social development together
with education as academic missions. The integration of these functions is changing the nature of
the university and its role in society. The potential for regional development in Africa, and
elsewhere, resides in entrepreneurial universities taking the lead in infusing knowledge,
innovation, technology and enterprise into the entire society.

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References

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Development.” Journal of Economics and Sociology 61:387-403.

Beesley, L. (2003), “Science policy in changing times: are governments poised to take full advantage of an
institution in transition.” Research Policy 32:1519-1532.

Davidson, B. (1990), Modern Africa: A Social and Political History. London: Longman.

Dzisah, J. (2003), “Information and Communication Technologies (ICT's) and Development: Ghana and
the Global Informational Economy.” University of Saskatchewan. Unpublished M.A. Thesis.

Ethiopian Herald, (2006), “ETHA Says Universities could speed up development”. Ethiopian Herald,
April 02, 2006.

Etzkowitz, H. (2002), “Incubation of Incubators: Innovation as a Triple Helix of University-Industry-

Government Networks.” Science and Public Policy 29:115-128.

Etzkowitz, H. (2005), Trippelhelix—den nya innovationsmodellen. Stockholm: SNS Press.

Etzkowitz, H. and J. Dzisah. (Under Review), “Route 128 and Silicon Valley: Towards A Spiral Model of
Regional Growth and Renewal”. European Planning Studies.

Etzkowitz, H., E. Schuler, and M. Gulbrandsen. (2000), “The Evolution of Entrepreneurial University.”
Pp. 40-60 in The Future of Knowledge Production in the Academy, edited by Merle Jacob and Tomas
Hellstrom. Ballmoor, Buckingham: Open University Press.

Etzkowitz, H., and L. Leydesdorff. (2001), “The Transformation of University-industry-government

Relations.” Electronic journal of Sociology.

Feller, I. (1997), “Federal and State government roles in science and technology.” Economic Development
Quarterly 11:283-296.

Geiger, R. L. and C. Sá. (2005), “Beyond Technology Transfer: US State Policies to Harness University
Research for Economic Development.” Minerva 43:1-21.

Gibbons, M., C. Limoges, H. Nowotny, S. Schwartzman, P. Scott, and M. Trow. (1994), The new production
of knowledge. London: Sage Publications.

InterAcademy Council.(2004), Realizing the Promise and Potential of African Agriculture. Amsterdam:
The Netherlands.

Juma, C. (Ed.). (2005), Going for Growth: Science, Technology and Innovation in Africa. London: The Smith
Institute.

Konde, V. (2004), “Internet development in Zambia: a triple helix of government-university-partners.”

International Journal of Technology Management 27:440-451.

Machuka, J. (2001), “Agricultural Biotechnology for Africa. African Scientists and Farmers Must Feed
Their Own People.” Plant Physiology 126:16-19.

Mazotti, M. (2004), “Enlightened Mills: Mechanizing Olive Oil Production in Mediterranean Europe.”
Technology and Culture 45:277-304.

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Mokyr, J. (2002), “Innovation in an Historical Perspective: Tales of Technology and Evolution.” Pp. 23-
46 in Technological Innovation and Economic Performance edited by B Steil, D G Victor, and R. R
Nelson. Princeton: Princeton University Press.

Mowery, D., and N. Rosenberg. (1998), Paths of Innovation: Technological Change in 20th Century America. New
York: Cambridge University Press.

Polanyi, K. (1957), The Great Transformation. Boston: Beacon Press;

Rashdall, H. (1896), The Universities of Europe in the Middle Ages. Oxford: Oxford University Press.

Rees, J, and R. Bradley. (1988), “State science policy and economic development in the United States: a
critical perspective.” Environment and Planning 20:999-1012.

Robinson, S. and D. Island. (2006), “The Waters of Life.” Pp. May in Time.

Rostow, W. W. (1960), The Stages of Growth: A Non-Communist Manifesto. Cambridge:

Schumpeter, J. A. (1934), The Theory of Economic Development. Cambridge, MA: Harvard Press.

Schumpeter, J. A.. (1954), History of Economic Analysis. New York: Oxford University Press.

Viale, R. and H. Etzkowitz. (2005), “Third Academic Revolution: Polyvalent Knowledge; The “DNA” of
the Triple Helix.” in Triple Helix 5. Turin, Italy.

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World Bank. (2002), Constructing Knowledge Societies: New Challenges for Tertiary Education. Washington, DC:
World Bank.

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4.2.4. An Assessment of the University-Industry Relations in Israel: The Experience of the

Magnet Program and Implications for Ethiopia

An Assessment of the University-Industry Relations in Israel:

The Experience of the Magnet Program and Implications for
Ethiopia

Devrim Göktepe
SPIRE-CIRCLE, Lund Institute of Technology, Lund, Sweden

Ekin Keskin
MERIT, University of Maastricht, Netherlands

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Abstract

Social and economic networks determine the economic success of nations and thus play a
prominent role in explaining the wide-range of economic growth and performance in especially
knowledge-based economy. Reasonably networking between the users and producers of
knowledge thus the achievement of the synergy among the networking participants has been
argued as an efficient way for the better utilization of the benefits of the knowledge-based
economy (Sinha and Cusumana 1991). Correspondingly, innovation networks and national
innovation systems have been acclaimed as accurate models for science, technology and
innovation systems of the twenty-first century (Edquist et al. 1997).

The notion of networking has been deeply rooted in the Israeli system earlier than the transition
to knowledge-based economy or even before establishment of the Israeli State in 1948. The
research focuses on the Israeli Magnet Program for pre-competitive generic technology
production within the consortia of university, government and industry (UGI). The analysis of
the Magnet Program reveals the importance of the interaction of domestic and international factors and
typical organizational setting of Magnet for the formation of innovation networks successful in Israel.
On the other hand, we will try to abstract the lessons of Israeli case and come up with
implications for a developing country such as Ethiopia.

Consequently, a network-based innovation system, which provides the communication linkages

and basis among the actors of innovation, leads to the achievement of the synergy among these actors
of innovation. Such production system is believed to bring about much more economic and
industrial development to the Israeli nation than the sum of these participants individually.

Keywords: innovation networks; Magnet; synergy creation, entrepreneurial university, implications

for Ethiopia

Introduction

The paper aims to study the notions of several theoretical approaches on the innovation
networks within the context of the Israeli Magnet Program and try to come up with implications
for a developing country such as Ethiopia. The discussion gives an overview of the distinguishing
features of the Israeli innovation networks between university, government and industry (UGI).
The qualitative determinants for the formation of the networks are reviewed from the literature
to find out such linkage phenomena among the academic, industrial and public participants of the
Magnet Program. Over the past decades, the world economy and the innovation systems of
countries have shifted paradigmatically from linear models of science-technology relations to
non-linear systematic models of innovation due to the pressures of globalization, liberalization,
dematerialization and technological revolution (Galli and Teubal 1997). As a result, there have
been a growing literature and policy-making, which put greater emphasis on systematic relations
among the agents of innovation networks. Then the question arises whether a program as
Magnet could provide lessons for developing countries in this case Ethiopia.

The components of the national innovation systems (NIS) include several organizations political
bodies such as (i) ministries for industry, trade, education; (ii) bureaucratic bodies and offices
implementing science-technology and innovation policies; (iii) regulatory bodies for
standardizations, certifications and norms; (iv) educational bodies, universities; (v) social bodies
professional organizations; (vi) public research centers, hospitals (vii) non-profit organizations,
industrial associations (viii) profit oriented firms, joint ventures, R&D consortia and (ix) bridging
bodies between science and industrial bases of the nation (North 1994). Additionally the NIS

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approach has strongly stresses the role of institutions, which are made of formal procedures and
rules such as; patent laws, peer review procedures, technical standards and various codes of
conduct set up the rules of the game for the national innovation generation and management
(Edquist and Johnson 1997).

Complementarily, science policy scholars have claimed the importance of the interaction and the
formation of innovation networks between these aforementioned components of NIS as a
reliable policy tool for the knowledge production and utilization as a technological good (Kline
and Rosenberg 1986, Rullani and Zanfei 1988, Metcalfe 1990, DeBresson and Amesse 1991,
Lundvall 1992, Skyrme 1992, Dodgson and Rotwell 1994, Gibbons et al. 1994, Steinmueller 1994,
Pavitt 1997, David, Foray and Steinmueller 1997, Leydesdorff and Etzkowitz 1996-2000, Porter
1998, Gilbert et al. 1999, Kim 1999, Jacob et al. 2000, Jacob et al. 2000) state these relations
brought about the emergence of the knowledge-based society and a new paradigm between the
academia and industry relations. They describe it as the knowledge partnership phase. The
academic studies have increasingly emphasized the close interrelatedness between innovation,
competitiveness and socio-economic growth of nations (Schmokler 1966, Rosenberg 1972, 1976,
1994, Nelson and Winter 1982, Jorgensen 1996, Bertuglia et al. 1997, Shefer et al. 2000).

Therefore, the non-linear innovation networks between the users and producers of knowledge
can be considered as a reliable framework for the management of the interaction and the
interface between the organizations and institutions of the NIS. The trends of the knowledge-
based economy and society have made governments to utilize innovation-networking policies by
linking the different partners of the society for innovation.

Networking operates on across organizational boundaries; it needs to develop networking

structures and bridging mechanisms. The participants of innovation networks can be integrated
vertically or horizontally. The traditional structures and rules need to be modified into less
hierarchical structures to allow innovation to prosper. In some occasions, even it reshapes the
institutional, political and societal setting of nations completely.

According to the literature on innovation networks, partners need to share collaborative cultures
for further learning and mutual production. Gilbert et al. (1999) stated networks are complex,
self-organizing multi-level structures, generally having no central control. They are characterized
by elements of trust, cooperation, openness and self-organizational forces. Beyond the traditional theories
of pluralism and corporatism, networks require close interactions between politicians, scientists,
technologists, industrialists and customers.

By the same token, Himple 1987, Hamel et al. 1989, Lynch 1990, Powell 1990, Levy & Samuels
199, Koschatzky and Kulicke 1994, Gibson and Rogers 1994, NBIA 1997, Kim, 1999 referred to
the conditions that may impede the functioning of networks. They stated when (i) there is no
adequate trust among the participants; (ii) there is no convergence on the long term goal among
the participants; (iii) participants expect no interactions for future projects; (iv) there are
communicational barriers in sharing information-knowledge and conflict over the intellectual
property and financial benefits, it seems unlikely for the actors of society to form innovation
networks.

Amidon (1996) and Skyrme (1994) mentioned the intense application of information communication
technologies to amplify the share of knowledge among the participants as well as diffusion into the
society and economy. Thus for a proper functioning of innovation systems, the necessary
changes in institutional structures of the system regarding all the internal and external factors
need to be done. Besides this, the obstacles that might impede the establishment and persistence

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of networks should be eliminated and conducive conditions and key institutions need to be
secured.

Indisputably innovation capacity of a nation is socially embedded; it depends on the social

networking and coordination among the knowledge producers and users. In the light of these
arguments the reliability and the sustainability of the Magnet “Generic Pre-Competitive R&D
Consortia Program” is analyzed in the next section.

The Exploration of Innovation Networks in the Magnet Context

As a small country of six and half million people with limited natural resources and encircled by
some unfriendly neighbors, Israel always needs to create synergy between its people and
organizations to utilize its productive capacity at the highest level to be competitive on the global
markets. Israel stands out as a highly successful country in meshing the national scientific,
technological and political pools. This can be attributed to two main interrelated factors (i)
domestic and international conditions; (ii) institutional frameworks formed by the Office of the Chief Scientist
under the Ministry of Industry and Trade (MOIT). While the former feature reflects the reasons for the
initiation of networking, the latter feature confirms the functioning of networks require a
systematic management and organization.

Data Collection

The data on the framework of the Magnet Program have been collected from the survey among
the members of the Board of Managers. It was sent to ninety-two participants from twelve
different consortia, during one of the authors’ one-year research in Israel. It was responded to by
forty participants from nine different consortia with a 43.47% response rate. Twenty-two
responses are from industrial participants and eighteen responses are from non-industrial
participants (academics or government representatives). On the hand, data for Ethiopian part was
collected (by one of the authors, Keskin) from the published sources due to lack of time for
conducting such a comprehensive study.

Reasons for the Initiation of the Magnet Program

Since the French embargo of the 1960s, Israel has started a massive governmental program to
support domestic industry and to reduce dependency on foreign technology acquisition. Israel
stands alone among Ireland, Portugal, Greece, Singapore and Taiwan in basing both its civilian
and military R&D on indigenously owned companies. The government devotes 3.6 % of the
GDP to R&D, which ranks it at the top of the world (CBS Israel 2002). The government’s
strategy rests on two pillars: (i) decentralization to promote initiative, (ii) coordination to promote
efficiency (EU MNC Report 1997). This has been accomplished through (i) the introduction of
the Law Encouraging Capital Investment; (ii) establishment of science parks; (iii) provision of
research grants (Tilles 1987, Frenkel et al. 2000).

However, in the 1990s it was observed that Israeli industry was too fragmented and the
companies were too small to handle the rising costs of R&D and global competition (Trajtenberg
2000). Moreover, the capacity of the Israeli universities and researchers for generating economic
wealth was not fully utilized. Consequently, the Israeli government introduced a comprehensive
“matchmaking, investment and consultative” support system. The programs’ aims were to (i)
bring companies together; (ii) provide direct or indirect financial support for the development

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and marketing of innovations; (iii) provide free management; and (iv) give legal and financial
advice to industries.

For this objective, the Office of the Chief Scientist (OCS) initiated the Magnet Program in 1992
to support the formation of an innovation network and reservoir of industry and academia, in
order to remedy failures in these areas, and to tackle the global challenges. (Berry 1998). The
main rationale of Magnet is the pooling of national physical, financial and intellectual resources.
The survey confirms the main rationale of Magnet as the realization of a “critical mass of six and
half million” for building new technologies and competitiveness, by aiming to improve
interaction through joint programs between knowledge, financial, industrial and professional
centers rather than aiming to immediate financial gains (Berry 1998).

According to Table 1, remarkably 85% of the respondents considered the achievement of the
better interaction between science and industry as the most crucial factor behind the initiation of
the Magnet Program by the Israeli government. Similarly, pooling of national resources was
regarded by 82% of the participants as another crucial rationale of the initiation of the Magnet.
Even though better utilization of academic potential came as fourth crucial factor, after the
increasing of high-tech export capability, it had lesser variation among the respondents. The
relatively higher deviation in the responses given for the assessment of high-tech export
capability is because of the straightforward participation of non-high-tech firms as much as the
high-tech firms in the Magnet program.

The industrial reasons to participate in the Magnet program overlaps with the rationale of
government for the Magnet. As shown in Table 2, the main reason of industry is to access to the
knowledge pools rather than cost reduction, immediate financial gains or market control. This
provides industry with access to the academic knowledge and research pools while providing
knowledge sharing and interactive learning between the each institutional setting. The pooling of
national resources accelerated the process of technological development, turning innovation into
products more rapidly, shortening the time to market cycle of new generation products.

Even though the responses on the reasons for the participation of academicians have greater
variance, industry committed research is stated by the 67% of participants as the most crucial
factor with a lesser deviation than the other parameters. For instance, the higher variance for the
matter employment opportunities for graduates is explained while some of the academicians
especially from Be’er-Sheba University seek for this point; academicians from Technion consider
it less important but emphasize the importance of applied research.

Strengthening the responses for the rationale behind the formation of the Magnet program, the
Table 3, specifically points out that the respondents ascertain the level of interaction between
academics and industrialists is outstandingly successful. Additionally, most of the respondents
consider the triple interaction and government-academy relations as successful at average level.

Relations between Academy-Industry-Government

An important feature for the successful coordination and relation within the consortia of the
Magnet Program is the fact that Israel is a small, compact country with a relatively small
population where stable and trustful personal linkages play great roles. Specifically, the close-knit
nature of the scientific community is stated to facilitate good liaison and co-ordination in the
society (EU MNC Report 1997). On the other hand, the interaction between the customers,
which is the fourth component of the network systems, is stated to be less successful compared
to the multilateral and bilateral relations among the other actors of the system. In fact, Magnet is

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designed as a pre-competitive R&D support program, in which the application of generic

technology into marketable goods depends on the participants themselves. Therefore, the
information centers of the each consortium are advised to inform the participants about the
market trends and needs more comprehensively than the current application. Consequently, the
results would be applied more relevant to the market needs and less risky than current
mechanism. This feature should be considered as an important actor for innovation systems or
fourth aspect of the triple helix mode of innovation networks (see Table 4).

Apparently, the domestic and international contexts have forced Israel as a state and society to
rely on its own resources in a networking system. However, the motivations and appreciation of
these partners for the networking are not sufficient reasons for the networks function properly
and yield the desired economic impacts. Innovation networks require a systematic management
approach that incorporates the institutional setting culture and mode of different participants
based on the aforementioned notions of networking theories.

The Organizational Framework of the Magnet Program: Office of Chief Scientists &
Balance of Powers

The Israeli Government (MOIT) has initiated the Magnet framework; it seemed to have a top-
down structure with a new legislation and institutions. Israel derives great strength and
technological excellence from its human capital along with the academic and technological
infrastructure it has developed. The Office of the Chief Scientist (OCS) within the Ministry of
Industry, Trade and Labor is responsible for executing the government policy relating to
industrial R&D support. The OCS is part of the Ministry of Industry and Trade, operating since
1973. The OCS is responsible for implementing government policy regarding support and
encouragement of industrial research and development. Law for the Encouragement of Industrial
Research and Development - 1984 constitutes the general mandate of the OCS.

The OCS tasks include:

• Expansion of industries technological and scientific infrastructure,

• The development of science intensive industry,
• Employment placement for scientific and technological manpower,
• Improvement of the competitiveness of the Israeli industry,
• Increase national industrial production and balance of trade.

The OCS objectives are to support industrial R&D, encourage entrepreneurs in high-tech start-
up companies, leverage Israel’s highly capable scientific and technological labor force, facilitate
the academic industrial interface for the transfer scientific know-how and technology and in
general to stimulate cooperation in state of the art R&D at national and international levels.

The OCS also offers a range of additional support programs within the framework of directives
from the Director-General of the Ministry of Industry, Trade and Labor. The revised law allows,
but does not encourage, the transfer of both know-how and manufacturing rights abroad under
clearly defined costs and conditions.56

56 The Chief Scientist's Office employs three mechanisms to support R&D efforts: MOP fund, Magnet/Nofar and high-tech
incubators. The total amount of funding available for all types of R&D ranges between NIS 900 million and NIS 1.2 billion
annually.

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On the other hand, as the initial demand has emerged from the industry which is looking for
academic knowledge and financial support to undertake longer-term and larger projects the
bottom-up demand coming from the industry is taken into account for the policy setting of the
Magnet program. Indeed according to the results of the field survey, the Magnet framework is
considered successful in ascertaining the existence of these societal features among the consortia
members and harmonious relations (Table 5).

In addition to incorporation of these societal elements, the new institutional framework of

Magnet is based on the systematic management of a committee, which is composed of several
participants from governmental agencies, high-tech industry and academia.57 The Chief Scientist
of the Ministry chairs the Committee. The Committee allocates the Magnet budget among
different consortia it also appoints representatives to board of consortium, users associations,
and steering committees. The board of each consortium is composed of one representative from
academia and two representatives from industrial participant (Magnet Report 1998). Specifically,
according to Table 6, most of the surveyed participants considered the application and use of
information communication technologies (ICT), funding and research stability, efficient management of the board of
the consortium, and consensus over intellectual property rights as successful building blocks of the Magnet
structure. The incorporation of these factors into network has been stated to be crucial for the
functioning of networks and achieving higher performance in innovation (Skyrme 1994 and
Amidon 1996).

The OCS allocates the R&D funds following three main schemes: (i) adjustment of support rate
or the eligibility criteria to meet the budget constraint; (ii) randomization; (iii) implementation of a
competitive ranking system. The last option is typical of the Magnet Program. Projects need to be
ranked, and the funds will be allocated from top to down until the Magnet budget is fully
exhausted (Trajtenberg 2000). It allocates a budget of $60 to 70 million per year on a competitive
basis to the winning consortium. Magnet finances two thirds of the R&D budget of the consortia
with direct grants for which there are no payback obligations. The criteria for this competitive
mode of selection depends first on the quality of generic, pre-competitive research with a broad
spectrum of common technologies, components, materials, design and manufacturing methods
and processes, standards and protocols that have wide-ranging applications in numerous
industries. Second, project proposals are evaluated based on increasing export and employment
opportunities and enhancing the quality and intensity of academy-industry relations. Finally, the
technology referred to here cannot be acquired from abroad on reasonable commercial
conditions; it cannot have been developed previously and it must not be in use in Israel currently
(Magnet Report 1998).

According to the evaluation report of a private consulting firm58, the optimum number of firms
in each consortium should be around five or six and must not exceed seven firms along with
research institutes, universities and hospitals participating in the Magnet consortia. (Trajtenberg
2000). Firms having sufficient financial and human resources, and which are ready to devote
substantial amounts of time and resources are preferred. On the other hand, neither the start-ups,
which not only have insufficient financial and human resources, but which are also in the process
of establishment, nor the big companies which are not committing enough time and attention or
which may become the monopolistic power in the consortium are preferable for innovation
networks.

57 It is composed of the Deputy Chief Scientist of the Ministry, Representatives of the Budget Division, Ministry of Finance, and
Ministry of Defense, two representatives from both the high-tech industry and academic research organizations and the Program
Manager of the Office of the Chief Scientist.
58 ENOSH Consulting Firm Evaluation Report in 2001 originally in Hebrew translated to English by the author and a Native
Hebrew Speaker.

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The management of intellectual property rights (IPR) developed within the framework of the
Magnet assigns IPRs for a given technology to the party that develops it; but all of the partners
must share the results equally. The sale or transfer of IPR to foreign parties is subject to the
approval of a committee, since the domestic dissemination is seen as crucial and it is observed
carefully. A five-year limit is suggested for the operation of consortia. These features eliminate
the risk of monopoly and anti-competitive behavior.

Magnet operates through two channels. The Technology R&D Channel is the team of researchers,
scientists and industrialists, who work cooperatively for the generation of new knowledge and
technologies for further development into new products. The Distribution and Implementation
Channel aims to enable “User’s Associations”, which are composed of members of the same
industrial sector, and which work to provide access to the latest scientific and technological
developments from abroad by implementing and integrating them into their members’ activities.
This information exchange is accomplished through the financing of lectures, seminars and professional
get togethers, which take place under the aegis of Magnet Users’ Associations (Magnet Report,
1998). Additionally, information centers provide consortia members with the latest scientific and
technological developments. The coordinators are responsible for the management of these
centers and the coordination of the relations between different participants. These methods
decrease scientists’ isolation and facilitate sharing of resources, tasks, and information (Davis and
Carden 1999).

The domestic and international circumstances have brought about much more personnel
contacts and linkages in the Israeli society than most of the other countries have. The stabile and
reliable relations between Israeli policy makers, academics and industrialists bring about the
formation of successful R&D networks among these three specific actors. Thus, it amplifies
dissemination of the results of these networks into the society and economy more efficient than
the conventional R&D supports such as grants, tax subsides. There is a considerable mutual
benefit and synergy between the industrialists, researchers and scientists, which would have been
otherwise lost. The next section assesses the impacts of Magnet type networking on the Israeli
economic performance.

Results of Networking and Magnet Structure

This section elaborates on the supportive relationship among the impacts of innovation
networks, Magnet’s budget, and growth rates, increases in high-tech exports and patenting
activities. The discussion seeks to clarify how innovation networks contribute more than the
conventional methods to the industrial and economic growth. Indeed, according to the analysis
of R&D expenditures and growth rates of different sectors given in Table 7, the R&D
expenditure in business and higher education sectors display rather stable growth rates due to the
positive influence of the OCS R&D grants (Mani 2000, Trajtenberg 2000). Furthermore, the
networking of business and higher education sectors in the contexts such as Magnet is believed
to provide more stable and rapidly increasing growth rates for Israel.

The total budget of the OCS increased steeply from 1988 to 1995, then increased slightly, and has
changed little since then. According to Table 8, with the exception of Magnet, the budget of each
OCS program has been increasing at declining rates, or even displaying budget shrinkages.
Magnet shows a constant rise without any reduction in its budget. The stable increase in the
allocation for Magnet’s budget and even the doubling of its budget in the 1995-1996 period
strengthens the case for innovation networks as the structures for optimum use of resources and
thus increasing trust in the Magnet type of R&D funding.

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The high-tech sector is considered as to be one of the indicators revealing the relation between
the R&D expenditures and R&D outputs. In view of the fact that many of the research grants are
given to the high-tech companies, it is not unreasonable to assume that an increase in the OCS
support programs corresponds to increased high-tech exports for Israel. Then the steady increase
in Magnet’s budget (Table 8) may possibly correlate with increases in high-tech exports. Such a
correlation is shown in Table 9.

However, even if the research grants have gone to high-tech exporters, the sector is diverse and
thus the support budget is divided into small firm shares. The disposal of grants for the same
product via different firms could very well prevent the achievement of better R&D and
innovation results. Therefore, instead of a multitude of small research grants, Magnet type
allocation schemes should be preferable, especially for catch-up countries, in terms of better
allocation and optimum utilization of national resources.

As shown in Table 10, the number of patents (in the USPTO) barely increased during the 1987-
1991 period. However, the rate of increase was impressive during the 1991-1997 (Trajtenberg
1999). This performance in the latter period can be attributed to the increasing budget allocation
to the Magnet program, with which it coincided.

According to a recent evaluation report of Magnet, there have been 12 consortia controlling a
budget of $60 to $75 million. In each consortium, at least 250 researchers work jointly in a
suitable environment. At least 63 scientific articles were published, more than 30 patent
applications were made, and more than 88 different products were introduced because of the
interaction between industry and academy. The establishment of several new companies was
reported, but the exact number was not available during the survey. Due to the limited data
acquisitions on patents and exports, the statistical analysis of the study cannot reveal much about
the specified impacts of Magnet on the Israeli economy. However, the survey provides a
presentation of the accomplishments of Magnet regarding the better optimization of R&D inputs
and achievement of improved R&D outcomes as related to the participants’ individual
achievements shown. The results are shown in Table 11.

The participants’ assessments of their achievements are quite revealing. Even though they do not
indicate that most participants have experienced a net change towards exporting, or patenting,
they do indicate that most participants have become more cooperative; more science oriented
and more able to carry on the long-term process of research. Consequently, significantly fewer
cultural differences between academy and industry can be expected in future programs. Such
achievements confirm the success of the Magnet program and networking as a critical
contribution to the Israeli research system. The long-term prospects for innovation-based
competitiveness are now overweighing the immediate short-term expectations.

In the light of previous observations, it can be safely assumed that the OCS support programs
and the Magnet program in particular have produced more than the sum of what their individual
participants would have achieved otherwise. The OCS support programs have been very useful in
encouraging innovation. However, the Israeli industry is not big enough in size to compete
against the background of emerging world trends. The Magnet program effectively accomplishes
the unification of resources for multilateral commitment to an advantageous positioning in world
markets. It demonstrates that the unification of resources for the common goal of economic and
industrial growth is a reliable strategy for small countries such as Israel or countries with limited
R&D budget and personnel. Magnet has proved to be a unique Israeli approach to economic and
industrial development.

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The structure of Magnet has modified the traditional R&D and innovation generation into a less
hierarchical one, which operates across institutional boundaries. Magnet has a bridging
mechanism between knowledge and industrial capacities of Israel. The domestic and international
conditions closely linked with to the societal features of the Israeli society and the institutional
set-up of Magnet have important roles on the formation and functioning of successful networks
in Israel and thus achievement of synergy of participants without absorbing the energy of them.
Magnet has the characteristics of a Triple Helix innovation networking system; it confirms the
importance of networking for the successful innovation generation and management.
Significantly, the modus operandi of Magnet, which has been operating fruitfully since its inception,
has been already integrated into the Israeli society. Therefore, Magnet is an institutional
framework that not only regulates but also reflects the Israeli S&T and innovation system at the
micro level.

University- Government and Industry (UGI) Relations in Developing Countries

As a result of many historical experiences and due to their colonial past, which had still adverse
effects on the economic growth, today’s developing countries (especially those in Africa) had
followed a different path of economic and social development. Democratic capitalism in western
countries led better and more dynamic environment for interaction of economy, technology and
science (Koslowski 2000). Concerning the research administration there has been lack of
efficiency, order and connection to the environment. In the absence of well-defined economic
and social development programs, science, technology and innovation programs have
subsequently became vague and unresponsive to the needs of industrial and economic
development. Public institutions have no missions or plans, its functioning rules were formed in
the communist era. Despite some reforms these public bodies are still tend to repeat the same
routine behavior and far from forming a web of coordination within the whole system.

The secret and golden thing in the efficiency of the public administration in western countries is
the fact that both officials and politicians apply certain basic reasoning just like scientific
researchers or scientific process. Policy plan for innovation or innovativeness, -which is the main
concern of this paper, - includes phases of: preparation, identification of the problem,
implementation, monitoring and assessment. These phases are all actualized in the implicit or
explicit form of trilateral relations of UGI. Concerning the other organizations for innovation,
such as universities, technology agencies, research councils and research organizations there are
also diversity and lack of coordination within these organizations. There are no institutional
frameworks bridging the knowledge centers to the industrial level.

Implications for Ethiopia: What could be done in Ethiopia based on the Magnet
Experience?

The aim of this section is not to provide a profile of Ethiopia but to highlight the particular
factors which will have an affect on the networking and innovation systems of Ethiopia. We will
start with the political and economic context briefly and then discuss the possible implications.

Ethiopia is one of the largest countries in sub-Saharan Africa (SSA) and its population of over 70
million is rapidly growing. It is also one of the poorest countries in the world, with a GNI per
capita of about USD100. Ethiopia has a unique cultural and political history and with no history
of colonial rule. A key point to emphasize is that an imperial regime was succeeded by a socialist
totalitarian one which was overthrown in 1991 by a coalition of rural resistance movements, the
Ethiopian People’s Revolutionary Democratic Front (EPRDF). Moreover, Ethiopia fought a

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border war with Eritrea between 1998 and 2000. There is now a United Nations buffer force
between the two sides, but time to time there are still tensions.

The Ethiopian economy is highly dependent on agriculture; about 85% of the population gains
their livelihood directly or indirectly from agricultural production, including livestock. Looking at
the private sector, Ethiopia does not have a reputation for routine bureaucratic corruption, but
the existence of close links between the officials of the ruling party and firms owned by members
of the party does not foster a culture of accountability and transparency (EIU, 2006) Moreover,
According to World Bank project documents, Ethiopia’s private sector has a low number of
firms; small-sized firms; low labour productivity (50% lower than China, although local wages are
only 30% lower); and little propensity to export (most private firms produce for the local
market). Apart from the obvious problem of high transport costs, the World Bank identifies
several related constraints to private sector development, including:

• the dominant role of the state,

• an absence of fair competition,
• weak institutional support for business,
• low skill levels in the private sector, and
• a lack of external integration.

Despite some deregulation, the state runs all major utilities, dominates the financial sector and
accounts for the bulk of manufacturing value-added (72%). The local private sector suffers from
skills shortfalls and difficulties in accessing credit. Public- and private-sector institutions, such as
professional associations, chambers of commerce and standards agencies, also have limited
capacity (EIU, 2006).

Mytelka and Oyeyinka (2003) point to a number of systemic barriers in developing countries that
provide a rationale for interventions to build competences and promote greater systemic
cohesion. Firstly, there may be rigidities at the organisational level that resist change in the face of
new conditions and challenges. Secondly, existing knowledge networks may be underutilised with
links between critical actors sparse or inappropriate for various reasons. Thirdly, organisational
performance may be path dependent, with the accumulation of inefficiencies arising from
membership of an obsolete self-reinforcing network. Fourthly, the organisational ineffectiveness
referred to above manifests itself as system inefficiency. In the absence of strong market
coordination this leads to a situation in developing countries in which policy coordination is
largely politically driven. Table 4 shows a simple model of the poor coordination between actors
in the system of innovation and the policy coordinating functions in Ethiopia. Finally,
“Institutional Gaps”, systemic weaknesses that characterise innovation systems in developing
countries are partly related to fundamental weaknesses of political-policy institutions and
processes. There are institutional inadequacies that manifest themselves as lack of rules of the
game, poor enforcement of contractual laws, and inadequate intellectual property laws, which
may constitute disincentives to innovation and technological learning.

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Table 12: Coordination and Linkages between Selected Technology Support

Institutions and Regional States in Ethiopia.

Technology Support Institution Nature of, and Coordination Linkage with enterprises and
Mechanism with Region other centres
1. Micro and Small Enterprises No links with regional states for now Ad-hoc
Development Agency (MSEDA) but expected to train and assist in
technical services for similar regional
bodies
2. Ethiopian Authority for No regional bureau on standards No systematic mechanism for
Standardization (EAS) quality control assurance and service delivery; presently seeking
certification. Propose to train capacity for greater effectiveness
personnel from regions in the future
3. National Computer and Information No regional centre on computer and Industry has little capability in
Centre (NCIC) information information technology limited
linkage with enterprises
4. Research Development and No counterpart in regions and Ad-hoc interaction, based on
Technology Adaptation Centre (RDTAC) impact limited to Addis Ababa and demand from users, underutilized
environs machinery capacity high turnover
of staff
5. Leather and Leather Products Training No regional counterpart but will start N.A
and Development Institute training in early 1999

Source: Mission visit, Oyelaran-Oyeyinka, 1998

Looking back in the history to see what has been done in terms of university industry relations
we come across two examples.59 First, a number of meetings were held at the highest levels to
establish a university-ministry cooperation program in mid 1980’s. It culminated in the formation
of the Addis Ababa University-Ministry of Industry Cooperation Programme (UICP) in February
1986 through a formal agreement between the Addis Ababa University (AAU) and the Ministry
of Industry (MoI). The overall objective of UICP was to bring together Addis Ababa University
and the Ministry of Industry so that they can accomplish their respective goals to achieve
different aims. On the part of industry, these aims included solving technical and managerial
problems; injecting new processes, technologies, etc; maintaining and improving productivity and
efficiency; and facilitating further training of existing staff, etc. On the other hand, the aims of
the university included practical training of students; making R&D relevant while maintaining
independence of staff; augmenting its R&D resources with those from UICP; and obtaining
feedback on the direction of R&D, curricula, teaching approaches and consultancy services, etc.

Further, to establish a sustainable University-Industry Linkage; the Faculty of Technology, Addis

Ababa University, started a Technology Faculty–Industry Linkage Unit (TFILU) on its premises.
“The main objective of this unit is to pave the way for the establishment of sustainable
University-Industry Linkage. It had the responsibility of conducting need and capability
assessment of the Technology Faculty and the industrial sector at large so as to form a strong
foundation for a reliable linkage. The Unit examined the activities carried out by the Addis Ababa
University-Ministry of Industry (AAU-MOI) co-operation program to learn from the success and
shortcomings of their experiences.”60 Moreover, TFILU run its activities in collaboration with the
National Advisory Body (NAB) of the Unit and the Addis Ababa University Research and
Publication Office. NAB is composed of members from the Ministry of Industry, the Ethiopian

59 The information is taken from the webpage Ethiopian News Agency. It is prepared by Dagim Mersha’s interview with Dr.-Eng.
Daniel Kitaw, Associate Professor of Mechanical Engineering Department at Addis Ababa University.
http://www.ena.gov.et/Articles/Benefits%20of%20higher%20institutions-industry%20linkages.asp.
60 Again, the quotations belong to the same interview on he Ethiopian Manufacturing Industries Association (EMIA) on January
11, 2006 in Ethiopia.

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Science and Technology Commission (ESTC), the Public Enterprises Supervising Authority, the
Chamber of Commerce, private companies and the Faculty of Technology.

The activities to be carried out by the Unit towards meeting its objectives include: study on
survey on skill needs and capabilities of Technology Faculty and the Industrial Sector; lay the
foundation for (IT) technology information dissemination; prepare and conduct summer courses
for industrial personnel; organize seminars and workshops on recent industrial issues; organize
educational visits and vacation jobs for students; and conduct research activities on already
identified problems of industry and promote and co-ordinate research activities in the Faculty.
The Unit began its operation in July 2000, soon after the grant had been obtained from ESTC.
Some of the main functions of TFILU include Training, Research and Consultancy, Industry-Job
core whose primary objective is to introduce students into the workplace early on their academic
studies, Workshops and Seminars, and Information Technology. The proposal has the main
objective of establishing a “Higher Education-Industry Resource Integration Centre” (HEIRIC).

The activities to be carried out by the Centre include but are not limited to: assess the needs and
capabilities of the Higher Education Institutions and the industry at large; establish a sustainable
University-Industry linkage; assess research priority areas of industries and co-ordinate research
activities in the University; organize thematic seminars and workshops annually; prepare summer
courses tailored to the needs of the industrial personnel; promote appropriate Technology
Transfer; and promote university/industry cooperative research projects. According to Dr.-Eng.
Daniel Kitaw, such activities and interactions are expected to benefit to both industry and
university by enabling them to establish multidisciplinary programs that are responsive to
industrial needs, carry out specific company-sponsored projects, strengthen team-based, cross-
disciplinary, problem solving industry-university exchanges by placing faculty and students at
industry sites and industry scientists-engineers at the university, and provide a real world and a
high-caliber educational experience for graduate and undergraduate students.

In conclusion, Dr.-Eng. Kitaw recommended three things based on the experience of other
countries, AAU-MoI cooperation program, TFILU, and the felt need that exists in the industries.
In his view first a nation wide Higher Education-Industry Resource Integration Centre should be
established at first. Secondly, all higher education Institutions should start linkage units in their
premises at their earliest convenience. And those who have already started should properly
appreciate the efforts made and strengthen the initiatives. Thirdly, Ministry of Capacity Building,
Ministry of Education, Ministry of Industry and Trade, the Ethiopian Science and Technology
Agency, Public and Private Higher Education Institutions and the business community should
make a coordinated effort to establish and strengthen Higher-Education-Industry Resource
Integration Center.

Lessons Learned in Magnet Program: Readiness for International Collaboration

In this section, some of the indicators and guidelines for a successful cooperation analogous to
the Triple Helix based UGI relations are identified. These indicators are gathered from a
comparative perspective on the general indicators derived from innovation programs in
developed countries the current University-Government and Industry (UGI) relations in
countries in transition.

i. Governmental Indicator: “An active participant government”

As international cooperation starts at the governmental or institutional levels, a developed

country (S&T body) seeks out the facilitator bodies that operate on similar basis. Successful

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country cases and Israel reveal the existence of administrations by which science base and
productive base are integrated. They have absolutely identified ST&I bodies that are dedicated to
the management of UGI relations. Thus after having an administrative reform and restructuring
the S&T bodies Ethiopia will become a more eligible partner for cooperation.

ii. Academic Indicator: “Entrepreneurial university”

The existence of a history of highly qualified academic culture and more strikingly the
entrepreneurial academy of 21st Century, with the mission of economic development is the
general indicators that initiate a propitious cooperation at the domestic and international levels.
On the other hand, it would be imaginary to expect an attainable relation between a university
with a number of independent interdisciplinary centers, and programs where the staff following
the latest developments, and a university where faculty assumes basic research and education on
traditional areas as its exclusive mission and can not follow the recent scientific developments. As
a second point, Ethiopia needs to reform its higher education system not only to have more
industry-oriented universities but also to have internationally attractive higher education
institutions.

iii. Industrial Indicator: “Science-based industry”

A significant number of technology-based industries that have the ability to integrate internal
R&D, production and commercialization process with external partners are the preferable
business types of knowledge-based economy. Therefore in order to be an eligible partner in
international programs, Ethiopia urgently needs to initiate a framework that encourages its
industry to generate technological innovation via networking and partnership.

iv. Work Force: “Skilled human resources”

Well-educated human resources capable of developing and implementing innovation are critical
national assets that attract other nations for cooperation. Ethiopia on the other hand has an
advantage of young population compared with European countries’ ageing population and
declining birth rates.

v. Stability of Program: “Research missions & plans”

Rather than the amount of R&D expenditure, the financial and political stability of the program
are more positive indicators to initiate a successful cooperation. Additionally, if can not expand
its GERD, Ethiopia needs to convince the international participants about the stability and
commitment to the measure. Innovation policy must be immune from the short-term political
and interest considerations. It must be embedded into the national system and culture.

vi. Well-defined Market: “Rich consumers”

All of these programs are aimed at producing goods that have the potential for
commercialization; even they may have existing markets. The forecasts of future consumer trends
and needs decrease the risks of marketing. Moreover, existence of sufficient market-pull with
increasing demands for the application of technology in the products is also important incentives
for collaboration. Compared with other countries, the low-income rates and life standards in
Ethiopia make it necessary to increase average income level, as indicated in the previous sections.

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vii. Trust-Building in Networks: “Social network”

As the literature survey and the case studies elucidate the mechanisms of innovation networks,
more specifically Triple Helix system works on an evolutionary selection mechanism that is
enacted by its members. In the system there is no central control dictating them what to do or
not to do. Since the participants are linked through the elements of trust, cooperation and close
interaction, they prefer to select those with whom they can achieve these elements and have
mutual benefit. Thus assuredly, while they have inclination to select the ones who has the
qualification of a beneficial partnership they have disinclination to cooperate with the ones who
does not carry the characteristics that are defined as indicators for collaboration.

Network is the forum for collective learning, communication, and synergy creation. The analysis
on the cases bears out that the main success of networks is based on the achievement of energy
of critical mass61, establishment of trust among the members. Involvement of end-users, customers
and potential networkers enable the system to have the understanding of their customers’ needs
(SPRU, SAPPHO Study, in WAMP, 2001). Pertaining to conditions of catch up countries the
trust and reliance between neither within the industrialists nor between industry and university
even to state sector is difficult to achieve. Thus the governments are obliged to assure trust
among the partners and their commitment to the system; they must pledge to continue the
system despite of the political instabilities.

Generally, networks are the virtual, symbolic places of cooperation embody the image of a big
company. In as much as the management of a big company is hard the administration of
networks is arduous and requiring concessions, trust endurance and determination. Thus, the
catch-up country should persuade the potential partners based on Lutz’s62 assertion for consortia
as none of the partner is calculating individual gains, but this is a matter of belief and devotion
for the national competitiveness and development. It is not a win-or-lose individual competition,
but achievement of exceptional R&D results. The impacts of networks are greater than the sum
of its parts, because they are benefiting from the synergy of the system.

Historically, while capitalists-liberal economies used to cooperate between themselves,

communists-socialist states used to form their networks on the other hand. Currently, however
studies reveal that cross-cutting arrangements like the Triple Helix are becoming the mode of
cooperation. Thus it is not illogical to assume the foundation of cooperation between countries
now have the characteristics of Triple Helix in their innovation or more generally in their
production system. International networking can be successfully achieved among states whose
R&D programs are designed on similar base and whose potential partners not only seek the
opportunities to gain, but also contribute to the system.

The aim of international cooperation is to co-development of technology rather than

establishment of multinational companies or transfer of technology from one company to
another. Analogous to national level, international cooperation aims the pooling of multinational
resources either industrial, academic or human resources. The aim is also similar endogenization
of knowledge production into the system and reduction of technology transfer costs and
applicability risks of new technology products. On the other hand, not only developing countries
are in need of cooperation, but also developed world needs cooperation since even if they can
generate innovation endlessly, they will not be able to find innovation demanding young and rich
consumers to sell their products. As a case to the point while Finland is considered the center of

61 The amount of substance that is needed for a nuclear chain reaction to take place.
62 Chief of Chrysler and partner of Chrysler-Ford-General Motors consortium.

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ICTs and cell-phones, the consumers of cell-phone are mainly from developing countries with
their larger population.

Concluding Remarks

Especially since the 1990s, innovation has become a social process that depends on external,
competitive centers of knowledge and funding, requiring the commitment of each participant
free of individual loss-win considerations. The motivation is the endogenization of knowledge
generation into tripartite network of university, industry and government. However, sole
motivations of the partners are not sufficient conditions for the formation and functioning of
innovation networks. They need a systematic management approach that integrates the industrial
strategy, knowledge resources, organizational cultures and sociological patterns of nations. In this
context the Triple Helix model becomes more than a policy-tool; it is accepted and validated as a
general vision of innovation network generation and governance. It aims to synchronize the
chaotic behaviors of economic actors into an innovation system. Although networks may enter
crises, lack superior technologies, and absorb energy instead of generating it, the dynamic
structure of the Triple Helix model is complex enough to harmonize their chaotic behaviors and
achieve the synergy of participants.

This short review has put forward the idea that replacing the traditional understanding of science
and technology generation with the Triple Helix model can be used to eliminate the dichotomies
at both national and international levels. One such dichotomy is the one drawn between the
producers of knowledge: “academia and developed countries”- and users of knowledge: “industry and developing
countries”. International harmonization of the culture of innovation generation and management
can enhance international and regional stability, welfare and development. Israel and its Magnet
program illustrate how synergy of the participants contributes more than the sum of the
individual partners. All in all, it is now more important than ever for Ethiopia to make concerted
efforts towards moving ahead in this direction. In so doing, it will also be positioned to take an
active part in the global scene. Therefore, it is imperative that people in Ethiopia are willing to
cooperate, to take part and to trust one another and other parties so that the essential elements of
trust, cooperation, openness and self-organization are satisfied. At the end, it will be for Ethiopia’s benefit
to make it able to accomplish much more than where this is lacking.

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B747101C5202/0/TheIntellectualCapital3550.pdf
http://www.consortia.org.il/
http://www.technion.ac.il/~liaison/israeli-programs/index.html

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Appendix:

Tables and Figures

Table 1: The Reasons for the Initiation of the Magnet Program by the Israeli
Government

Factors Very Important Slightly / not Mean Std.

important important
Better interaction between S&I 85% 12,5% 2,5% 4,17 0,957
Better utilization of academic potential 62,5% 30% 7,5% 3,65 0,975
Demands of industry 35% 40% 25% 3,15 1,050
Increasing high-tech export capability 82,5% 7,5% 10% 3,92 1,020
Pooling of National resources 82,5% 15% 2,5% 4,1 0,955
Reduction of relying on foreign
technology 45% 30% 25% 3,32 1,340
Source: Results of questionnaire among Magnet participants (2002)

Table 2: Industrial Reason for Participation in the Magnet Program

Factors Crucial Important Slightly/ Mean Std.

not important
Access to knowledge centers 82,5% 10% 7,5% 4,07 0,859
Competence gap 80% 12,5% 7,5% 3,92 0,888
Market Control gap 37,5% 37,5% 25% 3,07 0,971
Cost reduction 50% 37,5% 12,5% 3,62 1,078
Information gap 52,5% 42,5% 5% 3,67 0,859
profit maximization 50% 35% 15% 3,35 1,166
Risk reduction 67,5% 27,5% 5% 3,65 1,051
Source: Results of questionnaire among Magnet participants (2002)

Table 3: Academicians Reasons for the Participation in Magnet

Factors Crucial Important Slightly / not Mean Std.

important
Financial Constraints 60% 30% 10% 3,65 1,160
Industry committed research 67,5% 27,5% 5% 3,75 1,000
Employment opportunities for graduates 45% 20% 35% 3 1,330

Source: Results of questionnaire among Magnet participants (2002)

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Table 4: Relation between Academy-Industry & Government

Relationship Outstandingly Successful Slightly /

between participants Successful not Successful
Interaction between government & industry 50% 42,5% 7,5%
Interaction between government & academy 27,5% 50% 17,5%
Interaction between industry & academy 67,5% 30% 2,5%
Triple interaction between industry academy
32,5% 55% 12,5%
& government
Interaction between customers & consortium 22,5% 22,5% 55%
Source: Results of questionnaire among Magnet participants (2002)

Table 5: Societal Features

Factors Very Successful Slightly /not Mean Std.

Successful successful Dev.
Commitment & devotion of
62,5% 35% 2,5% 3,62 0,9251
partners
Confidence Security & trust 65% 30% 5% 3,72 0,7506
Convergence for longer-term
40% 50% 10% 3,65 0,7355
cooperation
Equity & balance between the
37,5% 50% 12,5% 3,3 0,8533
partners
Similar objectives of partners-
60% 37,5% 2,5% 3,62 0,6279
collective belief
Source: Results of survey among Magnet participants (2002)

Table 6: Features of the Magnet Framework

Factors Very Successful Slightly / Mean Std.

Successful not
successful
Application and use of ICTs 70% 22,5% 7,5% 3,77 0,811
Bridging different group interests 57,5% 40% 2,5% 3,67 0,729
Consensus over IPR management 77.5% 22.5% 0% 3,97 0,6597
Efficient role of the Board of the consortium 90% 5% 5% 4,1 0,7089
Funding and research stability 67,5% 12.5% 10% 3,77 0,8619
Source: Results of survey among Magnet participants (2002)

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Table 7: Growth Rates in the Israeli Academy-Industry-Government & Non-Profit

Sectors

Year PNP Growth Gov. Growth H.edu Growth Ind. Growth Ind & Ind. &
Rate Rate Rate Rate H.edu H.edu. total
G. Rate
1988 164 ... 260 ... 636 ... 2266 ... 2902
1989 173 5,49 245 -5,77 678 6,6 2319 2,34 2997 8,94
1990 176 1,73 265 8,16 706 4,13 2536 9,36 3242 13,49
1991 180 2,27 292 10,19 748 5,95 2733 7,77 3481 13,72
1992 205 13,99 292 0 781 4,41 2921 6,88 3702 11,29
1993 200 -2,44 282 -3,42 812 3,97 3143 7,6 3955 11,57
1994 224 12,00 276 -2,13 842 3,96 3280 4,36 4122 8,32
1995 223 -0,45 301 9,06 863 2,49 3577 9,05 4440 11,54
1996 230 3,14 294 -2,33 903 4,63 3796 6,12 4699 10,75
1997 243 5,65 299 1,7 945 4,65 4046 6,59 4991 11,24
1998 252 3,70 299 0 992 4,97 4361 7,79 5353 12,76
1999 4,50 1,55 4,55 6,79 11,34
2000
Source: www.cbs.gov.il; (PNP: Private non-profit sectors, H.Edu: Higher Education,
Gov: Government, Ind.: Industry, G. Rate: Growth Rate)

Table 8: OCS R&D Funding 1988-2000

Year R&D Paybacks Paybacks/ Net Grant Magnet Incubators

grants Grants
1988 120 8 0,07 112 ... ...
1989 125 10 0,08 115 ... ...
1990 136 14 0,1 122 ... ...
1991 179 20 0,11 159 0,3 3,6
1992 199 25 0,13 174 3,7 16
1993 231 33 0,14 198 4,6 23
1994 316 42 0,13 274 10 28
1995 346 56 0,16 290 15 31
1996 348 79 0,23 269 36 30
1997 397 102 0,26 295 53 30
1998 400 117 0,29 283 61 30
1999 428 139 0,32 289 60 30
2000 395 128 0,32 267 70 30
Source: Trajtenberg p. 15. 2000 (in 2000 $ million)

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Table 9: Israeli High-Tech Export

Year High-tech Exports in $ % of High-tech share in exports Rate of growth

1988 831,382 9,93 ...
1989 998,353 10,69 20
1990 1,111,525 10,66 11
1991 1,170,933 11,26 5
1992 1,366,108 11,71 17
1993 1,609,098 11,99 18
1994 2,008,376 13,03 25
1995 2,719,332 16,03 35
1996 3,184,664 17,06 17
1997 3,844,893 18,56 21
1998 4,259,555 19,8 11
Source: Compiled from Mani, 2002

Table 10: Israeli Patents Registered in the USA

Year Raw Patents issued, by Rate of Patents Growth Industrial

Applications application year Success issued by Rate R&D
Grant Year
1987 503 295 0.59 244 27.7 550.3
1988 490 281 0.57 238 -4.7 423.2
1989 624 318 0.51 324 25.5 396.6
1990 608 325 0.53 298 2.2 468.6
1991 633 312 0.49 304 -4 510.7
1992 780 355 0.46 335 13.8 559.3
1993 803 421 0.52 314 18.6 574.7
1994 1,040 576 0.55 349 36.8 631.3
1995 1,072 613 0.57 384 6.4 614.4
1996 1,042 609 0.58 484 -0.7 668.6
1997 1,185 664 0.56 529 9
1998 741
total 12,962 7,013 0.54 6,432 5397.7
Source: Trajtenberg, 1999

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Table 11: Accomplishment of Magnet Program

Success criteria Outstandingly Successful Slightly / not

Successful Successful
Access to Knowledge & Research Pools 77,5% 20% 2,5%
Access to State Funds 80% 15% 5%
Allocation of resources other than R&D 35% 55% 10%
Assisting knowledge sharing-learning 52,5% 42,5% 5%
Better R&D results 35% 62,5% 2,5%
Contribution to higher education 27,5% 65,5% 7,5%
Decrease in R&D equipment costs 32,5% 57,5% 10%
Decrease in R&D personnel costs 32,5% 57,5% 10%
Decrease in time-span for R&D 47,5% 47,5% 5%
Eliminating the duplication of R&D inputs 50% 35% 15%
Higher potential for firm creation 47,5% 47,5% 5%
Improvements in human capital 70% 17,5% 12,5%
Increase in product quality 42,5% 42,5% 15%
Increase in product variety 77,5% 15% 7,5%
Increase in R&D capacity & capability 42,5% 55,5% 2,5%
Increase in the number of patents & scientific papers 29,5% 67,5% 2,5%
Reduction of Risks & Costs of innovation process 67,5% 30% 2,5%
Speed-up commercialization of Knowledge & 57,5% 35% 7,5%
technology transfer
Source: Results of survey among Magnet participants (2002)

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EXAMPLES OF MAGNET-ICT CONSORTIA

• ISIS – Information Superhighway in Space Information Superhighway in Space

• LSRT – Large Scale Rural Telephony Large Scale Rural Telephony
• STRIMM – Streaming Rich Media Messaging Streaming Rich Media Messaging
• OPTIPAC – The Optical Packaging Consortium The Optical Packaging Consortium
• KITE – Knowledge Inferring Technology Knowledge Inferring Technology
• RIMON – 4G 4G
• ISRC – Israeli Short Range Communication Israeli Short Range Communication

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4.2.5. A mission impossible? A tri-partite cooperation in an international context

(Summary)

A mission impossible?
A tri-partite cooperation in an international context
(Summary)

Ethel Brundin, Caroline Wigren

Jonkoping International Business School, Jönköping, Sweden

Kobus Visser, Eslyn Isaacs, Chris Friedrich, Goosain Solomon

University of the Western Cape, Cape Town, South Africa

Editors’ note:

The paper which is the subject of the following summary is published in the Journal of
Developmental Entrepreneurship of 3rd January 2008 under the title “TRIPLE HELIX NETWORKS
IN A MULTICULTURAL CONTEXT: TRIGGERS AND BARRIERS FOR FOSTERING
GROWTH AND SUSTAINABILITY”

The presentation was delivered at the Ethiopia Triple Helix Conference by Professor Chris
Friedrich.

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Introduction and Background to the Research Challenge

This paper explores the interaction between three entities--university, industry and government in
the context of entrepreneurship development with regard to a developing country. Etzkowitz and
Leydesdorff (2000) coined the phrase “Triple Helix” to refer to this dynamic relationship. The
purpose of this paper is to adapt the existing Triple Helix model to the South African context,
and secondly to identify facilities and impediments for working according to the Triple Helix in
South Africa, in the context of a developing country where the model does not receive the same
degree of attention as in the West.

The South African government has formulated a national policy framework (White Paper, 1995)
to guide existing and potential role players about the development and promotion of small
business. The national policy framework has six objectives, including the creation of an enabling
environment for small enterprises. It emphasises a differentiated support system, indirectly calling
for the Triple Helix, and designates target groups such as women and previously economically
disadvantaged groups.

Since 1994, no significant improvement has taken place in the SME sector. According to the
2004 Global Entrepreneurship Monitor Report (Orford et al., 2004: 25), deficient entrepreneurial
capacity is a consequence of weaknesses in the educational system, as well as the lack of
government support and the difficulty of accessing financial resources. The Triple Helix is
presented as a nexus in the discourse of entrepreneurial development. The paper provides a
theoretical overview of the Triple Helix model. It then presents the South African case with three
case studies, followed by an examination of the theory based on the empirical evidence, and
concludes with implications to facilitate entrepreneurship according to the Triple Helix in South
Africa, together with a future research agenda.

Triple Helix: A Theoretical Overview

The Triple Helix model with academia, government and industry each identified in the model as
helices, is proposed by Etzkowitz and Leydesdorff (2000) as essential for national and
multinational innovation strategies, and will be useful for overcoming communication barriers
between the three helices. The paper discusses three different Triple Helix models according to
Etzkowitz and Leydesdorff (2000), and suggests that the third model is the one to strive for. In
this model, academia, government and industry have overlapping institutional spheres with
hybrid organisations spinning off from them. With each helix interacting with the other(s) rather
than controlling it/them and thus each helix taking the role of the other(s), knowledge is mutually
constructed.

Academia

Trilateral networks and

State Hybrid organizations
Industry

Fig. 1. The Triple Helix model of university-industry-government relations

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Innovations are non-linear, and common learning takes place in networks between different
actors (Tödtling, 1998). The paper suggests that the Triple Helix is a prerequisite for managing
the innovation process nationally or regionally, since it is an interactive process. It is further
suggested that the Triple Helix be understood at a regional level, which is the focus of this paper,
and thus should contribute to understanding the value of tripartite cooperation on a regional level
in a developing country. The model has been applied in other developing countries, for instance
in Brazil (Etzkowitz et al., 2005), where academics formed businesses, industry partnered in
training, and government contributed to research and development. Another example is Croatia,
where the model has not developed totally, and exists as two helices, government and university
(Laznjak and Svarc, 2004). In South Africa, the model is applied in small business development, a
very important sector for the country (Orford et al., 2004) and in one region only, the Western
Cape.

Institutional theory

Organisations are embedded in institutional environments (Di Maggio and Powell, 1983; Tolbert,
1985; Greenwood and Hinings, 1996; Teo et al., 2003) to keep legitimacy and be seen as
trustworthy by their audience. Legitimacy will make it easier to acquire resources, but institutions
must be subjected to the pressures of technical and institutional control (Scott and Meyer in
Powell and Di Maggio, 1991). Organisations adapting to these pressures follow a three-step
process, thus becoming an institutionalised and “taken-for-granted entity” (Tolbert and Zucker,
1996).

Banks
Stronger Industry Hospitals
Technical controls
Public day-care University,
Weaker centres Government,
State
Weak Strong
Institutional controls

Fig. 2. Scott and Meyer’s matrix

The paper discusses the relative positioning of each institutionalised entity i.e. university,
government and industry, within Scott and Meyer’s 2 x 2 matrix, fig. 2, with respect to technical
controls and institutional controls. These writers argue that universities and governments are
subject to institutional isomorphism, while industry is subjected to competitive isomorphism
(DiMaggio and Powell, 1983, 1996). Institutional control can be exercised through coercive,
mimetic and/or normative pressures (Oliver, 1997; DiMaggio and Powell 1983).

Institutional legitimacy is important, and once achieved, it is revered, and resistance to change is
likely to exist. It is suggested that rigid embeddedness of an institution makes it hard for change
to occur; instability is created through change (Scott and Meyer, 1991). Change involving
economic growth and innovation systems is complicated by the fact that it is linked to permanent
institutional change (Dalum et al., 1992).

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The South African case with particular reference to the Province of the Western Cape

The role of universities, government and industry in entrepreneurship development

It is expected of higher education institutions to engage in teaching, research, consultation, and

community outreach projects. Entrepreneurship education has received more attention during
the last three decades. Brijlal (2005) has identified four universities and a technical college in the
Western Cape involved in entrepreneurship development in varying degrees through formal and
outreach programmes. For the study, this paper focuses on a specific unit, the Entrepreneurship
Development Unit of the University of the Western Cape, established to provide training,
consulting, and engagement in research, in order to improve the quality of life of the SME
community.

The Department of Trade and Industry, which is responsible for creating an enabling business
environment, published in 1995 the National Strategy for the Development and Promotion of
Small Business in South Africa. Subsequent small business development mechanisms have been
established to support the national strategy. The Department of Trade and Industry (2004)
reported an increase in SMEs from 800,000 in 1995 to 2.5 million in 2004. The Department of
Economic Development and Tourism, a sub-directorate of the Provincial Government of the
Western Cape, is an essential element of the Triple Helix model; it facilitates small business
development and support of entrepreneurship.

Industry also initiates business development via industry associations. In the Western Cape,
associations such as the Cape Town Chamber of Commerce and Industry (CTCCI), Western
Cape Business Opportunity Forum (WECBOF), Western Cape Minibus Taxi Association,
Business Opportunities Network (BON) and Clothing and Textile Association (CLOTEX) are
significant role players (Brundin et al., 2006).

Evidence of cooperation between universities, industry and government: survey and case
illustrations

In search of evidence to assess the applicability of the Triple Helix model, a survey was
conducted in which respondents were drawn from the executive management level of the three
institutions. The survey showed that cooperation among the actors exists. Three cases of
cooperation between university, industry and government were selected to demonstrate
problems, weaknesses and successes in tripartite agreements when the Triple Helix model was
applied.

Case 1: Implementation of a training programme for the owners of minibus taxis in the province of the Western
Cape.

Apartheid resulted in the relocation of the majority of the population away from central business
districts. The primary means of transport are minibus taxis, considered as part of the informal
sector. Most minibus taxi owners have poor educational backgrounds. It is thus important for
them to be educated, and trained in business and entrepreneurship.

This industry is very lucrative, but crime is rampant and service delivery is poor. The University
of the Western Cape conducted a skills audit in 2004, commissioned by the Department of
Transport. The audit revealed that the management committee members of the taxi industry
lacked management skills. The project, costed at Є125,000 (Є = ZAR 8.00 at the time) was
awarded to the university. A tender process was not instituted because of the confidence instilled

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in the manager of the Provincial Department of Transport by the quality of research produced by
the university. The project was awarded to the university. Subsequently the training responsibility
was transferred. No training has taken place.

This analysis shows two institutions well known to each other with well-established legitimacy,
and with the intent to create an enabling small business environment, being stifled. The
impediments identified were that the rules of the game changed with the shifting of
responsibility. Subsequent managers preferred guidance by institutional pressure. The industry,
keen on gaining legitimacy, wanted to conform to technical and institutional pressures. Neither
the university, nor the government, nor the taxi industry derived any benefit. The government,
being driven by institutional pressure, was not able to recognise technical pressure.

Case 2. Evaluation of a “real enterprise development” project: RED Door

During the post-1994 era, the government developed a “one-stop” business support service close
to needy communities. The Department of Economic Development and Tourism proposed to
open 35 RED Doors (Real Enterprise Development) across the Province of the Western Cape.
This concept proved successful in Brazil, Northern Ireland and Israel. The capital investment was
approximately Є30,000, with an annual operating budget of Є120,000 (Department of Economic
Development and Tourism, 2005). Prompted by the university, an evaluation project was asked
for; funding was approved, but again transfer of responsibilities within the government
department resulted in the project being withdrawn. One of the managers attended a seminar at
the university, where the seminar leader mentioned that many government initiatives were not
successful. This statement caused her to be dissatisfied with the university as a service provider to
her department. Even after due tender process, the project was not awarded to the winning
bidder. The RED Door project was not evaluated; the three parties - university, government and
industry - lost an invaluable opportunity for joint learning and entrepreneurship development.

Analysis of the case reveals that the actors had good intentions to cooperate; impediments such
as personal preference are one possible explanation for delays. The first replacement resorted to
organisational control; the second replacement, it seems, revered the legitimacy of the
government department. The government department did not understand the value to be gained
from the evaluation of the programme; tacit knowledge possessed by the university was not
shared, so collective learning did not take place.

Case 3.Employment creation at the Bot River mini-tunnel farming

Bot River is a typical rural town where the majority of the people are unemployed; job
opportunities are scarce, and most people work on fruit and wine farms and in nearby towns.
High unemployment gave birth to the idea of starting a mini-tunnel farming business. These
tunnels are built for rapid cultivation; they are one metre high and made from plastic material.
The government, in the form of the local municipality, provided the land and financial support.
Research and fund-raising support came from the Foundation for Contemporary Research
(FCR), who also initiated the project. A researcher from the university acted as research
consultant to the FCR. The business operations were performed by Eco-tunnel. Distribution to
the local business community was limited by capacity. The project was built on informal
contracts, according to which each party performed according to its assigned role. Six women
were employed, earning Є75 per month. The joint project started in 2003, with 90 tunnels
operational in 2004. 180 tunnels were operational in 2006, and future growth plans are in place.

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Analysis of this case shows that each role player recognised his/her role and responsibilities, and
made tangible contributions. No key persons were changed. The project led to an expansion,
with a potential increase in job creation.

Discussion, implications and future prospects

Cooperation: In the South African context, two cases showed interaction between two helices,
similar to what Laznjak and Svarc (2005) found in Croatia. The functions performed by these
institutions were not well defined. The first two cases demonstrate that institutional barriers can
obstruct cooperation between the helices, thereby preventing innovation.

Planning and structure: The cases show that planning and structure can be a missing link in the
South African context. No evidence of a formal contract was found in the three cases, only
informal verbal agreements.

Institutional theory and change: Institutional change had taken place to some degree in accordance
with BBBEE (Broad Based Black Economic Empowerment), hence the sedimentation aspect
was not evident here (Greenwood and Hinings, 1996); incoming people did not stay in their
positions long enough to develop structure and feed-back loops for continuity; there was no time
to conform to mimetic behaviour (Tolbert and Zucker, 1996).

A focus on the entrepreneur: When actors from different institutions cooperate, it is important that
they have a shared understanding and a language for effective transfer of knowledge.

When the actors are involved in activities such as entrepreneurship and assessments, the three
institutions--university, industry and governmental bodies--are supposed to cooperate and jointly
foster innovations and growth in the Triple Helix model. A shift in the core beliefs and purpose
of the institutions is required; mindsets are so deeply rooted that inertia may hinder change.
Entrepreneurs suffer because the three helices are victims of institutional control and they resist
radical change. Institutional barriers do not promote cooperation and facilitate achievement of a
common focus on the entrepreneur. Therefore an important addendum is the incorporation of
the entrepreneur in the Triple-Helix model, fig.3.

Cooperation
I For growth and A
sustainability

Legend
E = Entrepreneur
I = Industry
G A = Academia
G = Government

Fig. 3. A proposed model for cooperation between the stakeholders in a South African context

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In the South African context, the Triple Helix model has potential for introducing innovative
practices and procedures for SME growth, and South Africa is perceived as strong on policy
development, but the weakness of implementing policy is a negating factor.

This paper proposes implications based on the study which are: universities should act only on
written agreements; government civil servants should be properly trained in procedures for
dealing with individuals outside governmental structures; industry should apply its influence more
effectively to bring about the required changes; institutions should exert strong leadership and
presence; and institutions should experiment and learn from them, and collectively monitor
progress.

Prospects for future research could be: to better understand the relationship of partners while
engaged in cooperative activities, and to investigate other actors such as donors and the non-
governmental sector to assess how they could add value to the Triple Helix cooperation.

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Annex

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4.2.6. Mobilizing University Resources to Create and Support Firms - the Case of
University of Zambia’s Computer Centre and Technology Development and Advisory Unit

Mobilizing University Resources to Create and Support Firms

The Case of University of Zambia’s Computer Centre and
Technology Development and Advisory Unit

Viktor Konde
Economic Affairs Officer, UNCTAD, International Investment Arrangements Section

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Abstract

Universities could serve as engines of economic growth by supplying skilled human resource
needed to manage increasingly sophisticated systems, and developing new knowledge that
stimulate industrial growth. However, the ability of African universities to incubate and support
firms is possibly weak. African universities are generally under funded, poorly staffed, small in
size, ill equipped and relatively young although they are the only institutions in many African
countries likely to have a concentration of expertise. Turning these universities into vibrant
centres capable of generating and diffusing new technologies as well as creating firms that meet
the development aspirations of their people remains a challenge.

This paper uses the case of the University of Zambia (UNZA) to highlight possible ways of
mobilizing university resources - manpower, national and international links, and close
cooperation with partners - to create and support businesses, through specialized units. It
highlights the important role of “linker units”, such as UNZA’s Technology Development and
Advisory Unit (TDAU) to utilize university expertise to support small and emerging
entrepreneurs. It also uses the Computer Centre to demonstrate the ability of African universities
to incubate and commercialize firms and provide premier network support to industry,
government and donor.

Although UNZA cannot be described as an entrepreneurial university by the standards of

universities in some advanced developing economies, it exhibits entrepreneurship traits that, if
harnessed, could help deliver services to industry and the community at large. It presents an
interesting model of how universities could mobilize their intellectual capital and social capital to
create and support businesses, as well as contribute to development even with meager resources.

Introduction

The domestic knowledge base of a country is often composed of research and development,
financial, manufacturing, professional and regulatory institutions, among others, that influence
the generation, dissemination, use and marketing of new knowledge products and services. These
institutions, among others, make up what has been termed national system of innovation.

In order to accelerate technology development and diffusion, countries have developed

specialized institutions often termed centres of excellence. Although there is no single agreed
definition, centres of excellence are supposed to be well-established institutions with a critical
mass of skilled personnel, stable and adequate funding base, highly motivated staff and state-of-
the-art facilities. In addition, it has a clear objective and mandate as well as good links with its
clients and other specialized centres, in and outside the country, and act as technology generators
and transferors.

Universities generally have a high concentration of qualified and skilled individuals in diverse
areas of interest, a clear mandate, well-equipped facilities and a stable funding base. Industries,
especially in developing countries, are unlikely to pool enough skills in any one area of technology
to provide sufficient innovations to remain competitive in emerging interdisciplinary fields. It is
for this reason that the relationship between industry, university and government has changed.
Universities have become partners to industry by producing new innovations that have become
the basis of new firms and industrial competitiveness.

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There are at least three different types of universities: teaching, research and entrepreneurial
universities. These generalized classifications are based on the nature and scope of university
programs, staff time allocation and weight attached to research and teaching activities, and the
objectives and relationship of the university with industry and government. These characteristics,
among others, affect how the university operates, is managed, and how it responds to the needs
of its clientele.

Teaching universities are generally designed to produce (train) manpower for the private and
public sectors and their programs place more emphasis on teaching rather than research. By
contrast, research universities place nearly as much emphasis on research as on teaching. In
general, faculty is expected to undertake research activities, compete for research grants, publish
original peer-reviewed articles, supervise post-graduate and post-doctoral students and, in some
cases, participate in outreach programs. Research excellence is squarely at the heart of the
university mission and substantial resources are committed to research activities.

Entrepreneurial universities expand the roles of research universities by undertaking roles that
promote contract research, commercialization of research outputs and incubation of firms. In a
way, they enable departments and/or members of staff to organize themselves and form research
teams that exist almost as “quasi-firms”. These universities view knowledge they generate as
potential economic and social assets. They may have technology transfer managers that screen
research products to identify those that can be patented, published and commercialized.

Therefore, it may not seem possible for African universities to serves as centres of excellence or
to develop and support firms. Staff, at many African universities, is often demoralized by the lack
of basic teaching and research tools, support from management, red tape and poor salaries, and
overwhelmed by the large numbers of students. Sometimes, they do not have research teams or
research facilities likely to produce technologies of interest. It seems impossible and perhaps
misconceived to assume such universities could play the same role as their equivalents in
developed and advanced developing countries.

It may also be possible that the comparison of universities using the same indicators (e.g.
numbers of patents, publications and post-doctoral students) do not take into account the
differences in economic, social and political realities. In poor countries a university that helps
communities improve their living standards and marginalized individuals become entrepreneurs
or create jobs may be just as entrepreneurial as those inspiring the development high technology
products and firms.

2. The University of Zambia’s Entrepreneurial Activities

University of Zambia (UNZA) has a longstanding tradition of working with industry and public
institutions. The School of Mines and the former Zambia Consolidated Copper Mines (ZCCM)
cooperated on training and research in the mining sector. The Mines supported most of the
students in the School of Mines and some students in the School of Engineering that wished to
work for them after graduation with tuition fees and attachments. Similarly, the School of
Agriculture and the Zambia Seed Company have worked together on many projects.

The University also run several business ventures (e.g. farms, bookshop, guesthouse and clinic).
For instance, UNZA owns about 49.9 % of the share of York Farms, one of the countries largest
horticultural producer and exporter, with an annual turnover of about $13.5 million and brings
the UNZA roughly $1 million in dividends a year (2000 estimates).

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York Farms was conceived by Mr. Charlie Youngson in the early 1970s who later sold it
University of Zambia as a teaching and experimental farm on high-value products. The
University got a loan from the Ministry of Finance to purchase the Farm. The UNZA was also
developing the UNZA horticulture nursery (often called UNZA Nursery) and UNZA farm
during this period. The firm got financial support from the CDC Capital Group and started
export of high-value/low volume agricultural produce in 1989. Today, it is Zambia’s second
largest exporter of fresh vegetables, baby corn, sugar-beans, flowers and onions to Europe, South
Africa, Australia and New Zealand.

York Farms covers about 1,800 hectares of which 600 hectares of irrigated land for production
of vegetables and 110 hectares is certified organic land. The farm employs about 3,300 workers,
all of who receive on-the-job training and some participate in formal training courses in Zambia
and overseas. The Farm has gained accreditation with EUREPGAP and Tesco’s ‘NATURES
CHOICE GOLD’ certification.

In 2001, CDC sold its 50.1% shares in a Management Buy Out Team (MBOT) schemes named
the “Lattice management consortium”. UNZA did exercise its pre-emptive rights over the CDC
shares which permitted the sale of CDC shares.

The Department of Physics is spearheading a project to fabricate sophisticated laboratory

equipment (such spectrophotometers) for research purposes and materials for home solar
systems. One of its recent products is the microprocessor-based charge controllers for home
solar systems (See ATDF Journal). The team includes staff from the departments of chemistry,
computer sciences and engineering.

This project was necessitated by the limited of investment in laboratory equipment needed to
perform scientific experiments by students and researchers. In addition to the engineering
expertise in the School of Engineering, the Department of Physics has workshops for electrical,
metalwork and woodwork repairs and maintenance, and the Department of Chemistry has a glass
blowing and equipment maintenance workshops. This project benefits from the combined
expertise within the University to meet the need for laboratory equipment.

UNZA is also structured to operate with minimal skilled professionals by encouraging

interdisciplinary and interdepartmental interaction. Few schools at UNZA, if any, could operate
independently. For examples, students admitted to the Schools of Engineering, Agriculture,
Medicine, Mining and Veterinary Medicine spend a year or more taking courses in the School of
Natural Sciences. Many lecturers also teach in more than one school or department as part of
their normal duties. The contracting department is generally required to place a written request,
where the course is not normally offered by the contracted department. This enables staff and
students to interact across schools and departments.

These characteristics are important in understanding why interdisciplinary teams seem to form
without formal agreements by the units and why UNZA has good working relation with the
Government and the private sector, even though it is often seen as a purely teaching university.
Although it does not have an established technology or business incubator, the university plays
an important role in technology adaptation and transfer.

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3. The case of the Technology Development and Advisory Unit (TDAU)

3.1. Background

TDAU was set up in 1975 as an intermediate technology development and consultancy unit
within the School of Engineering. Its main objective is to help small-scale producers in the urban
and rural areas access skills and technologies that can help them generate wealth and jobs. TDAU
adapts advanced mature technologies to develop effective but simpler products that use locally
available resources, skills and knowledge.

TDAU was originally established to promote agricultural and industrial development by serving
as a channel through which the School of Engineering could provide its services to the local
community. Its main objectives are to help:

a) Promote use of technologies by entrepreneurs and/or enterprises to generate income and

create employment in the private sector,
b) Serve as a centre for the manufacture of business equipment and small scale goods for
emerging entrepreneurs in Zambia,
c) Provide consultancy services in the fields of appropriate technologies and its areas of
competence.63

Most of the projects of TDAU fall in three broad categories: 1. Design and fabrication, 2.
Consultancy and advice, and 3. Training. Although it addresses a broad range of areas, it has a
bias for technologies used in agriculture, food processing, energy, construction (housing), water
and sanitation, and rural transportations.

Following changes in the university management in the 1990s, TDAU became a semi-
autonomous unit. At the time, and for financial reasons as well, the university was shedding a
number of “non-core” units as “self-sustaining” units. These included the UNZA bookshop,
nursery (horticulture), farm and the Institute for Economic and Social Research, among others.
In a nutshell, these units were expected to meet their operational expenses, and where possible,
share any benefits accrued with the university.

3.2. Nature of Projects and Partners

TDAU does not invest in development and production of new or advanced technologies but
rather adapts mature and freely available technologies to meet local operational conditions. For
instance, UNIDO and COMESA requested TDAU to adapt a seed-treating machine for use in
rural areas without electricity to improve the quality of seeds served by farmers. TDAU
developed a machine that could be used to treat seed, food grains and pulses with preservatives
before storages.

Most of its projects are demand-driven. In general, an interested party - e.g. government/donor
agency, private firm, research institute or NGO - may request TDAU to undertaken or
participate in a project. In other cases, TDAU may bid for advertised projects just like other
service providers. Therefore, TDAU does not develop products that are not requested by an
interested party.

63UNZA (1999), Strategy to improve the operations of the university, Chapter 5 see:
http://www.unza.zm/news/IOTA/UNZAStrategy.htm

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Although most of its projects are donor-funded, TDAU has good working relations with several
private and public institutions. For instance, the National Institute for Scientific and Industrial
Research (NISIR) contracted TDAU to develop a fruit-pulping machine for wine production, a
team of investors hired TDAU to investigate the commercial feasibility of introducing a private
airline in Zambia, a bank requested TDAU to look at the design and potential of paint-mixing for
their client, and two church organizations contracted TDAU to design, fabricate and install mini-
hydropower stations as well as train local people to manage them.

3.3. TDAU as a Linker and Marketing Unit of Unza

Although the unit represents a very small fraction of the University, it is better known outside the
UNZA community than larger departments. Its advertisements have been on television,
newspapers and billboards, and it participates in national trade fairs and exhibitions.

TDAU cannot afford to hire a large pool of full-time or part-time staff skilled in its areas of
interest to serve industry, donors and government effectively. Its location in the school of
engineering is ideal in enabling it to design, fabricate and market products that require
engineering knowledge. However, a number of consultancy projects may require knowledge of
other professionals outside the School of Engineering.

For instance, TDAU is investigating options for producing affordable agricultural lime for
farmers. In this project, it is working with colleagues from School of Agricultural Sciences,
School of Mines, Mount Makulu (Agricultural) Research Station and the British Geological
Society. The project, sponsored by United Kingdom’s Department for International
Development (DFID), is an example of TDAU acting as a link between different UNZA
departments and with other key players outside the university community.

The units benefit from other university departments to meet the needs of its clientele and
enhance its reputation. In return, university departments get the chance to contribute to national
development and benefit from monetary gains associated with the projects (e.g. as consultants).
By so doing, TDAU brings the University closer to society and society closer to the University.

3.4. Why TDAU seems to be Successful

TDAU is not unique. For example, the University of Dar-es-Salaam (Tanzania) formed the
Institute of Production Innovation (IPI) in 1981. Although the objectives were similar, IPI was
supply-driven, largely as a channel to deliver new products/technologies to industry. When it was
perceived to have failed, the School of Engineering formed another unit called the Bureau for
Industrial Cooperation (BIC). The two bodies competed for the same clients with varying
degrees of successes but remained supply-driven.

By contrast, when TDAU became semi-autonomous, it abandoned the supply-driven strategy

partly because its products, like those of IPI in Tanzania, were not of interest to major industrial
players but rather small and emerging firms. This strategy made it a natural partner for donor
agencies, international organizations, NGOs and government agencies that target marginalized
groups and small firms.

Based on the memorandum of understanding (MOU) it signed with UNZA, TDAU is required
to repay the university the salaries it draws each year, where possible. In return, it is allowed to
declare bonuses for its members of staff, spend and invest any money it generates to meet its
objectives. Such financial freedom and regulatory incentives (ability to recruit staff outside the

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university and operate without express approval from the university) may have played a catalytic
role in making the unit successful.

As its reputation and confidence has increased and marketing capabilities improve, its products
and consultancy services are increasing in sophistication. It has moved from simple solar dryers,
manual block presses and oil presses to more sophisticated projects such as incubators for the
poultry industry and consultancy for the larger firms. It is, therefore, conceivable that in the near
future, its involvement in technologically demanding projects is going to increase.

TDAU is not viewed as a competitor by firms but rather as a facilitator. It seeks industrial
partners to take up the developed products as it does not have the facilities and resources for
mass production of any products. For example, the manual oil press, designed and produced on
the request of AfriCare and sponsored by USAID, is now produced by an industrial partner and
hundreds of units have been sold to clients.

TDAU had to change management and recruit people with skills in its core areas of interest –
obtaining and negotiating contracts, outreach and public relations, design and engineering and
management. It employed people from the private sector and those familiar with government and
donor operations. This mixture of skills, expertise and experiences has perhaps been the driving
force behind its success.

3.5. TDAU as a Model

There are many who rightly believe that university staff in Africa is already too overburdened by
their teaching obligations to take on extra duties. In some cases, departments may not even have
dedicated research and experimental development laboratories, or funds to sustain projects likely
to develop or support firms. In addition, many professional are preoccupied by personal ventures
that supplement their meager salaries.

As TDAU demonstrates, a small non-teaching unit could help bring in official contracts that put
to good use the diversity of skill and experiences associated with universities. It could help
researchers develop vital links with industry and other partners as well as a financial reward
associated with such projects. More importantly, it does not interrupt or affect normal operations
of the universities as experts may be hired on their personal or departmental basis.

TDAU has helped the development of several small income generation ventures. A similar model
could focus on emerging firms seeking to establish themselves in poorer countries on limited
budgets. In this case, it could offer design, administrative and management skills, either
implemented at premises of the client as is done currently or, incubated by TDAU within
university corridors (just like development of prototypes).

TDAU’s model of facilitation as well as being demand-driven is perhaps key to limiting losses or
huge marketing costs. Rather than focus on simplifying technology, it could start to address the
needs of firm in new and emerging fields such as information and communication technologies,
biotechnology and material sciences. For instance, members of staff from the departments of
Physics, Computer Sciences, Chemistry and School of Engineering are collaborating in a project
to design and produce reliable but cheap version of expensive laboratory equipment. There may
be a potential need for measuring and monitoring tools for industry as well. If TDAU was to
focus on both low and high technology products and services, it will attract and serve a wider
base of the Zambian industry, and perhaps the emergence of a machine tool industry.

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The question is not whether it is wise for universities to promote units that serve industries and
the community but rather whether it is wise to remain indifferent to the economic realities of
their people and industries. Universities that depend largely on patronage (by government and
donors) are unlikely to be seen as relevant or attract research funding from government, industry
and donors. TDAU demonstrates that it is possible even in the poor countries for universities to
serve industry and the community.

4. The case of the Computer Centre in the Development of Zamnet

4.1. Background

In 1990, the Director of the Computer Centre (CC) at University of Zambia, Mark Bennett,
connected a few personal computers that could exchange emails within the institution, and with
Rhodes University in South Africa, and from there to the rest of the world. By 1994, most
Schools had at least one email point available to all members of staff. The University network
was serving health institutions, NGOs, governmental, and development and aid organizations,
with a total of at least 270 email points.

The Computer Centre (CC) was managing, on behalf of several parties, at least three projects: 1.
The HealthNet project funded by SatelLife, covering Africa, Asia and Latin America, 2. The
ESANET (Eastern and Southern African Network), funded by IDRC, promoting connectivity
among universities in the region and 3. ZangoNet (Zambian NGO network), was designed to
connect local NGOs to their parental or sister NGOs within the country and abroad. Due to
limited skilled and experienced manpower in networking, the projects were housed and co-
developed at the University of Zambia (UNZA) Computer Centre. This created a culture of
mutual understanding, trust and interest.

4.2. Combining Resources to Achieve Depth

ESANET provided the first microcomputer and modem which served as a host for the first
University email system, while the link between Lusaka and Rhodes University was paid for by
UNINET due to their interest in interuniversity connectivity. Suggestions to separate the three
projects were abandoned, due to scarce qualified human resources.

The collaborative spirit within the university community was also important in the development
of the networks. For example, the School of Engineering manufactured a unit, according to
Bennett, “a device that allows the central PC to be connected to both internal and external phone systems and
answering whichever calls first”. Skilled staff in computing, other than computer centre, at the time
were in electrical engineering department of the School of Engineering.

4.3. Sourcing Funds for Commercialization

The connectivity projects were enthusiastically supported by Government, donors and regulators.
However, all donors refused to fund direct internet connection as of 1993. The high level of
interest in information technology may have deceived UNZA management to assume that
support for the Internet connection will be obtained easily. Mark Bernett summed it up as
follows:

“By 1993, we had decided that we wanted ‘the real thing’: we wanted full Internet access,.. There
were plenty of people who said that Africa had other priorities - after all, wasn’t Fidonet working
(e-mail) -or that Africa needed its own systems of communication...but with the relevant bits of

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string and sticky tape (and hopes that it didn’t rain too often and cut off the phone lines), ..The
continent has gone from Zambia being one of the only countries with a connection to no country
being without”.

Early in 1994, UNZA decided to establish a campus-based company called Zamnet (Zamnet
Communication Systems Limited) to link the institution to the Internet and provide service to
commercial customers. The UNZA provided space, management and most of the manpower for
Zamnet while the World Bank provided a $122,000 loan through the Institutional Development
Fund in 1994 - covering 80% of the cost of the first year.

The Director of Computer Centre became the first managing director of Zamnet while the Vice
Chancellor and the Deputy. The number of commercial accounts grew from 5 to 165 between
January and June 1995. Seven months before the end of the World Bank loan, Zamnet was
making enough money to buy new equipment.

4.4. Importance of Good and Effective Relations with Government

The University of Zambia did not experience the problems other universities faced in
establishment of ESANET (Eastern and Southern Africa Network; included Universities of
Nairobi, Zimbabwe, Dar-es salaam and Mozambique). For example, University of Nairobi in
Kenya was initially denied a license to operate the radio link to the satellite. In Zambia, the
government was interested in HealthNet and represented at a high level (deputy minister). For
example, HealthNet was inaugurated by the Republican President of Zambia.

The goodwill that government showed towards HealthNet benefited other projects and the
development of Zamnet. For example, the Computer Centre operated the radio-link to the
satellite (picking and dropping emails) without a license but with Government knowledge.
Zamnet was the first firm to be allowed to operate private satellite links for data transfers, cutting
off the national telecommunication operator. Mobile phones and other telecommunications
service providers that followed much later had a tough time convincing government they needed
to operate independent satellite links. Therefore, good working relations with government are
possibly one of the university’s main assets and advantages.

4.5. The Role of Partners

Other institutions also helped the young project “learn to stand”. According to Mark Bennett
“Rhodes University, on behalf of UNINET 64, generously offered to bear the cost of sufficient
polls each day to allow picking up and dropping of mail…..effectively providing a free e-mail
service to UNZA”. This support allowed UNZA a learning and experimentation period.

It was evident that most projects entered and exited the CC through the intersection sets of the
three parties: University, Government and Partners. ZangoNet entered through the Partner-
University intersection while HealthNet entered through the Government-Partner intersection.
The government interests were high (represented by the Deputy Minister of Health). Lastly,
UNZANET entered through the University-government intersection.65 The initiatives produced
no losers as the different teams were at CC to meet their needs.

Once the projects were completed, HealthNet exited from Computer Center to be based at the
Medical School, ZangoNet exited to be managed by a network of NGOs, and UNZANET

64 UNINET is a South African Universities Network funded by the Foundation for Research and Development (FRD).
65 In bold letters is the main beneficiary.

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remained the main networking unit of the University of Zambia community and the country.
However, the Computer Centre remained the main gateway for the three networks.

Each of the project it coordinated or participated in brought new challenges and opportunities as
well as partners and technologies and resources. For instance, UNZA implemented a project
termed Computers for Administrative, Management and Academic Support (CAMAS) that laid
fibre optic cables throughout the university and provide every office with a digital telephone line
and internet point, and each department with computers, a scanner and printer (1994-1996). This
project gave birth to the Consultancy and Training Unit at CC.

Figure 1: The Relations between the Different Partners

Computer
University Centre

Government
Partners

4.6. The Demonstrative Impact of Zamnet Commercialization

The commercialization of Zamnet demonstrated that provision of Internet services was good
business even in poor countries. Other institutions soon followed the example of Zamnet.
CopperNet, formerly a networking unit of the Zambia Consolidate Copper Mines (ZCCM), and
the national regulator, Zambia Telecommunication Corporation, developed Internet services.

The computer Centre too, following the successful commercialization of Zamnet, turned the
vacated room - which once served as a lecture room - into “The Consultancy and Training Unit”
(CTU). The CTU was initially formed to train and support university staff and departments with
IT services. Once that was achieved, it opened its doors to the wider public. It has carried out
training for organizations such as Common Market for Eastern and Southern Africa (COMESA),
Chilanga Cement PLC, Zambia Sugar PLC, Zambia Telecommunication Cooperation and Caltex,
and software systems support to a number of organisations, such as Micro Banker’s Trust (MBT)
and the Dutch embassy.

5. Concluding Remarks

It is important to emphasize that the existence of specialized and well-funded research centres is
only the first step in enabling universities to develop and support existing firms. Other factors
equally play an important role in enabling university provide support to existing firms or help the
emergence of new enterprises.

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According to Burton, there are at least five main characteristics of entrepreneurial universities:

• Independent, strong and efficient managerial systems,

• Interdepartmental cooperation and increased collaboration with the outside,
• Wider funding resource base,
• Stimulated and strengthened academic units, and
• Integrated entrepreneurial culture throughout the university.

Of these, few apply to the University of Zambia. Its leadership is appointed by Government and
is not described by staff as “efficient”, its funding base is very narrow and cannot be described as
having “an integrated entrepreneurial culture throughout the university”. At first glance these
characteristics do not apply to UNZA.

However, a careful examination reveals that these characteristics are associated with the units that
support private firms. It is these units that undertake entrepreneurial activities and have all the
characteristics associated with entrepreneurial universities. In many ways, they exist almost as
private firms within the university. For example, TDAU is headed by a Manager supported by
two Project Engineers, a Business Advisor, an Information Officer and a Chief Technician. It is a
hierarchy that mirrors those of private engineer units rather than a university department.

Therefore, a few key characteristics are important at the university level:

• Ability of staff to work across schools, especially when supported by regulations,

• Efficient utilization of existing, and/or developing, relationships with government
and industry, and
• Existence of units dedicated to support enterprise development.

The existence of units, whether incubators or consultancy centres, should serve as channels
through which the rest of the university community could potentially contribute to national
development. Universities whose regulations promote teaching and research across
schools/department may facilitate participation and involvement of a wider range of university
professionals in projects that specialized units may undertake.

It is also important to have clear guidelines on commercialization of university developed

technologies and firms. Neil Robinson, an IT consultant at UNZA wrote (in 1995):

“[Zamnet] has been set up as a campus company by the University of Zambia, The establishment
of a company itself has both legal and financial implications and we have involved accounting and
legal advisors to assist us.”

For example, the Vice-Chancellor was alleged to have owned shares in Zamnet and also held the
University shares in trust. Such shares, including those of the University Bursar at the time, were
returned to the University following the Supreme Court of Zambia ruling. The lack of clear
regulations on commercialization and incentives for entrepreneurial individuals may represent a
major challenge. Although UNZA owns firms, its staff do not own shares in such ventures. Some
have left to set up their own private firms based on their experience at UNZA. As a
consequence, the university loses out on expertise and revenue.

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The University is developing the office of the Business Venture Controller. The position will be
located within the Office of the Vice Chancellor and will manage all the investment ventures and
take care of UNZA’s interests in firms/units it has invested, such as the University Nursery,
Zamnet, York Farms, TDAU, Marshalnds Guest House and UNZA farms. This will help
coordinate mature initiatives and firms.

However, this does not address the core issues that could enable the University act as a catalyst
for entrepreneurship and firm formation. To achieve this goal, the university may wish to: 1.
develop or expand the proposed office of the Business Venture Controller to include
identification of emerging initiatives, 2. establish clear mechanisms and regulation for accelerating
the development and commercialization of new ventures and 3. implement freedom of operation
of the business or technology manager(s) to invest or seek investors interested in University
initiatives and 4. provide awards for entrepreneurial individuals.

A way out is to request Department to designate an interested individual to act as a technology

transfer officer. Each officer will then encourage and identify emerging activities that could be
considered for funding or award of recognition. For example, such awards could be considered
favourably when considering promotions and funding departments.

The University could also consider to developing mini-consulting centres where students provide
consulting services to established and emerging firms. It could help trainees create crucial social
network and learn real business challenges or opportunities in Zambia. It also helps students
learn how to set up their own companies in future and work in multidisciplinary teams.

While developed countries debate whether universities should spend so much effort in
promoting technology and developing firms, most African universities may as well help create
jobs for the thousands of graduates they channel out each year- many of who may not find jobs
or the right jobs. Above all, if vocational colleges are equipping their students with skills needed
to manage firms, universities may not choose to be indifferent to the prevailing socio-economic
situation. They may have to equip all their students, irrespective of profession, with basic skills to,
at least, write a business proposal, register a firm, attract funding and collaborate with others in
development and marketing of their ideas/concepts. This could easily be achieved through a
forum or an entrepreneurship clinic that bring business experts, government units (e.g. tax and
business registration authorities) and business consultants in a non-credit earning session that
could be run once or twice a week.

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References

Abraham, T. and S. Ahlawat (1998), The India option: perceptions of Indian software solutions.
International J. technology management, 15, 6/7.

Burton, R.C. (1998), Creating Entrepreneurial Universities Organization Pathways of Transformation.

IAU Press.

Charles, D. and J. Howells (1992), Technology transfer in Europe; public and private networks Belhaven,
pg 3-8.

Etzkowitz, H. and J.M.C. De Mello (2000), The endless transition: relations among social, economic and
scientific development in a triple helix of university-industry-government relations, Rio 2000 Triple
Helix III Conference.

Etzkowitz, H. (2003), “Research groups as ‘quasi-firms’: The invention of the entrepreneurial university”,
Research Policy, 32.

Freeman, C., (1982), The Economics of Industrial Innovation, London: Pinter Publishers.

Levey, L.A. and S. Young. Rowing Upstream: Snapshots of Pioneers of the Information Age in Africa,
http://www.piac.org/rowing_upstream/chapter7/ch7cominginzambia.html.

Lundvall, A.B. (1992), National Systems of Innovation: Towards a Theory of Innovation and Interactive
Learning, London: Pinter.

Nelson, R. R. (ed.), (1993), National Systems of Innovation: A Comparative Study, Oxford: Oxford University
Press.

Report Review; (1992), Bennett, M. Electronic mail in Zambia, A review as at June 1992. www.nscrc.org/.

Robinson, N. (1995), How Zambia Got on the Internet, Zamnet

http://www.aaas.org/international/africa-guide/zam1.htm.

Robinson, N. (1996), Bringing the Internet to Zambia in: Bridge Builders, African experience with
information technology, National Research Council, National academy press,

Tyler, M., Hughes, J. and Renfrew, H. (1991), Telecommunications in Africa - Kenya: Facing the Challenges of
an Open Economy, Eli M. Noam (ed.), Columbia Institute for Tele-information,
http://www.vii.org/papers/tyler.htm.

11 July 1992, an email to randy@psg.com. A Report View on Electronic Mail in Zambia.

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4.2.7. The Oxfordshire Economic Observatory project: Relevance of the Model to

Developing Countries

The Oxfordshire Economic Observatory project:

Relevance of the Model to Developing Countries

Helen Lawton Smith,

Director of Research, Oxfordshire Economic Observatory Oxford University
&
Reader in Management, School of Management and Organisational Psychology,
Birkbeck, University of London

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1. Introduction

A number of consistently occurring interlocking themes represent the consensus on the targets of
policy-makers with responsibilities for raising the level of regional economic and social
development. These include innovation, skills, clusters, university-industry interaction,
infrastructure, sustainability and urban structure. These can be seen for example in the draft
regional economic strategy for one of the UK’s regional development agencies, SEEDA
(www.SEEDA.co.uk). While these are components of common objective, numerous agencies at
regional and sub-regional level have responsibilities for delivery of policy. Hence there is a need
for a holistic approach to data collection and analysis within multi-agency environments to
overcome fragmentation of information, hence improve the policy-making process. Not only is it
essential for the data to be up-to-date, it should provide more than a snapshot of current local
specificities, it should also provide indications of trends over the short and longer timescales and
be benchmarked against other regions. Analysis should also reflect different interests and their
agendas: the individual, the firm and the region.

The Oxfordshire Economic Observatory (OEO) was established to undertake world-class

research providing data and analysis first to major stakeholders in the Oxfordshire region and
second to broader communities – at regional, national and international scales. OEO is an
independent research centre, based both in the School of Geography, Oxford University and the
Department of Planning, Oxford Brookes University. It provides up-to-date information and
analysis on economic trends primarily on the Oxfordshire and London economies, benchmarked
against regions in the UK, Europe and similar regions in the USA. OEO is an exemplar of a
university-based research centre that is located at the nexus of academic, business and
government interests – the triple-helix model (Etzkowitz and Leyesdorff, 1997).

This paper develops three themes. The first is the process of developing the Observatory,
organizationally. The second is the research portfolio of OEO. The third is how the findings are
being utilized for regional development purposes within the UK’s South East, and highlights the
relevance of OEO to regions in developing countries.

2. What is OEO? Developing the Observatory

The observatory in its five-year history has undergone three stages.

Stage 1: Identification of the Need for the Observatory.

The Observatory’s origins are in the research conducted by this author over three decades,
beginning with my doctoral thesis at Oxford University, School of Geography begun in 1984.
The research was immediately high-profile, taking shape at around the time of the publication of
The Cambridge Phenomenon: The Growth of a University Town published in 1985 by Cambridge-based
consultants Segal Quince & Partners. Although this work has been academic, it has always had
support from external agencies. In particular it was funded by a local charitable trust, The Oxford
Trust, established in 1985 to support science and technology enterprise by the founder of Oxford
Instruments, one of Oxfordshire’s most successful high-tech firms. From the beginning it had
the support of Oxfordshire County Council and Oxford City Council. Hence it has always been
embedded in the local system of governance.

The Observatory came to be established following a chance remark in 2000 about the need for
my academic work on Oxfordshire’s high-tech economy to be institutionalised within Oxford
University. The intention was that funding would be raised to ensure that research would be

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continuous rather than piecemeal and being located within Oxford University would provide an
authoritative position from which to address a wide range of audiences. It was in discussions with
the then economic development officer of the County Council that it was decided that the
research centre should draw on the complementary strengths of academics in Oxford’s other
university – Oxford Brookes. Colleagues there were experts in planning, transport and high-tech
economies in other parts of the South East. At that time, the comprehensive database I had
established for my thesis on Oxfordshire’s high-tech economy was out of date because there was
no one organisation responsible for collecting the data – unlike in Cambridge where
Cambridgeshire County Council’s statistician, Jill Tuffnell, has maintained a high-tech database
for over two decades. As in Cambridge, the Oxfordshire high-tech economy had been growing
rapidly since the mid-1980s thus presenting considerable challenges to the urban infrastructure
(transport and housing) and was creating pressures within the labour market from skills
shortages. The timing was therefore right for an Observatory. Moreover, the political agenda
post-1997 with the election of the Labour Government prioritised universities’ role in economic
development in the 1998 White Paper Our Competitive Future: Building the Knowledge-Driven Economy;
the region with the creation of the Regional Development Agencies (RDAs) in 1999 and clusters
(White Paper on Business Clusters published in 2001).

OEO was founded in January 2001 and is now a three-way collaboration with Birkbeck College,
Department of Management, University of London, where I am employed full time. The team
comprises four top academics: Professor John Glasson (Oxford Brookes University) and myself
– the two lead academics, plus a senior colleague from each departments. These four comprised
the Management Board. This board was set up to determine strategy – research and funding and
to engage with local stakeholders. OEO also had the services of two research assistants at Oxford
Brookes, one of whom is responsible for maintaining the database. The division of
responsibilities is that I manage OEO and am in charge of the research strategy and research
management. Professor Glasson is responsible for the database management, and the seminar
programme. Professor Glasson and I work very closely, meeting frequently to discuss OEO’s
overall direction and co-author both OEO reports and academic papers.

It was agreed at the outset that the focus should be the high-tech economy, building on our
expertise and using our limited resources, with the intention of expanding the portfolio of
activities to encompass trends in the Oxfordshire economy as a whole. Initial funding, of around
£30,000 came from The Oxford Trust, Oxfordshire’s County Council and the district councils.

As a key element in OEO’s mission to engage with local and regional stakeholders, an Advisory
Council (which meets now annually) was established. The Advisory Council comprises
representatives from major local and regional organisations. These include the regional and local
public authorities, key local entrepreneurs such as the founders of Oxford Instruments and
Research Machines, the head of The Oxford Trust, politicians (an MP and the Leader of one of
the district councils) and representatives from Oxford University: the Chief Executive of Isis
Innovation, the university’s technology transfer company, the Head of Regional Liaison and the
Director of the Science Enterprise Centre, OxSEC. Other senior academics include the Head of
the Said Business School and the Head of the Rutherford Appleton laboratory, one of the UK’s
major scientific research laboratories. A subset of the Advisory Council now forms the Strategy
Group which meets three times a year and discusses research agendas. The ways in which these
stakeholders have influenced the shape of data collection and what kinds of data have been useful
to policy makers is discussed in the following sections.

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Stage 2: Developing the Research Agenda: What is OEO’s Research Portfolio?

At the outset, eight core themes were decided and which remain OEO’s research portfolio as
they reflect both the major priorities within the Oxfordshire economy and Oxfordshire’s position
within broader economic and political contexts. It was also agreed that outputs would take three
forms: (i) high profile reports, (ii) briefing papers and (iii) seminars and other speaking
engagements. The eight core themes, outputs and funding are next discussed, along with other
developments. These are to be found on the OEO website http://oeo.geog.ox.ac.uk.

Early funding for OEO’s research activities came from the initial and follow-on general funding
and from funding for particular research projects. A major impetus to OEO’s activities was the
award of funding from the UK Government’s Higher Education Funding Council for England
(HEFCE) (which operates under the jurisdiction of the Department for Education and Skills). In
2004, Oxford University and Oxford Brookes were awarded £38,823 to fund OEO for two
years. The funding maintains OEO’s high quality research activities, funds workshops for public
authorities and local businesses at which economic intelligence on the evolving economy is
disseminated, and is used to develop the website.

The eight research themes and their outputs are:

(i). Creation and Development of a Database of Enterprise in Oxfordshire

(ii). Benchmarking Oxfordshire

The database, the core activity of OEO catalogues enterprise births, deaths, mergers, acquisitions
and employment change, by sector and technology. The database provides the platform for
investigations across the spectrum of the high-tech economy. International comparisons, which
are essential to understanding processes of entrepreneurship, technological advance and
economic development in Oxfordshire, are made using information in the database.

• In 2003 OEO produced a two-volume report: “Enterprising Oxford: the growth and
anatomy of the Oxfordshire high-tech economy”. Enterprising Oxford was launched by the UK’s
Minister of Science, Lord Sainsbury, in March 2003 at the Royal Society.

This professionally published, bound report explained how the Oxfordshire’s high-tech economy
is now one of the largest and fastest growing in the UK, with an estimated 1,400 high-tech
businesses currently located in the county. These companies have a combined workforce of over
36,000 and most have been formed during the last decade. Along with the neighbouring counties
of Berkshire and Buckinghamshire, Oxfordshire forms part of one of the highest concentrations
of high-tech employment in Europe. Although the companies operating within this sector are
mainly small companies, nevertheless it is the larger firms that account for the bulk of the high-
tech jobs. The county is the highest-ranked EU region for high-tech services, and is the fastest
growing high-tech region in the UK.

Volume 1 records how Oxfordshire’s high tech economy grew within an old economy dominated
by the manufacture of automobiles, blankets and food. It highlights the actions of key individuals
who had set the agenda and were instrumental in bringing about change, the changing roles and
fortunes of the universities and the county’s seven government laboratories, the county’s most
successful enterprises, the networks of supportive organisations, the planning system and key
planning decisions. The Report also looks to the future. The Report argues that it is a particular
concern that there should be more support for skills development to enable the region to

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continue to develop the economy at an optimum rate. Problems and issues of sustainability and
the environment are also highlighted.

Volume 2 provides a complete breakdown of the database and benchmarked Oxfordshire against
other UK and European regions. It begins by defining high-tech and discusses various definitions
such as used by the OECD and Eurostat. The definitional issue is crucial to establishing the
extent of particular kinds of activity, hence the design of policies to support or ameliorate
particular problems associated with growth/decline. For example, using a board definition of
high-tech (Eurostat), Oxfordshire would have 2000 high-tech firms employing 50,000 people but
this would include the production of the Mini (BMW) and other automobile related production
such as component manufacture. The definition used by OEO is a narrow Butchart + definition
based on the 1987 Butchart definition developed for the UK’s Department of Trade and
Industry (DTI) which defined high-tech sectors on the basis of the R&D intensity. The report
benchmarks Oxfordshire’s high-tech employment against regional and national averages, and
makes comparisons with other English counties and competitor European regions. Recent trends
in high-tech employment levels in the county are also analysed. The data on the high-tech
economy has been the most useful to all the stakeholders. There is a continual demand for robust
data. OEO data has been widely cited in policy documents and in presentations by all of the
stakeholder organisations, often abroad. It appears on the websites for example of OxSEC, The
Oxford Trust, OEP and Oxford University and Oxford Brookes main pages. The reports were
also cited in HM Treasury’s 2003 Lambert Review of Business and University Collaboration (The
Lambert Report). Until report on the database, the growing extent of Oxfordshire’s high-tech
economy was not documented. It now accounts for some 12 per cent of the county’s workforce.
Leading sectors include biotechnology, ICT and engineering.

• The database is currently being updated. The new data will be published in
Enterprising Oxford (III) in December 2006.

(iii). Employment: Supply and Demand

What is the changing mix of labour by skill, age, gender and education? How is the nature of
work in different sections of the high-tech economy changing? What will be the future of work?

The academic argument is that clustering of innovative industry both demands and creates a local
highly-skilled labour market. The growth of agglomerations of labour has been argued to benefit
both individuals and firms by providing the opportunity for matching labour demand with labour
supply, which is crucial to sustaining innovation. Additionally, mobility within the local labour
market is argued to be of collective benefit as the movement of the highly-skilled within the
cluster is a key mechanism for technology transfer and fostering of inter-firm links. Social
networks (social capital) are argued in the literature to be the medium by which these activities
are facilitated and their development key to innovation-based local economic development. This
is exemplified by Silicon Valley (Saxenian 1994, Benner 2003).

OEO has undertaken two studies of labour markets and is about to conduct a more extensive
study which will examine the supply side of the Oxfordshire labour market.

• Milton Keynes, Oxfordshire and Buckinghamshire Learning and Skills Council (April
2002-August 2002) “The labour market potential of over 50s Scientists and Engineers
in the MKOB region”.

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• Technicians: “Planning for the next generation of skills” The Oxford

Trust/Oxford2Cambridge Arc (January to August 2004).

The first established the extent of scientists and engineers aged 50+ in Oxfordshire’s universities,
government laboratories and large high-tech firms who might be recruited into the high-tech
economy to overcome skill shortages. This is in the context of considerable downsizing in the
late 1990s in the laboratories combined with an increasing age profile in the laboratories and the
universities. Early retirement reduces the skill base of the county. The policy implication of this
research is that there is the opportunity to establish a mentoring network that would advise
younger entrepreneurs, providing advice on scientific projects and management and/or a science
and engineering consultancy network whereby smaller firms could draw on this pool of expertise.

The second addressed the changing labour market for technicians and explored whether
Oxfordshire’s training institutions have established an appropriate strategy to address new career
paths. Technicians traditionally had “jobs for life”, but now technicians who have only ever
worked for one or two employers constitute a dying breed. The trend is increasingly for short-
term contracts, or rapid turnover within jobs, such that the average tenure of jobs is less than 5
years. As a result, people need to be more adaptable with the skills they have, and be prepared to
acquire new skills to respond to the changing labour market needs. There is a need for a platform
of generic skills (i.e. transferable skills that can be used across occupational groups), on which to
build a range of more technical and job specific skills. The recommendation of this study was
that there should be far greater cooperation between training providers in the county.

The third study will be undertaken in conjunction with the County Council and OEP. This will
contribute to the Oxfordshire Learning Partnership’s Learning Plan. Following consultation with
the Learning & Skills Council and the County Council, OEO proposes that the key questions for
Oxfordshire are:

1. does Oxfordshire provide the right kinds of skills to attract and retain firms in key
sectors such as engineering and IT?
2. are the channels of communication sufficiently well developed to match supply with
demand?

The objectives of the proposed study are therefore:

1. to identify the current patterns in the employability of human capital in key sectors of
the Oxfordshire economy’s 16+ sector of the workforce.
2. to suggest policy implications emerging from the patterns identified by this study at
the local and regional level.

(iv). Evaluating the significance of clusters for technological development:

How does clustering of activity contribute to technological change in established and emerging
technologies? How does Oxfordshire compare with other regions as a pioneer region?

The justification for this focus is that geographic clustering of high-tech firms is associated with
rapid innovation-led economic development. Proximity is argued to increase information flow
and rate at which innovations diffuse – the “innovative milieu” concept (Camagni 1991) and
Porter’s (1998) cluster thesis. In this line of argument, the innovative firm creates and uses
networks and interdependencies which allow companies to innovate more quickly and to develop

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innovations that are beyond their individual capabilities (Rutten and Boekma 2004). Indeed many
studies have shown that regional innovation intensity and technology transfer as measured by
inter-firm cooperation is positively and significantly related to innovation success (Love and
Roper 2001, Frenz and Oughton 2005). Thus the interest to The Oxford Trust and local and
regional policy makers is in the overall extent of clustering of high-tech activity and in which
sectors and how networks can be improved.

These issues formed a central theme of Enterprising Oxford. In addition to the report, the
Government Office of the South East commissioned OEO in January 2004 to undertake “The
Oxfordshire Case Study”. This was a further breakdown of trends within the Oxfordshire high-
tech economy.

A current OEO project is focusing on the R&D activities of multi-national companies in

Oxfordshire. This is part of an eight country comparison funded by the European Commission.
The first task is to establish who owns Oxfordshire. The second task will be to consider the
implications of technology transfer networks of these companies – and whether the universities
and the county can provide a better environment than which currently exists.

• Locomotive “Dissemination of knowledge concerning current R&D localisation of

large regionally important private sector organisations” (European Commission Sixth
Framework Priority Programme) (January 2006).

(v). Mapping university/national laboratory interaction

What is the true extent of university-industry and national laboratory-industry interaction within
the county? How does this compare with industry and science base links in the most successful
cases?

This theme reflects UK and European Union concerns about the low levels of innovation in the
economy. The argument is that knowledge-based economies are innovation driven: there is a
widespread agreement that knowledge, technological innovation and industrial competitiveness
are linked (Oughton et al 2002). In the context of concerns in countries such as the UK that
economic performance is held back by a lack of innovation, universities have assumed a central
role in the delivery of policies designed to drive economic development. Universities, as
producers of knowledge are a resource that can be used by firms to close to universities.
Moreover, governments throughout the world have instituted incentives for universities, their
staff and students to be more entrepreneurial and contribute directly through economic
development through business activities such as the formation of spin-off companies, patenting
and licensing technology (see Etzkowitz et al 2000). Universities are also increasing participating
in local and regional governance structures.

OEO’s contribution to the debate about universities’ and government laboratories’ contribution
to innovation and economic development is twofold. The first is a chapter in Enterprising Oxford
Volume 1 that explores the technology transfer activities of Oxfordshire’s academic and research
institutions and the development of partnerships in innovation.

The second is the form of a study:

• Measuring the performance of Oxfordshire’s academic spin-offs (2004/2005).

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The findings of this study were published in December 2005 in the Report Public Research High-
Tech spin-offs: measuring performance and growth. This Report, another report professionally produced,
was launched to an invited high-level audience of 200 people from academia, business and policy-
makers at the Said Business School in December 2005.

The study found that 114 spin-offs originated in Oxfordshire’s three universities and seven
research laboratories employing 9,500 people (3.5 percent of the County’s workforce). The
largest sectors were biomedical sciences and information and communication technologies. 12
companies have been launched on stock exchanges. These include Oxford Instruments, Research
Machines, Psion, Powderject (now part of Chiron and Medisense. The study also shows that it
takes on average ten years before firms start to grow to any substantial size – generating
significant employment. Unlike other studies of spin-offs, it records spin-offs dating back to the
1950s and records patterns of growth. The findings on growth trajectories have implications
across the county, for example for future housing and dedicated property developments.

This study had considerable input from Isis Innovation. The results of the study have been used
widely within Oxford University, to demonstrate its success in spinning off new firms. The
national importance of this study is indicated by the report being featured on the UK
government’s eGov website, under the heading, “Excellence in new venture creation: the
Oxfordshire model”.

A further study, this time of London University spin-offs is scheduled and will be funded by
London Higher, which represents the 42 London University colleges:

• Measuring the performance of London University spin-offs.

(vi). Infrastructure and Policy Networks

A key task of the Observatory is the periodic assessment of the effectiveness of the policy system
as it evolves, in terms of Oxfordshire’s ability to sustain its position as a leading centre of
innovation. What is Oxfordshire doing to ensure that its economy is sustained by world class
hard and soft infrastructure?

These issues have been addressed in the form of seminars organised in conjunction with the
County Council. Attendees are from business, local and regional government and academia.

Stage 3 Broadening OEO’s Portfolio

The maturing role of OEO is indicated by the scope of work on the seventh of the key themes.

(vii). The Oxfordshire Economy

What is the impact of the growth of the high-tech sector on the demand for products and
services in the local area? What are the connections between the high-tech sector and other major
industries such as the car industry? What are the impacts of global competition on these
industries? What is the role of exports in driving the local economy?

Five briefing papers, produced quarterly, have been prepared on trends in the Oxfordshire
economy. These provide up-to-the-minute analysis of recent trends across the Oxfordshire
economy as a whole. The content of the reports includes information on labour market trends
and in the performance of the economy. The reports are first presented to the meetings of the
Oxfordshire Economic Partnership, “a network of public and private sector partners committed

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building a world-class economy in Oxfordshire”. Economic partnerships are mandatory in the

UK, and are designed to bring together major local interests with the purpose of conducting
constructive policy-making dialogues. The reports are then published on line on the website.

(viii). Urban Structure and the New Economy

What is the interaction between the organisation of the built environment and the development
of the new economy? How is this related to changes in the regional, national and international
economy?

This topic was also featured in Enterprising Oxford, in the Briefing Reports, and forms part of the
current portfolio of work at the Oxford Brookes arm of OEO.

Alongside these reports, the team publishes academic articles on the studies. These include:

• Universities, Innovation and territorial development: A review of the evidence

Environment and Planning C (Forthcoming);
• Lawton Smith, H and Ho, K W ‚Measuring the performance of Oxfordshire’s spin-
off companies’ Research Policy (August/September 2006);
• Glasson, J, Chadwick, A and Lawton Smith, H., The growth of Oxfordshire’s high-
tech economy, European Planning Studies (In press April 2006);
• Lawton Smith, H, Glasson, J, and Chadwick, A‚ (2005), The geography of talent:
entrepreneurship and local economic development in Oxfordshire; Entrepreneurship
and Regional Development 17, 449-476.

3. OEO’s Regional Role and Relevance to Developing Countries

The OEO model is one which engages with a wide range of local, regional and organisations. Its
research agenda and dissemination strategy are an essential part of policy-making activities within
political, economic, academic and scientific spheres of interest. The relevance of the OEO model
to developing countries is fivefold.

The first, and by far the most important, is the need to create a database of activity, maintain it
and provide analysis of the data with a view to identifying trends and their potential
consequences. This provides a sound basis for policy-making and business decisions.

The second is that embedded engagement with stakeholders is crucial. OEO demonstrates that
collaboration between local universities and with key local partners – in both public and private
sectors - is the best model. Collaboration increases efficiency and provides legitimacy for the
research agenda, locally, regionally and nationally. OEO is directly involved in the main policy-
making bodies and vice versa. OEO is represented on the board of OEP (and vice-versa), on the
Executive Committee of the Oxfordshire County Community Data Observatory (an observatory
of observatories) for which it is the economic intelligence provider, and the Steering Committee
of The Oxford Trust Networks activity (which undertakes sector studies). It is therefore
embedded in local systems of governance. Moreover, OEO is unique in that it through its
Advisory Council, it brings together politicians with local development officers as well as
business people.

At the same time, it is an outward looking model. As with cluster development and technology
transfer networks, the key to innovation is for firms is to link up with global flows of knowledge

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(Malmberg and Power 2004). This equally applies to policy-making. This model therefore shows
that academics can play a fundamentally crucial role in policy-making through their data-
collection and analytical skills and their key local as well as global knowledge. Far too often in the
UK, expensive consultants are paid to undertake reviews of local trends and who very often have
no local knowledge, hence take time to get up to speed with local issues.

Third, well presented and frequent output is essential. OEO’s publications and seminars serve
the following purposes: (i) to provide independent analysis on key trends in the economy which
are relevant to the needs of policy makers, industrialists looking to locate in the region, service
providers and venture capitalists looking for business opportunities and so on and (ii) to raise the
profile of the region. Enterprising Oxford has been widely circulated at the highest levels of
government and by Oxfordshire’s local government agencies, The Oxford Trust and so on as
evidence of Oxfordshire’s role in the international economy. Both Enterprising Oxford and Public
Research High-Tech spin-offs: measuring performance and growth are given to visitors from around the
world by all of Oxford University’s technology transfer departments to publicise the University’s
success as an entrepreneurial university. Part of that dissemination strategy is OEO’s high quality
website. This is maintained within Oxford University’s School of Geography. It has pages on
news, research output, events, key staff, the Advisory Council and our sponsors.

Fourth, it is important to have the right mix of skills and good working relationships between the
key players. OEO’s management team comprises economic geographers and planners, all of
whom are expert in undertaking detailed analyses of economic development at the regional level,
but from different perspectives. These complementary assets, for example in understanding
locational factors relating to high-tech industry, regional systems of innovation, technology
transfer, factors influencing the formation and growth of firms, labour market dynamics,
planning issues relating to urban structures and transport, underpin OEO’s capacity to identify
the nature of specific issues, develop methodologies for addressing their causes and produce
conclusions that are relevant to the needs of local stakeholders. In addition, the research assistant
in charge of the database is a statistician by training. He compiles the database from a wide range
of local, national and international sources such as local newspapers, databases held by other local
organisations and data produced by Companies House, the Office of National Statistics and
Eurostat.

OEO also draws on research assistance from within the respective universities. For example, the
data collection and analysis on the Oxfordshire spin-offs study was first undertaken by a fourth
year engineering, economics and management undergraduate at Oxford University. This formed
the content of his final year dissertation at the Said Business School. His placement was for six
months. Follow-up work has been conducted by a Masters student at Birkbeck. This student will
undertake the data collection and analysis on the London Spin-offs project. Other students will
be employed on future projects, such as the labour market study.

Fifth, observatories of this kind need to be funded by central sources as well as through
competitive bidding. Long-term funding (three years minimum) allows freedom to plan activities
and lead the research agenda, rather than being dependent on short-term projects.

4. Conclusions

Local observatories such as OEO can improve local policy making by delivering relevant
information and analysis at a relatively low cost. Unlike consultancy companies, academic
research centres such as OEO are established out of the long-term interests and passions of their

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founders. A principal advantage of such a model is that its management team builds up long-term
relationships with local stakeholders in both the public and private sectors. Through these
relationships a dialogue is maintained about the key issues, the questions that need to be
addressed and the methodologies for developing the analysis and the means of dissemination.
The reciprocal benefits are that national, regional and local governments obtain theoretically
informed analyses and data on priority topics while academics get to publish on contemporary
issues, fulfilling a broad rather than narrow academic function. The independence of academics is
crucial in this role.

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References:

Benner, C. (2003), “Learning communities in a learning region: the soft infrastructure of cross-firm
learning networks in Silicon Valley” Environment and Planning A 35 1809-1830.

Camagni, R. (1991), “Local milieu, uncertainty and innovation networks: towards a new dynamic theory of
economic space” in R Camagni (ed) Innovation networks, Spatial perspective, London:Belhaven-Pinter
121-144.

Chadwick, A., J. Glasson, Lawton Smith, H., Clark, G. and Simmie, J (2003), Enterprising Oxford: The
Growth of the Oxfordshire High-Tech Economy Oxford: Oxfordshire Economic Observatory.

Etzkowitz, H. and L. Leydesdorff (1997), Introduction: Universities in the global knowledge economy. In
Universities and the global knowledge economy: A triple helix of university-industry-government relations, ed. by
Henry Etzkowitz & Loet Leydesdorff, London: Pinter. 1-8.

Etzkowitz, H., A. Webster, C. Gebhardt and B.R. Cantisano Terra (2000), “The future of the university
and the university of the future: Evolution from ivory tower to entrepreneurial paradigm” Research
Policy 29, 2 313-330.

Florida, R (2002), The Rise of the Creative Class New York:Basic Books.

Frenz, M and C. Oughton (2005), “Innovation in the UK Regions and Devolved Administrations: A
Review of the Literature” Final Report for the Department of Trade and Industry and the Office of
the Deputy Prime Minister, May 2005.

Lawton Smith, H. and Glasson, J (2005), Public Research High-tech Spin-offs: Measuring Performance and growth in
Oxfordshire Oxford: Oxfordshire Economic Observatory.

Lawton Smith, H, J. Glasson, J. Simmie, A. Chadwick and G. Clark (2003), Enterprising Oxford: The Growth
of the Oxfordshire High-Tech Economy, Oxford: Oxfordshire Economic Observatory.

Love, J. H. and S. Roper (2001), “Networking and Innovation Success: A Comparison of UK, German
and Irish Companies”, Research Policy, 30, 643-661.

Malmberg, A. and D. Power (2004), “On the role of global demand in local innovation processes”, in P.
Shapiro and G. Fuchs (eds) Rethinking Regional Innovation and Change. Dordrecht:Kluwer Academic
Publishers.

Porter, M. (1998), “Clusters and the new economics of competitiveness”, Harvard Business Review 77 1 – 10.

Oughton, C., M. Landabaso and K. Morgan (2002), “The Regional Innovation Paradox: Innovation Policy
and Industrial Policy”, Journal of Technology Transfer 27 97-110.

Rutten, R and F. Boekema (2004), “The spatial dimension of inter-firm learning: case study and
conceptualisation” Chapter 10 P.Cooke and A Piccaluga (eds), Regional Economies as Knowledge
Laboratories, Cheltenham:Edward Elgar 181-196.

Saxenian, A. (1994), Regional Advantage, Cambridge, Mass. Harvard.

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4.2.8. Universities as Innovators in the Israeli Biotechnology Industry

Universities as Innovators in the Israeli Biotechnology

Industry

Amalya L. Oliver
Department of Sociology and Anthropology
The Hebrew University of Jerusalem, Israel

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Introduction: Governments’ Science Orientation, Universities, Industries and Innovation

Governments and national political institutions can have a significant impact on the rate of
technological innovation. As argued recently by Spencer, Murtha and Lenway (2005), that
governments in developed, capitalist economies can help, hinder, or avoid doing harm to firms
engaged in new industry creation. In their argument they link countries’ political institutional
structures, innovators’ approaches to technological entrepreneurship, and government’s
technology policy orientations. In addition, we have learned that from Kogut (1991) that
knowledge resources have proven more difficult to separate from national context than many
models of MNC strategy might have predicted (see also Ghemawat 2003, Rugman & Verbeke
2003). Thus, for understanding national innovation systems and the role of universities within
them it is important to start with a focus on the role of the government.

Technology policy can have various orientations (Ergas, 1987). Governments can apply mission
oriented policy to enhance “big science” which is based on radical innovation in small numbers
generally linked to national objectives. On the other hand, diffusion oriented technology policies
aim to create large base technological capabilities through the industrial enterprise of small,
medium and large firms. Israel can be classifies, similar to Germany, Switzerland and Sweden as a
country in which technology policy does not aim at targeting specific technological objectives,
but relies more on firms’ funding and links between firms and the public research organizations.

A four-cell typology is suggested to differentiate between social corporatists, state corporatists,

liberal pluralist and state nation states take into account the nature of the collective agency
(society to state centric) and organization of society (associational to corporatist) (Spencer,
Murtha and Lenway 2005:326). Israel can be classified (similar to Sweden, Denmark and Finland)
as a social corporatists state in which the state plays a facilitating role, the government acts as a
partner but does not lead to new industry emergence, the focus is on diffusion policy orientation
and implementation and there is a tendency for bricolage in which entrepreneurial approaches are
reinforced.

Universities play a key role in entrepreneurial regional development. Etzkowitz (1998) argues that
universities are undergoing a second revolution in which economic use of their knowledge
creating research is integrated into their ongoing basic research and teaching domains. He coins
this entrepreneurial behavior of universities as the capitalization of knowledge. Indeed, in recent
years we observe a trend in which universities and academic scientists become more
entrepreneurial than in the past (Etzkowitz 2003; Oliver 2004). Etzkowitz (2003) maintains that
the entrepreneurial university takes a proactive stance in putting knowledge to use and in
broadening the input into the creation of academic knowledge. Thus it operates according to an
interactive rather than a linear model of innovation. As a result, we can trace significant
differences between entrepreneurial and non-entrepreneurial scientists in terms of their
collaborative patterns in the area of biotechnology in universities (Oliver 2004).

Finally, it is important to emphasize the structure of exchanges in systems of innovation. The

creation process of high-technology industries, such as biotechnology, depends more on
knowledge creation and acquisition processes than on ownership of physical assets (Murtha et al.
2001). Garud and Karnoe (2003) introduce an important distinction between bricolage and
breakthrough approaches to technological entrepreneurship. The bricolage approach refers to
mutually adaptive systems in which emergent processes are collective and gradual leading to
multiple network actors in which series of small wins create and improve the technology. The
emphasis here is on the impact of informal networks of learning. On the other hand, a
breakthrough approach is based on a competition between actors in order to achieve a

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technological innovation in one great leap. The focus of this distinction is in the degree of
collective action in the scientific-technological community. The bricolage entrepreneurship
approach is consistent with cooperative networks while the breakthrough approach is consistent
with individualism and competitiveness.

In this paper, I argue that rigor academic research and innovation coupled with effective
networks with the local knowledge intensive industry, supportive government policies and
funding for the creation of a new industry generate the know-how and the ability to:

• Capture both basic and applied research in biotechnology,

• Motivate scientists to see the link between their academic research and its applied
possible outcomes,
• Establish strong Technology Transfer offices that are perceived efficient and rigorous
by the academic and industrial community,
• Acquire research funds from academic, governmental and industrial sources,
• Facilitate the participation of their scientists in various government sponsored R&D
initiatives, and
• Provide the resources for establishing on site academic spin-offs.

The paper starts with an introduction of the biotechnology industry in Israel, then describes
academic research in biotechnology and provides examples of government and university
initiatives to encourage the emergence of this innovative industry. Further, two biotechnology
firms that emerged from university research will be described, followed by insights as to the
important links between government, universities and industry in the emergence of an innovative
industry such as biotechnology. Finally, the paper portrays an emerging university spin-off and
suggests a few elements of inherent complexity in university spin-offs.

The Founding of the Industry in Israel:

“Star scientists”, who are conducting research in universities and who have made some breaking
through discoveries, were found to have the power to facilitate the establishment of
biotechnology firms (Zucker and Darby 1996, Zucker et al. 1998). In Israel, the discovery of the
Interferon by Prof. Ravel from the Weitzman institute in Rehovot was probably the leading
catalyst for the emergence of the biotechnology industry. This industry founding event starts with
a sweet taste and ends with a bitter flavor. Both have implications for understanding the links
between academia, industry and the State. These will be discussed further.

A second biotechnology related drug developed in Israel for Multiple Sclerosis – Copaxone.
Copaxone is produced and sold by Teva, an Israeli Therapeutic firm that is known for its central
role in the Generic Drug Market. The market includes the USA and worldwide in which the
returns in the year 2005 exceeded $1 billion for the first time, making Copaxone Teva’s first
blockbuster.66

Other successful Israeli biotechnology firms include Biotechnology General (BTG), a firm that
sells recombinant Growth-Hormone, a Hepatitis B vaccine and viscoelastics for joints and eye
applications. Pharmos, a firm registered in the USA, sells new ophthalmic drugs and developed
medication for strokes and head traumas (which recently failed an advanced trial phase). In

66 Based on information from Teva’s website.

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addition, many other products are under development including drug delivery systems (D-Pharm,
Omri), human monoclonal antibodies (XTL Pharmaceuticals), structurally shaped peptides
(Peptor), recombinant heparanase (Insight) and cell therapies promising for spinal cord traumas
(Proneuron).

Platform technology companies, especially in Genomic Bio-informatics (Compugen, QBI) and in

computer-aided molecular design (Synergics, Peptor, BTG, Green Care), are also active and
develop new drug generations.

For diagnostics, developments are less financially demanding, but the market is also more limited.
In Israel, Diagnostics amount to 4% of Biotech sales, mainly from genetic and immunological
assays for viruses and other pathogens (Orgenics, Savyon, Rahan Meristem, Gamida-Gen).

Agro-Bio and veterinary products amount to 23% of sales. The bulk is genetically-developed
hybrid seeds for vegetable, crops, fruits and cotton, with resistance to pathogens, herbicide and
adaptation to environments (Hazera, Zeraim Gedera, Rahan Meristem,Vitality). Poultry and farm
animal vaccines (Abic), insects to fight plant parasites (BioBee) and new cellulose-based
technologies (CBD) contribute to Agro-Bio and environment control.

1999-2005: A Decade of Growth67

Over all, the Israeli Life Science Industry is young but rapidly growing. Of the existing 557
companies, 77% were founded during the last decade. A closer look reveals that almost half of
the Industry (45%) was established in the last five years. Figure 1 depicts the trend and growth
experienced by the industry in the 1996-2005 period. One hundred and twenty seven companies
were established prior to 1996, with the oldest one, Teva Pharmaceutical, founded in 1901. From
1996 to 2000, the industry experienced significant annual growth equalling 19%. In 1996, the life
science industry grew by 23 companies while in 2000 the industry saw its number increase by an
additional 61 companies. In total, the industry grew by an additional 175 companies in the period
of 1996-2000. In the past five years, industry growth has remained stable with approximately 50-
60 new companies, annually. Altogether, the industry experienced a 16% compounded annual
growth in the decade of 1996-2005. It is important to note that Figure 6 depicts the number of
companies established in each of the year and exist today.

67 Data exerted from the ILSI data presented in 2005.

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Figure 1: The Israeli Life Science Industry Number of Companies Founded

* Incomplete data
Source: ILSI Database – 2005

The Israeli industry focus is on unique opportunities of major diseases for which existing
therapies are largely ineffective. Thus many Israeli companies are working on treatments for
cardiovascular and peripheral vascular disease (73 companies), oncology (41), neurodegenerative
disease (32), and other age-related diseases such as ophthalmic (16) and orthopaedic (18).

Figure 2: Main Medical Fields. Number of Companies (296 Total)

Source: ILSI Database – 2005

Companies at the Developmental Stage

As noted above, 77% of the companies were established within the last decade. Yet, only 37% or
205 companies are revenue generating entities. Of those, 83 companies are mature and were
created prior to 1996. More impressive is the fact that 20 companies or 12% of all revenue
producing companies were established within the last five years. Approximately 30% of the life
science industry or 175 companies are at the seed stage, 12% or 65 companies are at the
preclinical stage and 93 or 17% of the companies are at the clinical stage.

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Figure 3: Companies Developmental Stage

Source: ILSI Database – 2005

The Biotechnology Sector

The biotechnology sector is the second largest with 129 companies. The sector is fluid with new
companies being established and old one being abandoned. Of the universe of 129, 38
companies, or 29% of the total, are revenue generating. Most companies are selling diagnostic
kits or research equipment. 46 companies or 36% are in the seed stage, 23 companies in
preclinical stage and 16 in clinical stage.

Figure 4 depicts Israel’s biotech companies categorized by sub sectors. Bioinformatics/Drug

Discovery is the largest sub sector with 22 companies or 16% of the total biotech sector,
followed by Diagnostic Kits – 20 companies or 16%, and Cell & Tissue Therapy with 17
companies or 13% total.

Figure 4: Israel’s Biotech Companies – Sub-sectors

Source: ILSI Database – 2005

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Table 1: Number of Companies in the Life Sciences Industry

No. of Employees: 1-10 11-20 21-30 31-50 More SUM

than 50
Ag BioTech 11 4 1 3 2 21

Biotech 88 13 6 13 9 129

Medical Devices 183 44 18 13 28 286

Pharma 48 8 4 3 11 74
IT 10 3 3 2 18
Service 3 2 1 3 9
Other 12 3 1 2 2 20
Total Number of Companies 355 77 31 37 57 557

Source: ILSI Database – 2005

Most life science firms are still small and have a small number of employees. Table 1 shows that
most biotech firms have less than 10 employees and that the largest firms in the life sciences are
medical devise firms. Only 9 biotech firms have more than 50 employees.

The Monitor Survey

Research in Israel is carried out at seven universities, five colleges, 10 specialized institutes and
the major hospitals. Yet despite a world class academic infrastructure and a flourishing venture
capital sector, Israeli biotechnology is far from realizing its full potential.

In the recent years, the Office of the Chief Scientist (OCS) of the Ministry of Industry and Trade
in its aim to create a supportive environment for the ongoing development of this sector, and to
better understand the industry and its needs, conducted in 1998 an in-depth study of Israel’s
biotechnology sector. Monitor Company Inc., an international survey firm, conducted the study,
which was set out to evaluate the type of support required to facilitate accelerated growth. The
survey was commissioned as part of the Israeli government’s ongoing support for biotechnology.

The consequent report revealed encouraging trends but also issued a long list of
recommendations to fully exploit what the country has to offer. The government has adopted the
recommendations of the report through the OCS. The recommendations are:

• task forces creation with private sector leadership,

• support selective applied research projects and technology transfer,
• provide incentives to upgrade industrial infrastructure,
• reinforce regulatory infrastructure,
• implement a tracking system.

In addition, the report included a recommendation that two world-class incubators specializing in
biotechnology be established. These incubators should have first rate business and management
support and the involvement of overseas interests. Through these incubators promising projects
in biotech will have access to adequate pre-seed funding.

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The report also recommended that the physical infrastructure supporting the industry be
upgraded. This infrastructure will provide integrated services and equipment in pharmacology
and animal testing, analytical services and GMP pilot batches manufacturing facilities. The
industrial infrastructure should be enhanced and coordination intensified by the private sector
and government. The main challenge is in the early commercialization stage where more pre-seed
funding must be introduced. Moreover, links between academia and industry must be deepened,
managerial skills improved, the regulatory infrastructure strengthened, and the flow of data on
the industry intensified. Another important recommendation was that a new fund be established
to support academic R&D with an applied orientation.

Patents

Patents are considered an important measure for the degree of innovativeness of national
systems. Israel’s patent position is relatively strong and impressive. In the next section, I will
highlight a few related facts based on government publications:

• Israel’s total number of granted patents in the medical device area positions it in first
place, worldwide in patents per capita and number seven in absolute number of
patents (see Figure 5). Moreover, the number of medical device granted patents
increased at a compounded annual growth rate of 20% during the years 1999-2003,
placing Israel number three globally after Taiwan (1st) and United Kingdom (2nd).
This high growth rate is indicative of the innovative activity in the Israeli medical
device field (see Figure 6).
• Israel’s total number of granted patents in the biopharma field puts it in fourth place
worldwide in patents per capita and number 12 in absolute number of biopharma
patents (see Figure 7).
• Israel’s total number of Life Science patents as percent of total patents written by
Israeli inventors, places the country in first place worldwide (see Figure 8).

Figure 5: Medical Devices Patents per Million

Source: www.uspto.gov, Analysis: ILSI©

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Figure 6: Medical Devices Patents Compounded Annual Growth Rate (1999-2003).

Source: www.uspto.gov, Analysis: ILSI ©

Figure 7: Number of BioPharma Patents per Million Capita

Source: www.uspto.gov, Analysis: ILSI ©

Figure 8: Life Science Patents % of Total Patents Registered

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Students

Higher education is another component that has a significant impact on innovativeness of

national systems. Most relevant information is related to research universities and the life sciences
programs. Table 2 shows the most recent information published. The number of Israeli students
who seek and receive higher education and degrees reached approximately 27,000 in the
2001/2002 academic year. Of those 1,386 or 5.1% are graduates of biology, which includes
biochemistry, microbiology, genetics, physiology and biotechnology. It is interesting to note that
13.8% of biology graduates have received their PhD. However, these 191 students comprise
22.1% of all PhD receivers in Israel, suggesting that a larger proportion of life sciences students
continue their studies towards a PhD degree.

Table 2: Number of Graduating Israeli Students in Life Sciences. Academic Year

2001/2002

Total Num. of % of the Biology % students of the Medicine % students of

Students Total Total the Total
BA 18,018 67 764 4.2 401 2.2
MA 8,170 30 431 5.3 481 5.9
Ph.D 863 3 191 22.1 39 4.5
Total 27,051 100 1,386 5.1 921 3.4

Source: Israel Central Bureau of Statistics – 2002/2003One

should keep in mind that total number of students
in the Life Sciences is estimated to be 2.5 times larger as students spend an average of three year
completing their undergraduate studies, and 2-3 years completing their advanced degree.

Life Sciences studies take place primarily (65%) in seven academic universities and institutions:
Hebrew Universities, Technion, Tel Aviv University, Bar Ilan University, Ben Gurion University
and the Weizmann Institute.

Biotechnology Based Academic Research

It is common understanding among organizational scholars of biotechnology that it requires rich

academic soil in which to grow (Liebeskind et al. 1996, Powell et al. 1998). More than any other
high-tech industry, it must be nurtured carefully by the often long and expensive process of

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research. This characteristic makes Israel well placed to succeed in biotechnology with an
estimation of 35% of the country’s researchers involved in the life sciences, and thus it may not
be of surprise that there have already been some remarkable university-driven commercial
applications for Israeli biotechnology research.

In general, Israeli universities are very active in biotechnology are considered to have a
competitive advantage due to the potential synergies with other disciplines such as computer
science and physics.

It is worth noting that from its beginnings in the early 1920’s, Israel’s academic community has
been characterized by a strong bent toward the life sciences. Israeli universities have established a
high profile life science research institutes, including a medical system actively involved in clinical
investigation. Israeli researchers and academics publish their work in both Israeli journals and
international publications. Almost 60% of academic publications are in bio and clinical medicine
and related fields. Recent surveys by the distinguished British biomedical periodical, The Lancet,
ranked Israel #1 in the world in per capita publication of technical and research papers.68

Biotechnology research in Israel is carried out at seven universities, five technical colleges and
other research institutes and hospitals. In the next section, I will review the major activities of the
leading research universities and their technology transfer offices.

The Weizmann Institute of Science in Rehovot pioneered biotechnology in Israel and continues
to do so today. As indicated already, InterPharm's leading product, bulk recombinant human
interferon-beta-1a for the treatment of multiple sclerosis, was developed the Weizmann
Institute’s Department of Molecular Genetics. InterPharm, owned by the Swiss-based-
corporation Serono, enjoyed significant profits from this product and this kind of success that
has persuaded many international companies to perform significant elements of their product
development in Israel. As a result of the Weizmann Institute’s endeavours, the neighbouring
Kiryat Weizmann Science Park has become the national centre of the country’s biotechnology
industry with the largest companies based there.

The Weizmann Institute participated in the international Human Genome Project. One of the
contributions of the Bioinformatics Unit in the Department of Molecular Genetics is the study of
mutated genes which cause such disorders as Down’s Syndrome and Alzheimer’s Disease.

All universities in Israel established a technology transfer company. Weizmann Institute has
established its own technology-transfer company - Yeda Research and is also associated with the
Pamot Venture Capital Fund, which holds rights of first opportunity over any project under
development by the Institute. Current biotechnology investments include Gamida Cell,
developing technologies for ex-vivo expansion and manipulation of stem cells in bone marrow
and BALM Pharmaceuticals, developing a proprietary platform technology utilizing peptides.

The Hebrew University of Jerusalem also allocates major resources to the Life Sciences. The
University’s Biotechnology and Fermentation Laboratory is often held up as a model for a new
generation of Precompetitive Industrial Research Centres (PRIC), in which industrial and
academic scientists can work together on problems of scale-up and feasibility testing. Among
successes in recent years a team of HU researchers has created a new material - bioactive sol-gel
glass - for immobilizing enzymes and other bio-organic molecules. The immobilized enzymes can
even acts as biosensors in medical or environmental applications. Another HU success is in the

68 Information from OCS report 2004.

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area of steroids. Researchers in Jerusalem have encapsulated steroids in microscopic vesicles

where they are more accessible to chemical interactions.

Yissum Technology, established in 1964, is the University’s technology transfer company. Yissum
submits more than 100 patent applications each year, with its over all portfolio of 1,400
registered patent families earning an income of $37 million in 2004. As a technology transfer
company, Yissum asserts that they seek to find the best partners to maximize the commercial
potential of innovative technologies developed by the university’s researchers. Yissum grants
licenses to local and international corporations who develop the discoveries and bring them to
market. They also initiate the formation of start-up companies such as Atox Bio (more on this
start-up later). One recent biotechnology commercial success in the area of bio-informatics based
on HU know-how is Keryx. This Jerusalem start-up has developed a mathematical formula that
harnesses raw genome data.

The Technion, Israel Institute of Technology in Haifa is also one of the country’s leaders in
creating new industrial biotechnologies and moving them into industry. Among recent
endeavours a process has been developed for the elimination of toxic metals for drinking water
and industrial effluents. The Technion R&D Foundation is responsible for technology transfer
agreements at the university has been Rademate Ltd., which is developing RBHM - a
hydrophobic, strong, inexpensive and fully compostable, biodegradable composite material that is
environmentally friendly.

Tel Aviv University’s Department of Microbiology and Biotechnology also conducts prolific
research in these disciplines. Recombinant microbial biopolymers have been developed for
treating oil pollution and metal contamination in natural water, while new classes of antibacterial
and antifungal drugs have been devised based on novel pathogen biochemistry. Another key link
between the University and industry is exemplified by studies in bioprocessing in which enzymes
are used for the controlled degradation of cellulose. In diagnostics research cell sorting
technologies are used to enable rapid identification of human microbial pathogens. Tel Aviv’s
technology transfer company is Ramot.

One of the country’s youngest biotechnology centres is at Ben Gurion University of the Negev in
Beer Sheva. The Institute of Applied Life-Sciences (scheduled to become the National Research
Centre for Biotechnology) specializes in bio-materials, bio-sensors and bio-environmental
projects.

Many regional colleges in Israel are also engaged in biotechnological research. The Migal Galilee
Technology Center in Kiryat Shmona in the country’s far north is part of the Tel Hai Academic
College. The college has its own mini biotechnology incubator. Start-up companies include
Galim, which has developed platform generic technologies for libraries of monoclonal anti-
bodies, Sensis (together with Tel Aviv University), which is developing sequencers for DNA
which are smaller, cheaper and more portable than existing devices, and Bioview, which is
developing diagnostic equipment which uses image processing. In the past Migal has developed
recombinant vaccines for the treatment of Gambero disease in poultry, which is being sold by
Abic.

Bar Ilan University has developed, among many projects, a drug delivery system for Alzheimer’s
disease and has an active technology transfer company. Other research institutes involved in
biotechnology research include the country’s leading medical centers as well as the Ministry of
Agriculture’s Vulcani Center - Agricultural Research Organization near Tel Aviv.

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Government Incentives to Biotechnology

Government initiatives have added resources to academic and industrial research in

biotechnology. The Office of the Chief Scientist (OCS) at the Ministry of Industry and Trade
evaluates the viability of innovative ideas and offers financial incentives through matching funds
that share in the high-risks intrinsic in the earliest stages of new projects. The very approval of a
grant by the OCS bestows a legitimacy, which subsequently helps locate investors. These grants
must be repaid through royalties if the project reaches a successful end.

The OCS also enhances international strategic cooperation between Israeli and overseas
communications companies by negotiating bi-national international R&D frameworks and funds.
These include the US-Israel Bi-National Foundation (BIRD) as well as similar funds with Canada,
Britain and Singapore. In addition there are bi-national agreements with Austria, Belgium, France,
Holland, India, Portugal, Ireland, Italy, China and Hong Kong, Spain and Germany. Agreements
are about to be signed with Sweden, Finland and Korea. Israel also participates in the Fifth
Framework Program of the European Union.

Another OCS initiative includes sheltered “incubator” environments and other programs for
scientists without entrepreneurial skills. A national network of 24 technological incubators was
set up nine years ago and since then over 900 projects have been initiated, many of them in the
field of biotechnology. About 40% of Israel’s biotechnology enterprises were initially nurtured in
these incubators.

In addition the OCS and this is especially crucial for the future of biotechnology, places great
emphasis on promoting the broadening of high-tech know-how accumulating in Israel by closer
cooperation between industry and academia. This is accomplished through programmes that are
titled: MAGNET and MAGNETON. These “collaboration enhancement” programmes
encourage universities and private companies to work together on the development of generic
pre-competitive technologies (more details on these programmes are given below).

Such consortia have recently completed projects on algae, DNA markers and hybrid seeds.
Projects are underway on technologies for drug development, Image Guided Therapy and Agro-
Bio genomics. A new topic being developed, pharma-logic, will seek to make better decisions
about compounds for drug development in the early stages of the R&D process. This will assist
in determining whether an active molecule has other features that render it more attractive for
further development.

The government has acknowledged the importance of biotechnology and continues to assist in its
rapid development through direct financial support and other incentives for R&D activities, via
both the Office of Chief Scientist of the Ministry of Industry and Trade and the Ministry of
Science. Over 10 years ago, the Israeli government decided to establish an Inter-governmental
steering committee to promote the biotechnology area as a national project. The Ministry of
Industry and Trade, Ministry of Science, Ministry of Health, Ministry of Agriculture, Ministry of
Environment and Ministry of Finance are participating at this committee.

The National Biotechnology Committee was established when the Government of Israel
recognized that biotechnology needed to be a priority area for development and, as a result. The
Committee, headed by Professors from academia or the industry, provides continuing consulting
services both the Ministry of Industry & Trade and the Ministry of Science. In broad terms, its
purpose is to promote biotechnological research and entrepreneurial activities in Israel and to

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advise various government offices as to the development of biotechnology in Israel. The

Committee is composed of equal representation from both industry and academia.

Government assistance in the form of grants and other incentives from the Ministry’s Investment
Centre are available beyond the R&D stage, and include assistance in building production
facilities, marketing, and start-up costs. The Israel Biotechnology Organization also works to
support and promote development of the field.

Of particular importance to biotechnology is the MAGNET programme operated under the

auspices of the Ministry of Industry and Trade. The MAGNET programme is designed to spur
the development of innovative generic technologies by encouraging collaboration both within the
scientific community and between industrial companies. To do this the programme underwrites
up to 65% of a consortium’s budget based on joint projects of merit.

A relatively new programme, MAGNETON, is another government initiative which began in

2001. The MAGNETON’s purpose was to investigate the manner by which a scientific discovery
becomes an industrial product. The aim is to increase the access of Israeli industry to the
achievements of academic research and its economic potential, through cooperation between
research groups and industry on single R&D projects. To date, many such university-industry
two years technology-transfer collaborations were founded and some have been highly successful
in bringing academic inventions into the market place.

According to the OCS this ongoing support and the implementation of the proposed
recommendations of the recent report are expected to create a biotechnology industry in Israel
generating annual revenues of between $2 billion - $3 billion by 2010. Over this period
supporting industries should enjoy a fivefold increase in revenues.

Local Organizations

The Israel Biotechnology Organization (IBO) operates within the Manufacturers’ Association of
Israel in order to promote the interests of the Biotechnology Industry in Israel, and to create a
supportive business environment for the development of the Biotechnology Industry. The IBO
comprises approximately 50 biotechnology companies that are divided into two branches:
Pharmaceutical Biotechnology and Agricultural Biotechnology. The IBO operates in
collaboration with the Israeli Government Ministries and other sectors in order to advance the
Biotechnology Industry in Israel.

University Spin-offs in Biotechnology – Illustrative case studies

In the next section, two successful spin-offs of academic research will be described. This will be
followed by initial findings from an ongoing study on a more recent phenomenon – university
based spin-offs. These are biotechnology firms that are founded by universities in order to
facilitate their initial seed stages close to the scientist’s laboratory.

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1. InterPharm – Rebif

The establishment of InterPharm in Israel is marked as the founding of the industry, InterPharm
Laboratories Ltd. (SERONO Israel) was founded in Ness-Ziona In 1978, by Ares-Serono, a
multinational pharmaceutical concern based in Switzerland, as a subsidiary, to conduct research
and development projects and to manufacture bulk biological pharmaceuticals. InterPharm has
focused its R&D efforts on the production of cytokines, the body’s biological messengers, while
maintaining extensive research ties with experts in this field – especially the person responsible
for the discovery of the Interferon – Professor Michele Ravel at the Weitzman Institute of
Science based in nearby Rehovot.

The year 2005 was good for the Swiss pharmaceutical firm Ares Serono and its Rebif product as
sales reached 1.2 billion dollars. This impressive achievement was for a therapeutic product that
was invented by Prof. Ravel of the Weitzman Inst. In 1979 the Weitzman Inst. Agreed to license
the development rights to Serono under the condition that the product would be developed in
Israel (Globs, Feb. 27, 2006). Prof. Ravel stated in this recent interview after Serono closed its
facilities in Israel that maybe the rights for development should have been given to another firm.
Serono also acquired the rights for three other molecules that were developed also in the Institute
but decided not to develop them further. This decision reduced the innovativeness of their
pipeline but also prevented the further commercialization of these molecules by other firms.
Prof. Ravel also argued that the firm failed to maintain an ongoing consulting dialogue with the
scientists at the university and did not keep the scientists involved in the development process.
He also indicated that in order to have the full involvement of the scientist, one needs to leave
his academic position and most scientists are not willing to do so. It is crucial that the scientist
will have a central role in the development process while remaining in academia.

The State has an important role on biotechnology innovation – in Ravel’s view, the state was
about to approve tax reduction for Serono that may have saved the facility in Israel, but this
support was not sufficient for Serono. Rebif is now developed in Switzerland.

The closedown of the research facility in Israel came as a big surprise. Different explanations
were assigned to the decision, yet the bottom line is that the firm was established through the
government initiative to retain the returns from academic intellectual property and to provide
opportunities for local scientists to work on the development of products resulting from the local
discovery. After many years in which the government provided support to InterPharm, the
knowledge was exported and the returns to the State have ceased.

2. Teva – Copaxson

Another team at the Weitzman institute developed Copaxon – commercialized by Teva – an

Israeli pharmaceutical firm that was known as a Generic Drug Developing firm prior to the
introduction of Copaxon. The following information is taken from Teva’s published records. The
first innovative drug to be developed in Israel and to receive FDA approval, Copaxone® is a
unique immunomodulator therapy for the treatment of Relapsing-Remitting Multiple Sclerosis.
Copaxone® is the only non-interferon agent available for MS.

Form the published records of Teva we learn that Copaxone® was originally discovered by
Professor Sela, Professor Arnon and Dr. Teitelbaum at the Weizmann Institute of Science in
Israel. Teva was granted world-wide exclusive license for Copaxone® and became the developer
of the product. The efficacy and safety of Copaxone® were demonstrated in three main clinical

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trials: The first trial, led by Professor M. Bornstein, was performed in a single centre, double-
blind, placebo-controlled trial and included 50 patients.

The second trial was a 2-year, multi-centre, randomized, double-blind, placebo-controlled trial
and was performed in eleven US centres involving 251 patients. This study was led by Professor
Kenneth Johnson, Chairman of the Department of Neurology, University of Maryland Medical
Center, Baltimore. The third trial, a double-blind, multi-centre, multi-country MRI study,
involved 29 MS centres in six European countries and Canada, with the participation of 239
patients. This study was led by Professor G. Comi, Department of Neuroscience, Scientific
Institute Ospedale San Raffaele, University of Milan.

Teva has invested heavily in the preparation of production capacities in two main production
sites: the Copaxone® chemical manufacturing facility, a modern, high-tech, computerized
manufacturing plant in Netanya, Israel, as well as the fully automated sterile pharmaceutical filling
operation in Kfar Sava, Israel. Both are highly advanced facilities.

The InterPharm and Teva cases are evidences of a successful transition of academic knowledge
into profitable biotechnology products. However, the role of the universities in the product
development phase was in these cases relatively small and the knowledge was transferred through
licensing agreements. A current trend, documented by Etzkowitz (2003), argues that
entrepreneurial universities are seeking a more active role in the entrepreneurial and
commercialization process and establish start-ups in the form of university spin-offs. The
following paragraph will introduce a few initial findings on such spin-offs founded by
entrepreneurial universities in Israel.

3. University based spin-offs in biotechnology – initial findings

An exploratory follow up study is currently conducted by me on university based spin-offs in

biotechnology. In this study, I focus on seven university-based start-ups which emerged in one
university in their first and second year by interviewing the inventors who are university
scientists, the investors (if available), the managers (if available), the collaborators (if available)
and the technology-transfer officers associated with the spin-off. At this point, there are only
initial findings. Out of the seven projects none has reached a financial breakthrough and most of
them did not emerge far beyond the laboratory stage. Two projects have made some significant
progress. Atox Bio is one of the successful spin-offs:

Atox Bio:

Atox Bio is a biodefense drug development start-up, operating under the aegis of the University
Technology Transfer Company. The formal spin-off was established in 2004, and is still under
the basic science phase.

After many years of research in the area of infectious diseases, an NIH grant of $5.6 million via
the National Institute of Allergies and Infectious Diseases, was granted to a professor from the
faculty of medicine. This is the largest competitive NIH award for development ever made to an
Israeli institution. The drug development is done in collaboration with Atox Bio, which holds the
license for the technology and manages its development. This grant expresses the appreciation
and confidence in the founder of Atox Bio and his collaborators on his scientific standards and
achievements. The professor and his collaborator discovered the molecular mechanism triggered
by superantigens and with the aid of the US Defense Advanced Research Projects Agency

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(DARPA) (research funds of $6.5 million), they spent the past decade developing a peptide that
acts as antagonist to superantigens.

The new drug will enable Atox Bio to develop a biodefense drug that further down the line, will
have applications as a treatment for naturally occurring septic shock. Since phase II and phase III
are not required in the realm of biodefense, they hope that by the end of the decade have an
effective biodefense drug. They envision that the final stages of development for the market will
be based on a partnership with a large pharmaceutical firm with sales and distribution facilities
and resources.

With this massive funding, Atox Bio operates out of the research laboratories of scientist at the
university, and manages the worldwide collaborative research headed by the entrepreneurial
professor. This is an illustrative case of an academic scientist who had a clear strategic agenda.
His entrepreneurial vision has been to postpone, as much as possible, the entry of venture capital
into the scientific development stage. Thus, he has chosen the public funding venue and has been
very successful so far. The follow-up study will focus on the next stage of the development of the
drug, once the academic stage will be finalized.

Complexities Associated with University Spin-offs

In order to highlight some complexities associated with university-based spin-offs, I will suggest a
few initial explanations that can account for the relative slow progress of developing university-
based spin-offs and highlight illustrative complexities:

• The role of the scientists – the inventors in the study were all keen on having a
central role in the coordination of the business and economic aspects of the spin-off.
Some of these scientists have expressed business entrepreneurial vision, but others
claim that the lack of their experience and understanding is a major hurtle for success.
This lack of business experience became a hurdle at times.
• The lack of experienced managers – technology transfer offices are not always
capable of offering the needed managerial guidance for the spin-off. Yet, without
early investments, it is expensive to hire experienced managers.
• Dilemmas regarding the use of funding – public versus private funding have
important implications on the independence of the inventor scientist. Public funding
offers the intellectual freedom for the academic scientist, while private (venture
capital or strategic alliance partner) funding is associated with lesser flexibility,
dependency, transaction costs and more constraints. Yet, private funding is more
readily available than public funding that is sufficient for R&D stages.
• Personal networks versus new collaborative partners – personal networks of previous
collaborative partners, especially when they yield successful collaborations, are seen as
more attractive than new collaborations. However, new projects require new
collaborations and different networks of strangers. Scientists tend to wish to continue
working with past successful collaborators that are not always appropriate for the
needs of the spin-off.
• Uncertainty regarding the location of the research laboratory – the research starts in
the scientist’s laboratory at the university, but at a certain stage has to move beyond
the laboratory to a new location. Yet, the timing and the consequences of the move
are not simple to determine, and so is hard to define clearly the exact role of the
inventor scientist as the project moves to advanced stages.

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• The flow of scientific research – problems of transformation or the research from

basic to applied, issues associated with the scale-up of the study and complexities
associated with cross national collaborations that are needed for the testing stages.
• Problems in cross institutional collaborative work – different institutional
environments operate under different norms and expectations. Therefore, inter-
institutional university-industry collaborations are complex and entail strains and
unanticipated hurtles.

Discussion

In this paper, I argue that universities are the engine of innovation in biotechnology research.
Yet, using the example of Israel, it is clear that such innovation can be a product of a bricolage
(Garud and Karnoe, 2003) of enhancing factors and strong networks of information and
collaborations of many forms and scope.

Such innovation starts with strong universities and academic research. It must be based on an
infrastructure of academic education of high research standards, especially in the life sciences area
but also in the exact, medical and agriculture sciences for supportive academic capabilities. Such
academic system should benefit from highly supportive government initiatives that provide both
funding for risky early-stage research as well as facilitate collaborations between universities and
the industry.

In addition, academic based innovative systems must allow for networks of scientists to
collaborate and exchange ideas and knowledge. Entrepreneurial universities can not succeed
without a governing environment in which academic intellectual property rights are secured and
universities have the ability to value the market potential of their in-house basic and applied
research (Oliver and Liebeskind, 2006). The industrial environment should be well established in
order offer collaborations related to scaling up research, provide needed technologies, offer
developing funding and vertical integration facilities such as testing, production and marketing.
Finally, the entrepreneurial spirit as a cultural aspect should be facilitated not only within the
industry but also in universities and research laboratories. This can be gained through supportive
and capable technology transfer offices and specialized managers and consultants for advancing
university spin-offs.

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References

Ergas, H. (1987), The importance of technology policy. In: Das-Gupta, P., Stoneman, P. Eds., Economic
Policy and Technological Performance, Cambridge University Press, Cambridge.

Etzkowitz, H. (2003), Innovation in Innovation: The Triple Helix of University-Industry-Government

Relations. Social Science Information, Vol. 42, No. 3, 293-337.

Etzkowitz, H. (1998), The norms of entrepreneurial science: Cognitive effects of the new university-
industry linkage. Research Policy, 27:823-833.

Garud, R. and P. Karnoe. (2003), Bricolage versus breakthrough: distributed and embedded agency in
technology entrepreneurship. Research Policy, 32: 277-300.

Ghemawat, P. (2003), Semiglobalization and international business strategy. Journal of International Business
Studies, 34, no. 2: 138-152.

ILSI Database (2005), Israel Life Science Industry Database.

Kenney, M., and Florida, R. (Eds) (2004), Locating global advantage: Industry dynamics in the international economy.
Stanford: Stanford University Press.

Kogut, B. (1991), Country capabilities and the permeability of boarders. Strategic Management Journal, 12, 33-
47.

Liebeskind. J.P., A.L. Oliver, L. Zucker and M Brewer (1996), Social Networks, Learning, and Flexibility:
Sourcing Scientific Knowledge in New Biotechnology Firms. Organization Science, Vol. 7, No. 4 (Jul. -
Aug., 1996), pp. 428-443.

Murtha, T. P., Lenway, S. A., and J.L. Hart (2001), Managing new industry creation: Global knowledge formation
and entrepreneurship in high technology. Stanford, CA: Stanford University Press.

Nelson, R. R. (1993), National innovation systems: A comparative analysis. New York: Oxford University Press.

OCS Report (2004), Office of the Chief Scientist Report. Israel.

Oliver, A.L. (2004), Biotechnology Entrepreneurial Scientists and their Collaborations. Research Policy, 33,
4: 583-597.

Oliver, A.L and J.P Liebeskind (2006), Public Research and Intellectual Property Rights: A Tale of Two
Inventions. Working paper, Department of Sociology, The Hebrew University.

Powell, WW, K.W. Koput, and L. Smith-Doerr (1996), Interorganizational Collaboration and the Locus of
Innovation: Networks of Learning in Biotechnology. Administrative Science Quarterly, Vol. 41, (1):116-
45.

Spencer, J. W., T. P. Murtha, and S.A. Lenway. (2005), How Governments matter to new industry
creation. Academy of Management Review, 30,2, 321-337.

Polanyi, M. (1983), The Tacit Dimension. Gloucester, MA: Peter Smith.

Prahalad, C. K., and Doz, Y. L. (1987), Multinational mission: Balancing local demands and global vision. New
York: Free Press.

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Rugman, A. M., and Verbeke, A. (2003), Extending the theory of the multinational enterprise:
internalization and strategic management perspectives. Journal of International Business Studies, 34, 125–
137.

Zucker L.G. and M.R. Darby (1996), Star scientists and institutional transformation: patterns of invention
and innovation in the formation of the biotechnology industry. Proceedings of the National Academy of
Sciences, 93, pp. 12,709–16.

Zucker, L. G., M. R. Darby and M. B. Brewer (1998), Intellectual human capital and the birth of U.S.
biotechnology enterprises. American Economics Review 88(1) 290-306.

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4.2.9. Management of Technology Transfer Offices: Lessons for Brazilian Universities

Management of Technology Transfer Offices:

Lessons for Brazilian Universities

Marli Elizabeth Ritter dos Santos

Technology Transfer Officer of Pontifical Catholic University of Rio Grande do Sul, Brazil

José Luis Solleiro Rebolledo

Professor and Researcher of the Applied Sciences and Technological Development Center of the
Universidad Nacional Autónoma de México (UNAM), Mexico

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Introduction

During the last decades, university-industry relationships have become a central subject, due to
the essential role played by technological progress in the economic development of the countries.

The development of an innovative system based on the interaction of academy with industry has
promoted different ways to optimize the link between science, technology and economic
development.

In this context, the association between universities, industries and government constitutes one
of the best ways to establish links between technology and economic development.

From the theoretical point of view, the linkage of these three agents - university, industry and
government - has been the object of different analyses, ranging from the macro perspective to
the establishment of conceptual models of technology transfer from the university to industry.

The system established by this joint, has as its primary target the complementarities between the
agents: universities, as producers of the scientific and technological knowledge; industries, as
promoters of the development and innovation of new technologies; and the government, acting
as regulator and promoter of such relation. The complementarity of these three agents provides
stability to the system and realizes the information potential generated by each one of its parts
(Etzkowitz, 1996).

In sharp contrast to the situation of innovations based on the contribution of individual

inventors, the need to increment institutional relationships is a result of the increasing complexity
of research and of innovative activities, which demand the creation of formal structures and a
more propitious atmosphere for the production of innovations (Dosi, 1988).

As a starting point for enhancing their participation in these institutional arrangements, specific
mechanisms have been devised by universities, such as Technology Transfer Offices (TTOs),
created with the objective to stimulate and to facilitate their interrelation with the other two
agents of the innovation systems: industries and government.

In Brazil, although the creation of this mechanism represents the institutional recognition of the
importance of incorporating technology transfer as a formal function, the introduction of new
routines, that are “imported” from private sector practices, in the academic environment has not
been fully accepted, due to different perceptions from the university community about the
university’s mission as well as to a lack of capabilities to deal with business activities that are new
for universities’ managers. Those institutions where such offices have been adopted assign them
the duty of administrating all the services related to the interaction activities, including
management of intellectual property and licensing.

Within this context, this paper analyzes the importance of the role performed by Brazilian
university TTOs, from the point of view of their organization, policy and performance. The
diagnosis carried out has the purpose of determining: a) the main functions of the offices, (b) the
position they must have within the university structure and (c) it’s the pattern of internal relations
and with the market. With the purpose of strengthening this diagnosis of Brazilian offices and
drawing recommendations for their sound management, the case of the Office of Interaction and
Technology Transfer (EITT) of the Federal University of Rio Grande do Sul (UFRGS) is
presented.

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1. The Technology Transfer Office Model

The technology transfer office constitutes an institutional mechanism created with the aim of
promoting interaction of the university with the productive sector, especially with companies, and
the government. The setting-up of TTOs derives from the necessity to improve the effectiveness
of university performance in order to better correspond to social demands, particularly through
research results transfer and licensing of proprietary technologies and know how.

According to Solleiro (1993), management of university services includes development and

establishment of common objectives that serve as a guide for the interaction process. In a general
way, activities developed by this institutional mechanism are similar in most institutions, with
small variations depending on the emphasis that orients their creation (Dos Santos, 1990;
Albornoz, 1993; Solleiro, 1993; Cunha, 1998).

In this section the main concepts involved in the subject will be presented.

1.1. Concept

Before defining the TTO model, it is necessary to draw some considerations about the concept
of technology transfer, because the more precise the concept, more focused will be the activities
developed by the TTO.

1.1.1. Concepts of technology transfer and their implications in the concept of TTOs

Initially, it is necessary to establish the basic assumption that the primary mission of the
university must be education and research, and that technology transfer can be used to support
this primary mission (Mejía, 1998). Technology transfer is not a new phenomenon in universities.
Historically, research universities have transferred technology using traditional methods, like
publications, student education and extension programs. Technology transfer through intellectual
property and know-how licensing added a new educative dimension and research opportunities
to professors and students (COGR, 2000, p.3).

Thus, technology transfer is made through several ways: oral communication, physical transfer of
a tangible research result or through the licensing of intellectual property. Under this point of
view, technology transfer, for Parker and Zilberman, “is any process by which basic
understanding, information, and innovations move from a university, an institute or a
governmental laboratory to individual or firms in the private and quasi-private sectors” (Parker
and Zilberman, 1993, p. 89). For these authors, the scope of the definition is based on the
essence of the university mission as creator of public good and includes information transfer
(conferences and publications), educative activities and qualification, consultancy, patenting,
licensing of innovations and creation of start-up companies.

For Berneman and Denis (1998), the immediate goal of technology transfer is to facilitate the
movement of academic research discoveries from the laboratory towards the market, aiming
public benefit. Observing cultural differences between the university and the company, the
authors define technology commercialization as a bridge that links both cultures through
university-company interaction.

Thus, the institutions, which adopt a narrow concept of technology transfer, based on the
commercialization of intangible assets, the offices activities are centred in commercialization of
intellectual property. The definition of TTO adopted by OECD expresses this conception:

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“Technology transfer or technology licensing offices are those organizations or parts of an

organization which help the staff at public research organizations (PRO) to identify and manage
the organization’s intellectual assets, including protecting intellectual property and transferring or
licensing rights to other parties to enhance prospects for further development. A PRO may have a
single centralized TTO, it may have several TTOs associated with it (e.g. for different schools or
departments), or it may outsource to an external TTO which has several clients organizations ”
(the OECD, 2003, p. 80).

Under this definition adopted by the OECD, we can identify TTOs which operate since the
second half of the XXth century: the TTO of the Fraunhofer Society of Germany was created in
1952 and those from the University of California, in the United States, in 1926.

Nevertheless, these are exceptional cases, because most of the TTOs are young, having an
average of 12 years in the United States, and less than 10 in the other countries of the OECD,
according to the referred reports.

The most diverse TTOs experiences can be identified in different parts of the world, from offices
that are inserted in the university organizational structure itself to those which constituted
independent instances and put into practice a technology transfer process in the university’s
name.

The OECD concept points out that the main activity of the TTO is intellectual property and the
activities related to its disclosure, protection, and licensing operations.

Rogers et al. (2000) defines technology transfer as a process that consists of several stages, from
the invention disclosure until patent licensing. It can take several years, after a technology is
protected, until the university receives royalties (income obtained by the sale of products)
originated by the licensed technology. For that reason, to measure the efficiency of technology
transfer, it is important to consider all stages, and not only one.

Also considering technology transfer as a process, Friedman and Silberman (2003), define it as “a
process whereby invention or intellectual property from academic research is licensed or
conveyed through use rights to a for-profit entity and eventually commercialized” (Friedman and
Silberman, 2003, p. 18).

Siegel et al. share this same concept, when they argue, “the primary motive of the TTO is to
protect and market the university’s intellectual property. Secondary motives include promotion
technological diffusion and securing additional research funding for the university, via royalties,
licensing fees, and sponsored research agreements” (Siegel et al., 2003, p.31).

The adoption of these strict concepts has characterized most of the TTOs. Nevertheless, as it will
be observed ahead, in some universities, the role played by the TTOs is not restricted to the
activities related to the management of the intellectual property only, but it is characterized by
broader objectives, including the management of projects and technological consultancy.

It has also been observed in the Brazilian experience, as appointed by Terra (2001) in the analysis
of the role of the university offices in technology transfer to the market. She identifies a
multiplicity of ways that universities carried out technology transfer, as for instance, through the
results of applied or experimental research, the dissemination of information, consultancy,
training and continuous education, support to supervised practices, start-up companies, business
incubators, development centres, technological parks and technopolis (Terra, 2001, XVII).

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Thus, considering the diversity that characterizes TTOs in Brazilian universities, management of
intellectual property is an activity that has only recently been incorporated to the other ways
adopted by the university institutions to put technology transfer activities into practice. So, the
concept of technology transfer adopted in this study expresses these elements, including this
diversity of ways in which the interactions happen. Under this point of view, technology transfer
cannot be centred exclusively on intellectual property matters, as it has been observed in TTOs
of developed countries (OCDE, 2003), because that would constitute an analytical bias, not
considering other ways of technology transfer predominant in the Brazilian scenery and necessary
to address domestic industry’s needs.

In this specific context, we understand the technology transfer as the process characterized by
the passage of knowledge generated by the university to a company, allowing it to innovate and
extend its technological capacity, making possible to obtain a competitive advantage in the
market. Thus, technology transfer from the university to an enterprise includes (see Figure 1
below):

1) Interaction activities: a) technological services - technical analyses, calibrations, measurements,

certification of conformity, tests and verifications, consultancies and others; b) education
services: courses “in company”, seminars and qualification, among others; c) information
services: searches in national and international patent databases, technological information in
general; d) R&D projects: basic research, applied research, experimental development and others;
e) projects carried out by companies in incubators; f) projects of junior companies69: consultancy
and services. 2) Knowledge transfer through intellectual property licensing: patents, software, and
others, and transfer of know-how (non-protected knowledge) to companies already established in
the market or in incubators and technological parks or through the creation of start-up
companies.

69
A junior company is a non-profit consultancy company that provides services to companies, through an academic unit, at a low
cost. The management of this kind of company is done by the students themselves, and the technical support is provided by
academicians.

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Figure 1 - The university-enterprise technology

transfer process

UNIVERSITY ENTERPRISE

Linkage Intellectual
activities Property
Established in the market
Technological (small, médium and large
Services enterprises)
Patent
Licensing
Education
Services
Software Established in an Incubator
Information Licensing
Services

Licensing of
R&D Projects New Plant
Varieties
Established in a Technological
Park
Incubators
Projects Transfer of
know-how

Junior
company START-UP Company
projects

In this perspective, the creation of an office in a Brazilian university has to take into account the
diversity of forms in which technology transfer happens, in order to fit it the university’s
necessities and local conditions. Mainly, the adopted concept must be reflected in the objectives
and the activities that will be carried out by the TTO.

2. TTOs in Brazil: a brief history

The precursor university was the Federal University of Rio de Janeiro, which created, in 1971, the
COPPETEC, the Technology Transfer Office of COPPE - Coordination of the Graduate
Engineering Programmes:

“The preoccupation with the full time regime and the certainty that the institution would have to
participate in the process of development of the country, led COPPE to create a structure
oriented to the management of studies and technological projects, with the objective to constitute
itself in the exclusive channel of interaction with the productive sector.” (Institutional
Presentation of COPPE, www.coppe.ufrj.br/coppe/apresentacao-c.htm, consulted 04/03/04).

Later, in 1990, the State University of Campinas – UNICAMP created its TTO - the “Escritório
de Transferência de Tecnologia - ETT”. The main objective of ETT was to organize and to
disclose the potential of scientific and technological knowledge of the University, in order to

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transfer products and processes and to provide services. Some years later, the name of ETT
changed to “Office of Diffusion and Technological Services” (EDISTEC), and more recently it
changed again, adopting the designation of Agency of Innovation - INOVA, with a strong link
with the business world. Putting into practice a market-oriented strategy, INOVA has hired
professionals with industry-related experience, with the aim to reinforce the licensing activities.

Another important example is the University of Sao Paulo (USP), which created, in September
1991, the service “Disque-Tecnologia” (Call-Technology), with the purpose of taking care of
consultancies of micro and small companies that, in general, do not have internal conditions for
R&D. Years later, this program originated the Executive Coordination of University Cooperation
and Special Activities (CECAE), who acted as a liaison office attending the demands of
companies, interested in university services. More recently, USP followed the UNICAMP
example and creates its Agency of Innovation. The objective of the Agency is to transfer the
knowledge generated in the University to the society, in order to stimulate the social and
economic development.

Following the initiatives of USP and UNICAMP, several Brazilian institutions have created their
TTOs: the “Coordination of Innovation and Technology Transfer” (CT&IT) of the Federal
University of Minas Gerais, the “Regional Center of Innovation and Technology Transfer”
(CRITT), of the Federal University of Juiz de Fora, CERTI Foundation (Federal University of
Santa Catarina), the “Office of Technology Management” (EGT), of the University of Rio dos
Sinos Valley - UNISINOS; the “Interaction and Technology Transfer Office” (EITT), of the
Federal University of Rio Grande do Sul, among others.

In the Brazilian universities, the TTOs have been created, in general, in a centralized model tied
to Extension and Graduate Studies Vice-Presidency. According to Dos Santos (1990), the main
advantage of the centralized offices is that they can have a general follow-up of all technological
research projects carried out by the university in collaboration with industries. Nevertheless, this
does not occur in all cases. Given the complex nature of the university, in which researchers and
employees, far from constituting a “sprit des corps”, form a set of individual autonomies, the
control of activities can only be made if the office has institutional legitimacy.

The situation is still more complex in those universities, mainly the public ones, which have
created foundations, in order to simplify and make the bureaucratic proceedings more agile. In
these cases, information control becomes more difficult due to the autonomy of the foundation
in managing the research resources.

Also a great ambiguity is observed about the role performed by the TTOs. Brisolla et al. (1998),
in a study carried out in UNICAMP, considered the performance of the TTOs very low. It seems
to be a non-exclusive situation of Brazil, because, as stated by Dierdonck et al., analyzing the
Belgian experience: “there is no clear definition of the role of the offices in contracts and in the
university’s research strategy, and there is no consensus on the tasks that they must carry out”
(Dierdonck et al., apud Brisolla et al., 1998, p. 427).

For the Brazilian case, the great responsibility that TTOs have to overcome the gap that separates
them from their international pairs contributes to this lack of definition, having to act as
promoters of the university-enterprise interaction, and, at a same time, as managers of intellectual
property, including the patent licensing activities and other forms of technology
commercialization. All these activities have to be put into practice in a not very favourable
environment, where consensus is still far from being reached.

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3. Method

The data were collected through a survey that involved 143 Brazilian universities70, which
answered a questionnaire to collect detailed information about the established TTOs, their form
of operation and their main activities. With a return rate of 18%, 25 TTOs in operation in the
Brazilian universities were identified. Table 1 shows the list of institutions that answered the
questionnaires.

Table 1: List of Brazilian University TTOs

Name of University TTO Date of

creation
Federal University of Rio Grande do Sul Interaction and Technology Transfer Office (EITT) 03/03/1997
(UFRGS)
University of Rio dos Sinos Valley Technology Management Office (EGT) 18/09/1997
(UNISINOS)
Pontifícal Catholic University Católica of Technology Management and Intellectual Property 13/09/1999
Rio Grande do Sul (PUCRS) Agency (AGT)
Universitarian Center of FEEVALE Bureau of Inovation and Technology Transfer (BITT) 01/03/2002
(FEEVALE)
Federal University of Santa Maria (UFSM) Nucleous of Intellectual Property (NPI) 05/03/2001
University of Santa Cruz do Sul (UNISC) Office of Technology Transfer (ETTEc) 20/04/1999
Catholic University of Pelotas (UCPEL) Nucleous of Projects Support (NAPI) 19/12/1991
Federal University of Santa Catarina Intellectual Property Management Coordination 25/06/2002
(UFSC) (COGEPI)
State University of West of Paraná Nucleous of Technological Innovations (NIT) 01/03/1991
(UNIOESTE)
State University of Londrina (UEL) Nucleous of Technological Innovation (NIT) 27/10/1987
University of São Paulo (USP) Executive Coordination of University Cooperation 24/07/1986
and Special Activities (CECAE)
Federal University of São Paulo Nucleous of Intellectual Property 03/05/2000
(UNIFESP) (CMI-NUPI)
State University of Campinas (UNICAMP) Office of Diffusion and Technological Services 28/08/1990
(EDISTEC)
Federal University of São Carlos Nucleous of Extension UFSCar-Enterprise (NUEMP) 01/09/1996
(UFSCAR)
University of Paraíba Valley (UNIVAP) Vice-Presidence of University-Society Integration 02/12/1992
(UNIVAP-PRIUS)
Fluminense Federal University (UFF) Office of Knowledge Transfer (ETCO) 30/07/2001
Federal University of Rio de Janeiro (UFRJ) Coordination of Projects, Researches and 12/03/1993
Technological Studies Foundation (COPPETEC)
State University of Rio de Janeiro (UERJ) Office of Technology Transfer (ETT) 23/09/1996
Pontifical Catholic University of Rio de Development Office of the Technical-Scientific 03/01/1994
Janeiro (PUCRJ) Center (ED do CTC)
Federal University of Minas Gerais Transfer and Technology Innovation Coordination 16/06/1997
(UFMG) (CT&IT)
Federal University of Viçosa (UFV) Permanent Comission of Intellectual Property (CPPI) 19/10/1999
University of Salvador (UNIFACS) Research and Extension Coordination 03/01/2000
Federal University of Pernambuco (UFPE) Innovation and Entrepreneurship Directory (DINE) 01/01/2000
Federal University of Ceará (UFCE) Scientific and Technological Diffusion Coordination 08/08/1981
Federal University of Pará (UFPA) Technology Transfer and Intellectual Property Sector 01/03/1999
(SPI)

70 The set of institutions was obtained from the registers of the Brazilian National Universities Presidents Association (Associação
Nacional de Dirigentes das Instituições Federais de Ensino - ANDIFES) and from de Council of Brazilian Universities Presidents
(Conselho de Reitores das Universidades Brasileiras -CRUB).

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Beyond the 25 TTOs described, three others have been identified - the Technology Transfer
Office – ETT, University of Caxias do Sul (UCS), the Innovation and Technology Transfer
Regional Center– CRITT, Federal University of Juiz de Fora (UFJF), and the Technological
Development Center – CDT, University of Brasília, that did not answer the questionnaire and,
therefore, did not participate in the survey.

In order to have a clearer understanding, the concepts used in this study are defined as: a)
Segment - group to which the university belongs: federal public universities - sponsored by the
federal government; provincial public universities - sponsored by the provincial government;
private universities – privately funded institutions of higher education, sponsored by the fees paid
by its students; communitarian universities - private institutions of higher education; b) Agency to
which is subordinated –includes the instance to which the TTO is hierarchically subordinated in
the structure of the institution; c) Budget - indicates if the TTO is maintained by the institution’s
budgetary resources; d) Own resources - they are the resources generated by the TTO itself in the
performance of its activities (through technical services, projects or percentage of the royalties
obtained in licensing activities); e) Centralized structure - it indicates if the TTO acts in a
centralized way or if it is the only instance designated by the institution to interact with the
productive sector and to put the technology transfer process into practice; f) Support Organism -
informs if the OTT uses the services of a support organism, like a foundation, to manage the
projects; g) Projects management - it indicates if the TTO uses some mechanism of projects
management, including some type of projects evaluation.

On the other hand, the activities carried out by the TTOs were analyzed, including: a) Attention
to technological demands; b) Management of technological services; c) Negotiation of
technological projects; d) Elaboration of agreements and contracts; e) Intellectual property
register; f) Technologies and patent licensing; g) Training of human resources; h) Technological
diffusion events.

4. Data Analysis

In order to analyze the main surveyed aspects, the same sequence adopted in the questionnaire
will be used, which included the creation of the offices, the organizational structure, staff, budget,
and services.

4.1. Creation of the TTOs

The first aspect analyzed was related to the segment to which the 25 identified TTOs belong. It
was observed (see Figure 2) that there is a predominance of TTOs in public universities (68%).
This fact is not a surprise, since it is exactly in the public universities where the greater volume of
Brazilian scientific investigation is concentrated (MCT, 1992), and the accomplishment of
research in the institution is an indispensable condition to promote technology transfer, once the
research results are the main inputs of a TTO.

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Figure 2: Segment to which the Brazilian TTOs belong

It was also observed that most of the TTOs were created during the 90s, in tune with the
international trend. As appointed in an OECD study (OECD, 2003) most of the recently created
TTOs are, on average, 12 years old, in the United States, and less than 10 in the other countries
of the OECD.

As to the designation of the structures found in the universities that fulfil the functions of a
TTO, several different designations have been observed, from nuclei, coordination, agencies and
offices themselves. This may be explained by the lack of a federal legislation similar to countries
such as the United States and Spain, where the legislation induces to a homogenous designation –
TTOs in the American case, and Oficinas de Transferencia de Resultados de Investigación
(OTRIs), in the Spanish case. Consequently, the TTOs have been created by decision of each
individual institution, from its own perceptions on the need and relevance of an instance with
such purpose.

With respect to the hierarchic subordination, the TTOs are, in general, linked to a Research and
Graduate Studies Vice-Presidency. There are few TTOs linked directly to the Presidency of the
University, and none of them constitute an autonomous entity.

Concerning the budget, of the 25 TTOs, only 7 can count on their own budget. The other 18
depend on resources of the university budget. Only 28% of the TTOs generate their own
resources through services or percentage on projects or royalties obtained by technology and
patent licensing. In those cases, the greater volume of income obtained by the TTOs comes from
services and returns generated by the projects. The amounts obtained by royalties through
licensing activities are still insignificant, which demonstrates the gap between Brazilian TTOs and
their equivalents in developed countries.

4.2. Organizational Structure

We have also verified a great diversity in the organizational structure:

In 60% of the institutions the structure is not centralized, and there are other instances that fulfil
the same function in managing university-enterprise projects;

In only 20% of the institutions the structure is centralized. In those cases, TTO is the only
instance in charge of the formalization of the university-enterprise and intellectual property
activities;

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In the other 20%, the structure is centralized only for some activities.

Although this diversity can be associated, in the Brazilian case, to the indefinite role that most
TTOs play in the whole organizational structure, or to a lack of institutional legitimacy to
perform their functions, the analysis can lead to a different interpretation if compared to their
international counterparts. A great diversity has also been observed in the institutional
adjustments adopted by universities in the OECD countries, where the following instances are
mentioned: (i) TTOs dedicated to identify, to protect, and to operate intellectual property; (ii)
administrative departments whose main function is not intellectual property management; and
(iii) external (public or private) providers of intellectual property management services (OECD,
2003). Therefore, the diversity observed by this study, more than a local characteristic, reflects
the lack of clarity in the understanding of such activities both in the university scope and in a
broader context as well.

The investigation revealed that the vast majority of the institutions rely on a support foundation
for managing their activities (76%). These data inform the need for agile, flexible procedures,
once bureaucratic routines are incompatible with technology transfer processes. Only 52% of the
TTOs use project evaluation mechanisms, indicating the still incipient preoccupation with the
effective institutionalization of university-enterprise interaction activities.

4.3. Staff

From the staff’s standpoint, our investigation reported that the TTOs present a very small
structure. The smallest identified structure was formed by only one person performing all the
activities, and the largest staff had sixteen professionals. The average number in the Brazilian
TTOs is similar to their USA and OECD counterparts, that is 3.5 workers.

As far as staff specialization is concerned, some points deserve to be underlined. A specialized

staff either in a technological or in a management area, in which they develop a specialized
knowledge, characterizes the majority of the TTO professionals. Nevertheless, in the Brazilian
case, the TTOs staff is still far from specialization or expertise. The presence of a high number of
temporary workers (scholarship holders) reveals the difficulty to constitute a professional staff.
The temporary character of the personnel work hinders the consolidation and improvement of
the activities performed by the TTOs, and slows down potential advances that a better trained
staff would certainly promote.

Different from what we can observe in the international experience, where the TTOs are
managed by professionals, in Brazil there is a significant number of professors in the
coordination of TTOs. On the one hand, this means that there is an institutional recognition of
the importance of the role played by the TTO, since professors are the professionals with the
greatest prestige and status in the university; but, on the other hand, it may hinder the
professional performance required for the management of the interface with the productive
sector. However, due to excessive workload that professors carry in accomplishing the tasks of
teaching and researching, it certainly becomes hard, on top of that, to manage a TTO with the
required professionalism and commitment.

4.4. Activities Performed

The activities performed by TTOs, are, in general, very similar. The activity that presented the
lowest performance was patent licensing. Although 16 TTOs are mostly in charge of patent

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licensing, only 5 institutions have, indeed, succeeded in this activity, totalling a total of 14 licensed
patents.

Considering the lack of specialized staff in the technology transfer management, around 80% of
the offices are also involved in educational activities, such as courses and seminars, with the aim
of training their staff in intellectual property and technology transfer matters.

The data presented and analyzed in this study lead us to the conclusion that diversity is the main
characteristic of the Brazilian TTOs. Although such diversity may result from the institutional
need for adjustment to the local conditions, it may reflect a relative incomprehension of the
specific TTO functions. Those functions are not always very clear. Some of the TTOs described
as such do not fit into this category, proving that the specificity of the TTOs is not clearly
understood by the other university instances.

Although the variability in the denomination of the TTOs can be seen as a lesser question, if
analyzed comparatively with the experience of other countries, for instance, United States and
Spain, the uniform designation reflects an underlying governmental policy - in the American case,
the Bayh-Dole Act, and in the Spanish case, by the National Plan of R&D. Thus, what we
propose here is not a uniform denomination, but the necessity for a governmental policy to
endorse, legitimize and define the role that these structures must fulfil in the context of the
Brazilian universities. A much stronger exchange of technology transfer experiences among
universities would be necessary to advance towards a Brazilian model of good practices that
would establish procedures and useful tools to increase TTO’s effectiveness.

Related to the activities developed by the TTOs, there are some gaps as perceived by Terra: “the
Brazilian TTOs act not like managers of the valuation of the generated knowledge, but like
administrators of contracts of academic services” (Terra, 1999, p. 171). Nevertheless, through the
data collected in this study we can perceive the reconfiguration of this scenario, with the
introduction of intellectual property management. We cannot be unaware of the advances
obtained by some offices in their aim to protect and license their patents, mainly those inserted in
universities with a greater volume of research results. It demonstrates their effectiveness in the
valuation of intellectual capital and the knowledge generated by the Brazilian researchers.

At the moment, the Brazilian TTOs perform a triple function: 1. Management of university-
enterprise interaction activities; 2. Intellectual property register; and 3. Technology transfer
through technologies and patent licensing. With respect to the first two functions, it is possible to
state that the universities have taken great steps. Nevertheless, the greatest challenge lies in the
third one. Some universities have been able to generate funds through patent licensing activities.
Others, however, although they produce a reasonable volume of research, are still in a very
incipient stage towards the licensing of research results and need a great institutional effort to put
the technology transfer processes into practice.

In this context, the next section will present a case analysis - the TTO of the Federal University
of Rio Grande do Sul, describing and analyzing how a Brazilian Public University TTO put into
practice its activities, comparing its particular performance to the general ones. The analyzed case
of the TTO of the Federal University of Rio Grande do Sul demonstrates, among other aspects,
the importance of institutional technology transfer strategies, and shows how the institution put
its experience into practice, following a learning by doing method.

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5. Case Analysis

The Federal University of Rio Grande do Sul – UFRGS is a federal, public university, founded in
1934. It is located in Porto Alegre, the capital of the State of Rio Grande do Sul, and is the largest
university in southern of Brazil, with around 30,000 undergraduate and graduate students. Today,
it is also one of the most outstanding research institutions in Brazil, carrying out almost 3,000
research projects in around 900 different areas.

More than 400 laboratories and about 500 research groups express the research capacity of
UFRGS. The excellence of its graduate programs can be measured by the national evaluation
realized by CAPES71, in which UFRGS is ranked as the second best university in the country, in
terms of the quality of its courses, and constitutes the only Brazilian university that did not have
any of its programs reproved.

The management of technology transfer and university-enterprise interaction is carried out,

mainly, through the support foundations and by the Secretariat of Technological Development,
to which the Office of Interaction and Technology Transfer (EITT) is linked since October,
2000.

5.1. TTO Antecedents

The Office of Projects Consultancy – the previous name of EITT – was created in March, 1997,
as a strategic option of the University to improve its relationships with society as established in its
institutional policy. Besides, the creation of this office attended to a commitment that UFRGS
had taken with FINEP (Financier of Studies and Projects), through the FINEP-TEC Program, to
“maintain a permanent structure for management of R&D Projects with enterprises” (Agreement
nº 8.6.95.0323.00).

The core business of EITT was projects management, and for this reason the interface with
enterprises was seen as a result of the faculty activities. It was, in fact, a linear management
model, in which the role played by the University was limited to its research and education
functions. Besides, the proposal of interaction with society was too timid, limited to the
organization of seminars, courses and workshops. It did not include, for instance, the promotion
of sponsored research projects, technology transfer, and intellectual property licensing.

Due to the amount of research projects and the increasing number of contracts, a dynamic was
established that did not fit to this Office model. It was necessary to create a “tailor made” model,
putting new emphasis in the connection of the University with the market.

On the other hand, the configuration of a new national scenario in the technology transfer ,
particularly, the new intellectual property Laws - Industrial Property (9.279/96), New Plants
Varieties (9.456/97), Software (9.609/98), Copyright (9.610/98) and, more specifically, the
Decree no. 2.553/98, that regulates the sharing of the economic profits derived from licensing
activities, instituting, as a prize, the limit of 1/3 to the researchers - imposed new requirements to
universities, in terms of internal procedures, in order to integrate these new activities to the
institutional context.

These combined factors – the opportunity of new national legislations and the necessity to
change the office’s focus – did create better conditions for the performance of the EITT as the

71 Coordenação do Aperfeiçoamento do Pessoal de Nível Superior - CAPES is the organism that, in Brazil, is responsible for the
evaluation of the graduate education.

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main institutional mechanism to manage university-enterprise interactions and to put into

practice technology transfer and intellectual property procedures. As well as the institutional
mechanisms created based on the concept of the Triple Helix (Etzkowitz, 1996), the nucleus of
EITT activities is to join science, technology and economic development, stimulating and
facilitating the interaction of UFRGS with enterprises and government.

The fact of having been the first university technology transfer office in the State of Rio Grande
do Sul imposed several challenges to its organization, specially due to the lack of references to
follow. Everything was new, because there was no sector in the institution that performed, at
least, some of the office’s proposed functions. The references were from foreign institutions and
the very few national experiences were inserted in other contexts that did not always fit to the
local conditions.

Thus, the internal endorsement by the different instances in the university administration, and the
external recognition expressed by the financial support, created the necessary conditions for
EITT to start working.

5.2. Main Functions

To carry out its activities, the EITT adopted a very simple structure that put the institutional
policy and mission into action. In addition to administrative support and legal consultancy, there
is an ad hoc Committee, which has the purpose to support the decision making process in
matters concerned with the office’s activities.

The main functions of EITT are divided into three areas: Intellectual Property, Business Division
and Technological Diffusion.

The Intellectual Property area takes care of all the steps involved in the protection of intangible
assets, from the invention disclosure to the patenting and licensing. A monitoring system is used
to accompany all the processes and to ensure the meeting of deadlines in all stages.

The Business Division encloses the negotiation of sponsored research projects, as well as the
elaboration of technology transfer agreements and contracts. The Technology Licensing Sector
carries out, among other activities, market and economic valuation of the technologies to be
licensed; identification of potential licensees; elaboration of licensing contracts; supervision of
technical assistance involved in the technology transfer process. The Technological Consultancies
is another sector in the Business Division and has the main purpose to meet demands of SMEs.
These consultancies can comprise a range of activities, from simple technological services to
more complex research projects.

The Technological Diffusion area plays a double role: internally, it constitutes an information
channel about technological research projects opportunities; externally; its role is to spread the
university technological products, as well as the specialization of its faculty members, and the
technical resources that are available in the institution. With this aim, the Information System
Sector keeps a database with the main institutional competences in different areas of knowledge
carried out by its more than 400 laboratories. The Divulgation and Events Sector is responsible
for promoting events with the aim to bring the internal community closer to external partners,
looking for partnership opportunities.

Despite the formal structure EITT has, with clearly defined functions, it is important to point out
that the staff is small, and for this reason, the sectors are mostly defined by the activities rather

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than by the limits that the organizational configuration can suggest. There is a permanent
connection among the team members.

5.3. Position of EITT in the University Structure

From 1997 to 2000, the EITT was hierarchically subordinated to the Research Vice-Presidency,
as an administrative department. Since October 2000, it has been integrated to the Secretariat of
Technological Development, which was created as an organ of the Presidency of the University.

In order to give agility and to make possible its technology transfer activities, the EITT contracts
the services of the University foundation.

In spite of being recognized as the institutional instance responsible for technology transfer
activities, the attributions of EITT are not formally described in the University Statements. There
is only an Administrative Act, signed by the President, creating the office.

This lack of formality brings about advantages and disadvantages. The main advantage is linked
to the flexibility that it confers to effectuate changes, especially because of the dynamism inherent
to technology transfer. On the other hand, the disadvantage is related to the weak institutional
legitimacy due to the “nonofficial” character of its actions. For this reason, the office can become
very fragile, because it strongly depends on the leader who is governing the University.

The autonomy in the decision making process is limited to routine matters or to the subjects to
which the office has exclusive competence. Subjects like hiring specialized professionals are
strongly limited by the bureaucratic procedures of the University. This is a very important
restriction in the Brazilian context that has to be faced by offices like EITT.

Therefore, even when it is considered strategic for the university to keep an office, there are
many obstacles to be faced by the managers to put daily activities into practice. In the EITT’s
case, these limitations have been punctually identified and the most important is that the high
administration has given the needed support and has allowed some advances that situate EITT
among the most important Brazilian technology transfer offices.

5.4. Relationship with the Market

The portfolio of services of the EITT has always been conditioned by the internal capacity of
attention to the demands. This fact has determined the adoption of a “step by step” strategy for
services supply, that is, the supply has been extended as soon as the office gets the technical
requirements to do it.

The EITT is oriented by a differentiation strategy, supplying services that are not done by other
instances inside the University. So, there is a focus on intellectual property management services,
an area in which only EITT has worked. To sum up, we can say that the intellectual property
management is the opportunity window of EITT. Here is situated its “internal market
monopoly”, and, therefore, its main source of legitimacy.

Externally, the action of EITT aims to stimulate partnerships with different sectors of the
productive sector, through different institutional arrangements. So, many activities address this
objective as, for instance: a) Participation in specific networks, as the Intellectual Property and
Technology Commercialization Network (Rede de Propriedade Intelectual e Comercialização de
Tecnologia – REPICT), of Rio de Janeiro; b) Participation in international committees, as the
Technological Development Committee, created in the context of the Montevideo Group

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Universities Association (Asociación de Universidades do Grupo Montevideo- AUGM); c)

Participation in Industrial Forums, linked to the Regional Industrial Federation, in specific groups
like the Technology Group at the Federation of Industries of the State of Rio Grande do Sul
(FIERGS) and the Technological Committee at the Chemistry Industry Syndicate.

Related to the negotiation strategy with its partners, the EITT adopts the win-win approach and
trust is considered the fundamental element for a successful relationship.

5.5. Results

The EITT is oriented towards results. In this context, time is a very important variable, because,
in general, a technology transfer task becomes fruitful only after a long time and involves some
factors that do not depend directly on EITT’s action. Therefore, a prudence strategy has been
adopted side by side with constant evaluation in order to allow, if necessary, a change of route.

So, after seven years, EITT has presented some results, which reflect its performance. In terms
of intellectual property management, Figure 3 shows some data related to this subject.

Figure 3: Applications on Intellectual Property, per year.

12

10

8 Patents
Utility Models
6
Trademarks
4 Softwares
New Plant Varieties
2

0
1998 2000 2002 2004

As shown in Figure 3, from 1998 to 2000 there was a regular increase in patent files, followed by
an abrupt decrease in 2001, which was compensated in 2002. From this year on, an annual
average of 6 filed patents has been kept.

The adoption of more rigorous criteria in the patent file decision-making and a systematic
procedure of searching for novelty in patent databases lie among other reasons for the observed
decline.

These quantitative indicators totalled, in December 2004, 44 filed patents, 8 requested

trademarks, 8 issued softwares and 12 new plant varieties registered. It is necessary to emphasize
that 3 (three) patents were also filed abroad - in South Africa, France and Uruguay, having
already been issued in the first two. In Brazil, only 2 patents have been issued to date.

Another area in which EITT has acted very intensively is the professional training in intellectual
property and technology transfer management. The courses and seminars carried out by EITT,

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have allowed around 150 people to be trained per year, not only from UFRGS but also from
other academic institutions and local and regional companies.

The technology licensing activities have demanded a great effort by EITT’s staff. Despite this
fact, the results are not significant, in terms of both licenses and the amount of royalties, which
until December 2004 was around US$ 50,000. Nevertheless, the impact of this activity is
inexpressive, considering the high potential of the institution.

Meanwhile, it is worth considering that the most important result can be measured not by the
quantitative impact, but by its qualitative results in terms of the learning process, allowing a better
knowledge about companies’ practices and also a clearer perception of the complexity involved in
the technology transfer process. Despite the importance of quantitative indicators in the
performance measurement, in the case of EITT the qualitative aspects surpass the quantitative
ones. The promoted changes in the University, related to an adequate valuation of the intellectual
patrimony and the creation of better conditions for the university-enterprise interaction,
constitute the main results obtained by EITT.

In order to evaluate its performance, in 2003 a survey was carried out in order to measure the
EITT customer’s satisfaction. The results of this survey indicate that the majority of the
customers are completely satisfied with the services supplied by EITT. However, it is important
to point out that as important as it is to survey the internal client’s opinion, it is also relevant to
know what the external clients are thinking, especially the companies.

The qualitative evidence of this case supports to the idea that the organizational performance is
the result and reflection of the way people put activities into practice. In the case of EITT,
although the great effort has been made in terms of training, and the great motivation of the staff
in order to “do the right things” and “do the things right”, the technology transfer tasks are still
developed in an amateur way. To keep a motivated staff is essential, but good will is not enough
when we have to face such a complex subject as technology transfer.

6. Conclusions

It is important to point out that the success of technology transfer activities at universities
depends, fundamentally, on the way they are inserted in the institutional context. It is essential
that university’s top management perform a visible leadership in the conduction of the policies
and the operation of the programs of interaction with enterprises, in order to guarantee the
necessary institutional resources for its execution.

Surely, the most important condition for advances in this area is the need for the university to
explicitly takes part in the economic development, adopting the idea of the technological
management with all its consequences thoroughly, i.e., not only in the institutional policy, but
also in matters related to the infrastructure and the managerial practices, including fund raising. It
is of fundamental importance that the university leaders, including the President and the first
level of the administration, assume their commitment with university-enterprise-government
interaction, as a function of the university. In the present stage of development of the majority of
Brazilian institutions, this is still an objective to be reached.

Unfortunately, the advances that many offices have been able to obtain result from individual
initiatives, more than from institutional commitment with the subject, a fact that may eventually
jeopardize the maintenance and consolidation of the experiences. The institutionalization of the
matter, thus, stands out as an urgent issue. Fortunately, on the other hand, after the

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Technological Innovation Law has been signed, some advances towards the legal recognition of
the nuclei of technological innovation can be foreseen, as an institutional mechanism for the
management of the innovation policy in scientific and technological institutions.

Nevertheless, it is necessary to point out that the legal devices alone are not enough to guarantee
that the advances will be reached. Governmental policies only reach their objectives if
accompanied by mechanisms that induce to cultural changes in the university community and to
the deepening of their understanding on the role of the university in the innovation process.

A more professional approach to technology transfer is needed to achieve a greater degree of

effectiveness. Conformity with a model of good practices based on WAITRO’s proposal
(WAITRO, 1997) would integrate a set of functions that need to success, as it was confirmed by
the authors of this paper through the analysis of the sample and the case study.

The role of informal relations should also be underlined as a very important variable in the
process of diffusion of technology transfer practices in the country, fundamental for identifying
opportunities of cooperative projects with companies, and for exchanging ideas among TTOs
managers.

Finally, it is important to emphasize that, in spite of the difficulties inherent to their incipient
conditions, the TTOs are gradually introducing a cultural change in the technology transfer
processes, open to the innovations that must be integrally explored.

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Brisolla, S.; S. Corder; E. Gomes and D. Mello (1998), As Relações Universidade-Empresa-Governo: Um

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Cunha, Neila C. V. (1998), Interação Universidade-Empresa em Dois Centros de Biotecnologia do Estado

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Siegel, Donald et al. (2003), Assessing the Impact of Organizational Practices on the Relative Productivity
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4.2.10. ICT Business Incubation: Evidence from Mauritius

ICT Business Incubation: Evidence from Mauritius

Roshan Kumar Seebaluck

Assistant Manager, National Computer Board – ICT Incubator Centre
Port Louis, Republic of Mauritius

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Abstract

The purpose of this paper is to examine the development of the ICT sector in Mauritius and the
ICT Incubator Centre managed by the National Computer Board that has been successfully
initiated and implemented.

The ICT sector in Mauritius has witnessed major development and undergone rapid and
sustained growth over the recent years. The vision of the government to transform Mauritius into
a Cyber Island in the year 2000 and making ICT the fifth pillar of the economy is gradually taking
shape. One of the determining factors for the rapid development of the ICT sector is the high-
level of political commitment through the ICT Ministerial Committee chaired by the Prime
Minister. Under this Committee, three task forces were set up to manage the (i) Cyber City and
Business Parks (ii) E-Education & Training and the (iii) E-Government. To this effect, the
Government strategy has been fully geared to create an environment conducive to ensuring
unparalleled development of this sector.

As part of the ICT Development strategy, the National Computer Board had undertaken a
feasibility study in May 2001 for the setting up of an ICT Incubator Centre, and submitted its
recommendations to the parent Ministry. The document was instrumental to promote business
incubation as an economic strategy and for securing funding to kick-start this project. In the
Government Budget Speech 2001/2002 the following paragraph was noted “In our drive to make of
Mauritius a Cyber Island, we are not ignoring the need to promote Mauritian entrepreneurship. Our young people
are endowed with talent and potential for innovative ideas in ICT. They need to be provided with the necessary
support and facilities. The National Computer Board will set up an ICT incubator to promote start- ups.”. The
mechanisms for the procurement, commissioning were initiated thereafter, and the Centre was
fully operational in January 2003 with initially four tenants. The project was customised for the
local context while paying special attention to the main recommendations of the feasibility report.
The document also elaborates on the stages of development of the ICT Incubator Centre since
its conception as an idea to its implementation.

As an integrated effort to nurture ICT start-ups, the centre offers business support, logistics and
infrastructural facilities to youngsters with innovative business ideas. The objective is to promote
entrepreneurship and to create fledgling enterprises in the ICT Sector. The unit occupies a
surface area of 500 m2. and can accommodate nine start-ups. Besides the services and facilities
provided, the Centre has developed a local network to promote and nurture its start-ups and to
promote entrepreneurship. The Incubator Centre was initially conceived to help local
entrepreneurs and gradually the joint venture undertakings comprising of local and foreign
enterprises have been accommodated.

Since its operations eighteen enterprises have benefited from the business support, logistics and
infrastructural facilities offered by the ICT Incubator Centre. As at date five enterprises have
successfully graduated from this facility. As a case study, three enterprises’ business track records
during their tenancy at the ICT Incubator Centre will be examined namely M-ITC Co Ltd,
Innovative Creative Lines (ICL) Ltd and AM Web Solutions Ltd.

1. Economic Landscape

Since its independence in 1968, Mauritius has developed from a relatively low-income,
agriculturally based economy to a middle-income diversified economy with growing industrial,

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financial, tourist and ICT sectors. For most of the period, annual growth has been in the order of
5% to 6%. This remarkable achievement has been reflected in more equitable income
distribution, increased life expectancy, lowered infant mortality, and a much-improved
infrastructure. Sugar cane is grown on about 90% of the cultivated land area and accounts for
25% of export earnings (CIA - The World Fact book – Mauritius 2005). Mauritius has achieved
one of the highest per capita gross domestic products in Africa; about US$ 4,600 in 2003, up
from about US$ 320 in the early 1970s. (IMF, 2005).

Notwithstanding its economic success, Mauritius has to reckon with several challenges to ensure
sustainable development, which includes the rapid pace of technological progress, the increasing
integration of global commodity and financial markets and the emergence of new low-cost
competitor countries. The strengthening of major trading blocs, the likely erosion of market
preferences under the WTO regime, and the increase in non-tariff barriers in the form of “green”
and “social” protectionism have all called for innovative, flexible and determined responses.

After two decades of remarkable export-led economic growth, the economy has been redirected
towards higher value, knowledge intensive products and services. The government’s development
strategy centres on expanding local financial institutions and making Information and
Communication Technology a fifth pillar of the economy. The evolution of the economy over
the past 30 years is shown in Figure 1.

Figure 1: Mauritius: An Open Economy

Year

• ICT
• Services
2000 • Tourism
• Services • Textile
• Tourism • Sugar
• Textile
1990 • Sugar

1980 • Textile
• Sugar

1970 • Sugar

Sector
Agriculture e
Agricultur Manufacturing
Manufacturing Services
Services E-Economy
E-EconomySector

Source: Central Statistical Office (CSO)

2. Development of the ICT sector & ICT Strategy

The ICT sector in Mauritius has witnessed major development and undergone rapid and lasting
growth over the past five years. The vision of the government to transform Mauritius into a
Cyber Island in the year 2000 and making ICT the fifth pillar of the economy has gradually taken
shape. One of the determining factors for the rapid development of the ICT sector was the high

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level of political commitment through the ICT Ministerial Committee chaired by the Prime
Minister. Under this Committee, three task forces were set up to manage the (i) Cyber City and
Business Parks (ii) E-Education & Training and the (iii) E-Government. To this effect, the
Government strategy had been fully geared to create an environment conducive to ensuring
unparalleled development of this sector.

The ICT industry in Mauritius has evolved towards export-oriented services. An increasing
number of foreign ICT companies have setup their development centres in Mauritius to conduct
software development, multimedia, BPO and ITES activities for the export market. Key players
already in Mauritius include Microsoft, Infosys, Accenture, Oracle, Infinity BPO among others.

2.1. Changing ICT Environment

The Changing ICT environment can be summarised as follows and shown in Figure 2:

a) The creation of relevant IT bodies in the late 80’s and the introduction of the Civil
Service Computerisation Programme
b) Late 80’s saw the enactment of IT laws to regulate and promote this sector
c) The Millennium witnessed the creation of several bodies, financial schemes and
improvement of the existing legal structure to promote ICT.

Figure 2: ICT Sector - Changing ICT Environment

• BPML – CyberCity
• National Computer Board
• Liberalisation of the Telecomunication
• State Informatics Ltd
Sector (2003)
• Central Informatics Bureau
• ICTA 2001
• Safe Cable
• Board of Investment (2000)
• Information- • ICT Incubator Centre (2003)
based society • NPCC – Computer Proficiency
World Bank • NITSP * Programme (2002)
• Y2K task • Government Online Centre (2005)
Force • ICT Loan Schemes
• National Telecommunication Policy
2004
• Policy Framework for Internet Service
• Providers 2001
• Civil Service Copyright Act 1997
Computerisation • Telecom Act 1988 • Electronic Transaction Act 2001
programme • IT Act 1988 • ICTA Act 2001 **
• ISP Act 2001
• Cyber Crime and Computer Misuse
Act 2003
• Data Protection Act 2004

1980’s 1990’s 2000’s

* National IT Strategic Plan

** Including the ICT Appeal Tribunal, ICT Advisory Council

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2.2. Early ICT Development – 80’s

The evolution of the ICT sector in the late 80’s has been gradual with the creation of the
following institutions: - National Computer Board, State Informatics Ltd and the Central
Informatics Bureau.

a. National Computer Board

The National Computer Board was set up in 1988 as a para-statal organization under the Ministry
of Information Technology and Telecommunications. The mission of the National Computer
Board is to promote the accelerated diffusion of Information Technology in every socio-
economic sphere of Mauritius in line with the national goals and policies.

b. Central Informatics Bureau

The Central Informatics Bureau (CIB) was created in 1989 as a unit of the Ministry of
Telecommunications and Information Technology. Its main functions are to plan and coordinate
computerisation in the Civil Service.

c. State Informatics Ltd

State Informatics Limited (SIL) was established in 1989 as a stated owned company and could be
considered as one of the largest ICT solutions provider in Mauritius. SIL has brought major
contribution in the evolution and application of ICT in Mauritius over the last fifteen years. With
its position at the forefront of technology, the state-owned company has continuously developing
skills and expertise in state-of-the-art technologies to computerise both public and private sector
institutions. Its successful strategic partnership with giants of the IT industry, namely Oracle,
SUN, IBM, Microsoft and Veritas have extended the transfer of technology to Mauritius and the
African region. SIL constantly concentrates its efforts in adopting the best technologies to meet
the growing demands of the local and African markets.

2.3. ICT Legal Framework

The enactment of the following laws laid the first milestones for the development of the ICT
sector: (a) Copyright Act - 1997 (b) Telecommunication Act - 1988 (c) The Information
Technology Act - 1988. This effort was further reinforced with the enactment of the following
laws:

(a) The Electronic Transactions Act 2000; (b) The Information and Communication
Technologies (ICT) Act 2001 (repealing the Telecommunication Act 1988 and the Information
Technology Act 1988); (c) ISP Act (2001) for the regulation of ISP operators; (d) The Computer
Misuse and Cyber Crime Act 2003, and (e) The Data Protection Act 2004.

2.4. Policies for the ICT Sector

The National Telecommunications Policy 2004 outlined the objectives and targets for the
Telecommunications sectors and set out strategies to be adopted. It also set out the methodology
that would ensure fair, effective and sustainable competition for the new market paradigm.

The Policy framework for Internet Service Providers (2001) has set out the policy framework for
the provision of the Internet Services in Mauritius. Government policy was to create an

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investment-friendly environment to enhance fair competition through a level playing field and to
ensure Internet access at all affordable costs.

2.5. Creation of New ICT Institutional Framework

The implementation of the ICT Strategy has witnessed the creation of several bodies to facilitate,
promote and regulate the ICT sector.

The Government created Business Park of Mauritius Ltd (BPML) in 2000 to spearhead the
development, construction and management of the state-of-the-art Technology and hi-tech
Business Parks in Mauritius. The Cyber Tower; a 12-storey building of 42,274 m2 equipped with
ultramodern features was inaugurated in April 2005. A second tower was under construction,
scheduled to be operational in March 2006. More business parks would be located in strategic
areas in the island.

The Board of Investment (BOI) was set up under the Investment Promotion Act of 2000, which
was reviewed in 2004. The main objectives of the BOI are to attract investment and act as a
facilitator to all investors. It has also encouraged ICT Development through the following
schemes: - (a) ICT Development (b) The Pioneer Status Certificate. Both schemes offer fiscal
and non-fiscal incentives to investors operating in the ICT sector.

The Information and Communication Authority (ICTA) was set up under the ICT Act 2001. It
provides for economic and technical monitoring of the telecommunication industry in
accordance with recognised international standard practices, including the promotion of fair
competition and efficient market conduct within that industry, and ensuring appropriate control,
inspection and regulation of the industry. It is the main regulatory body for the Information
Communications Technology and Postal services sectors. It also grants operator licenses,
allocates frequencies and ensures safety and quality of every telecommunication service.

The ICT Appeal Tribunal was conceived through the ICT Act 2001. Its role is to hear and
dispose of any appeal against a decision of the ICT Authority regarding disputes on ICT Related
matters. Similarly, the ICT Advisory also complemented this Act to advise the Minister of
Information Technology and Telecommunications on specific issues. These include the
promotion of interested of consumers, purchasers and other users in respect of quality, variety
and improvement of ICT services, tariff policy and the promotion of research and development
of new ICT Techniques.

The National Productivity and Competitiveness Council (NPCC) was created in 2002 and has
promoted ICT as tool for improving productivity. It has used the existing resources including
existing IT school laboratory and resource persons after normal school hours to impart basic IT
skills. NPCC had trained 37,000 people from different backgrounds and age groups (Source: Le
Mauricien - 18 May 2005). As part of its IT culture promotion programme, the National
Computer Board through its two IT Coached has trained up to 44,000 people in its ICT Literacy
Programme.

The Government Online Centre (GOC) was set up in May 2005. The Government Online
Centre (GOC) is a centralised data centre, which supports e-Government initiatives. It is
equipped with the state-of-the-art IT Infrastructure. The government web portal (www.gov.mu)
provides secure online government services round the clock. It also provides Internet access and
email facilities to employees of Ministries and Departments, offers website publishing and
hosting services and host common and back-office applications amongst others.

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2.6. Telecommunications Infrastructure

The SAT-3/WASC/SAFE submarine optical fibre cable links Europe to the Far East through
Mauritius and provides connectivity to worldwide destinations through ADSL, ISDN and high
bandwidth international leased lines.

Mauritius Telecom, the national operator, has a Point of Presence (PoP) in Telehouse, Paris
where major international bandwidth providers and key telecom operators are present for
interconnection, thereby providing end-to-end service at very competitive rates.

The Government of Mauritius has brought forward the liberalisation of the telecommunications
sector by one year, thus ending the exclusivity of the incumbent operator as from December
2002. The Telecommunication Sector is regulated by virtue of the ICT Act 2001 through an
independent regulatory body, the Information and Communications Technology Authority
(ICTA).

The sector comprises of (a) 2 fixed line operators (b) 3 mobile operators (c) 13 Internet Service
Providers and (d) 8 International Long-Distance Operator. The table below summarises the
services offered by various companies.

Licence Company
Fixed Line Telephony-Public Switch (Fixed) 1. Mauritius Telecom
Telephone Network (PSTN) 2. Mahanagar Telephone (Mtius) Ltd
Mobile Telephony- Public Land Mobile Network 1. Cellplus Mobile Communications Ltd
(PLMN) 2. Emtel Ltd
3. Mahanagar Telephone (Mtius) Ltd
International Long Distance (ILD) 1. TLC (Mauritius) Ltd
2. City Call Ltd
3. Data Communications Ltd
4. Emtel Ltd
5. Hot Link Co. Ltd
6. I-Telecom Ltd
7. Mahanagar Telephone (Mtius) Ltd
8. Mauritius Telecom Ltd
Internet Service Provider 1. Africa Digital Bridges Network Ltd
2. City Call Ltd
3. Clusterway Ltd
4. Data Communications Ltd
5. Emtel Ltd
6. Harel Mallac & Co. Ltd
7. I-Telecom Ltd*
8. Mauripost Net Ltd
9. MFDC Ltd*
10. Paging Services Ltd
11. Rogers Telcom Ltd*
12. SITA*
13. Telecom Plus
Internet Telephony Service 1. Paging Services Ltd
Facsimile Services 1. City Call Ltd
2. Telecom Plus Ltd
3. Van Tel Ltd
Unified Messaging Service (UMS) 1. Africa Digital Bridges Network Ltd
Value Added Services 1. Mauritius Telecom Ltd
2. Telecom Plus Ltd
Source: ICTA
Note: Companies in bold are already operational.
* In the Internet Service Provider category, I-Telecom Ltd, MFDC Ltd, Rogers Telecom and SITA are operational
but are not offering their services to the public.

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2.7. The ITES-BPO Sector

IT-Enabled Services-Business Process Outsourcing (ITES-BPO) is seen as a very strong segment

for the local ICT industry. Over the recent years, this sector has experienced an exponential
growth. According to the BPO Secretariat, as at October 2005, 90 ITES-BPO companies were
operating in the ICT sector and were employing 3,801 people. Call centres remains the highest
generator of employment in the ICT sector with 2,071 people. The major BPO players currently
operating in Mauritius include Accenture, Hinduja Group, Cendris (TPG Group), Centrefile,
Berger-Levrault, Teleforma, Infinity Group and Victoria Group, amongst others.

The 90 companies operating in the ITES-BPO sector have generated a cumulative proposed
investment level of Rs 1,445,162,27472 with Call Centres and BPO companies having the highest
levels of investment. Based on a recent survey carried out by the BOI, it appears that half of the
proposed investment value has already been realised, i.e. Rs 726,445,492.

On the international scene, according to the NASSCOM McKinsey Study 2002, the global
market size estimate of BPO was US$ 127 bn in 2001 and is expected to grow to US$ 234 bn in
2005 and US$ 310 bn in 2008. The main outsourcing destinations include Ireland, Australia,
India, and the Philippines while China, Russia and Mexico are considered as upcoming
destinations.

2.8. Financial Schemes for the ICT Sector

The Development Bank of Mauritius Ltd announced the following financial schemes to facilitate
investment in the ICT sector:

(a) ICT Loan for setting up of enterprises engaged in ICT-enabled services. The ceiling for
the loan is Rs 5 million bearing an interest of 8% p.a, which is repayable over a period
five years.
(b) Under the Equity participation Fund a maximum amount of Rs 300,000 is provided to
enterprises operating in the ICT and other high value-added sector, The scheme can be
accessed at an interest rate of 8% per annum, which is payable out of dividends received
by the borrower or otherwise during the previous financial year of the company. The loan
will be guaranteed by a charge/pledge on the proposed shares to be acquired and a
general floating charge after existing charges, if any, on the assets of the borrower.
(c) Under the Venture Capital Fund, maximum amount of Rs 1 million is provided to
enterprises operating in the ICT sector. The purpose is to support start-ups and SMEs
operating in the ICT sector including joint ventures with foreign partners. Interest Rate is
not applicable and after a period of 6 years, the existing shareholders will have the choice
to buy back the equity at a negotiated price.
(d) To simplify access to finance by SMEs engaged in the ICT and high value-added
activities, which are unable to provide the traditional collaterals, an SME Loan Guarantee
Fund has been set up to guarantee 50% of qualified SME loans. The Fund will guarantee
50% of the loan amount granted by the Development Bank of Mauritius. The maximum
amount provided under this fund is Rs 500,000.

The bank periodically reviews the schemes to align them with government objectives to promote
different sectors.

72 Source: BPO Secretariat, Board of Investment

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2.9. Key ICT Indicators

Over the year Mauritius has experienced sustainable growth in terms of ICT usage as depicted in
the table below:

Key indicators 2000 2001 2002 2003 2004

Estimated Population (Millions) 1.193 1.205 1.217 1.228 1.233
Number of Households 296,300 305,900 311,300 321,000 n/a
Fixed Line teledensity 24% 26% 27% 28% ~29%
Cellular Mobile Phone teledensity 5% 25% 28% 38% 50%
Estimated household Internet penetration 12% 13% 16% 18% n/a
% Household with a telephone 80 80 80 91 92
Source: CSO, National Computer Board, Mauritius Telecom

The growth of the ICT culture coupled with the liberalisation of the ISP Sector has contributed
to the exponential growth of Internet users during the past years. The number of Internet users
has increased from 87,000 in 2000 to 275,000 in 2004. The number of fixed-line subscribers
increased from 262,000 in 2000 to 355,000 in 2004. The number of cellular-phone subscribers
has grown from 180,000 in 2000 to 600,000 in 2004.

Capacity building at the tertiary level through its enrolment has grown at an average rate of 14%
during the past four years with more students taking ICT and ICT related subjects. The following
table indicates the enrolment in ICT at tertiary level from 2001 to 2004.

2001 2002 2003 2004

Local institutions 1046 1506 2162 2141
Distance Learning 2158 1962 1543
Overseas 365 618 804
Total number of students enrolled in ICT 3569 4086 4509
Source: Tertiary Education Council

The IMF Report (2005) has highlighted the following competitive advantages for the ICT Sector

(a) Strong political commitment and social consensus. The vision of the government and the public is
to transform Mauritius into a “Cyber Island”.
(b) Knowledge spill over from India. The successful experience of the Indian ICT sector is being
transferred to Mauritius. The Indian ICT sector is advising the Mauritians on a
development strategy and will also be sub-contracting some of its operations to Mauritius
and investing in the domestic sector.
(c) Bilingual nature of the labour force. The ability of the Mauritian labour force to speak both
English and French is an important competitive advantage.
(d) Infrastructure improvement. The government is embarking on substantial capital outlays to set
up the physical and communication infrastructure. As a springboard, the Ebene Cyber
City started operating from December 2003 with much of its space for private investors
already taken up by global ICT firms.

As ICT production becomes a larger share of total output, The ICT sector would play a greater
role in driving Mauritian medium-term growth. The contribution to overall growth might amount
to 10 per cent starting in 2004/05. However, the job creation of the ICT sector is expected to be
limited.

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Baseline Projection of the ICT Sector

(In percent, unless otherwise indicated )
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08
Share of nominal GDP 2.1 2.3 2.6 2.9 3.2 3.5
ICT real growth 10.0 17.0 20.0 16.0 15.0 15.0
Overall GDP growth 3.3 5.5 5.1 4.9 4.6 4.6
Contribution to growth 6.4 7.1 10.2 9.5 10.4 11.4
Total employment 2,000 5,000 8,000 9,000 10,000 11,000

Source: IMF 2005

3. ICT Business Incubation

The second part of this article deals with the business incubation experience in Mauritius.

3.1. First Attempt – Technology Business Incubator

A first attempt to set up a technology business incubator was tried through a consultancy exercise
conducted by the Ministry of Industry and Industrial Technology with the assistance of UNIDO
in 1991. The objectives of the study were (a) to explore the possibility of establishing a
mechanism to provide support services to informatics activities in Mauritius (b) to assess the
interest in forming a sub regional centre for Informatics training.

The economic situation in the 1990’s called for intensification of work on enhancing quality,
factor productivity and cost competitiveness existing product lines and for diversification into
value-added, knowledge-intensive goods and services and for creating effective linkages between
sectors as well as EPZ and non-EPZ industries. The informatics sector was considered as a
potential sector for the creation of value, wealth and employment generation. The government
had repeatedly stated its intentions to give informatics related activities a central role for the next
industrial phase.

One of the recommendations of the study was to set up a Technology Business Incubator for
Informatics business and tackling the following issues at the outset (a) Creation of a National
Informatics Policy & Enabling environment (b) Ensure availability of technical Human
Resources (b) Access to Risk Capital (d) Support Services such as reliable telecommunication
network and workspaces.

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Figure 3:

National Informatics Policy & Enabling

Environment

Technical Human Entrepreneurship and Access to Risk

Resources Capital
Innovation in Informatics

Support Services, Reliable

Telecommunication and Workspaces

3.1.1. Technology Business Incubator

The Technical Business Incubator as per the study would be as follows:

A micro-facility with a small trained motivated management staff, which would provide start-up
companies with the following types of services:

(a) Affordable workspace;

(b) Share facilities (such as receptionist, conference room, office equipment, and secretarial
help);
(c) Focused support services (particularly on the software of business development such as
management, marketing, legal, accounting and similar support;
(d) Access to seed money (often through an internal revolving fund, which would provide
small loans on commercial terms but without significant collateral;
(e) The synergy of sharing (entrepreneurs working close to each other would be able to share
experiences and also buy/sell form each other;

It was also emphasised the characteristics of an incubator would differ significantly from the
usual workspaces in the following manner:

(f) The incubator would primarily be for start-up companies;

(g) It would provide focussed management and technical assistance to tenants, from helping
them to write business plans to securing working capital;
(h) It would have rigid entry requirements (only one in 10 applicants would usually be
selected);
(i) It would have stipulated exit rules, so after 2 or 3 years the tenant must leave the space to
make way for a new entrepreneur;
(j) The incubator would also serve important social functions such as (a) creating new self-
owned businesses, particularly among youth, women and other disadvantaged groups, (b)

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helping disperse economic activity to non-metropolitan towns and rural areas, and (c)
bridging the culture gap between university-research-laboratory-private/ state enterprises;

The technology incubator model proposed was as follows:

Gross space 1,000 m2 (starting with 500 m2 in first year)

Rentable space 750 m2 (balance being for common facilities)
Average space rented 675 m2 (due to partial vacancies)
No. of tenants 20 (in the 4th year, with 5 tenants in the first year).

Operational structure: A small management group would provide technical and management
services to tenants, and further secure other specialised assistance in marketing, legal and
accounting matters from an informal network of outside professionals. On this basis, the staff in
the fourth year of operations would consist of (i) Manager (preferably an entrepreneur with a
wide circle of contacts in the local community) (ii) Deputy Manager (to cover administration,
building services and financial management assistance) (iii) Technologist (part-time, with full
familiarity in software engineering and informatics services) (iv) Secretary (v) Receptionist
(starting in fourth year) (vi) Messenger/Clerk.

Building lease: In order to save capital costs and time, it would be preferable to secure a vacant
factory-type building space from the Government on a low (or no) rental basis.

Advisory services: Incubator management would provide general support to all tenants. In
addition, specific training, managerial, marketing, accounting and financial services will be
provided on a cost-recovery basis.

Other incubator income: The incubator management could provide technical/managerial services
to entrepreneurs outside the incubator, such as “sick companies” in existing industrial estates, etc
and generate additional income for this venture.

Capital costs: It was assumed that the space rented would be in fair shape, and would require
painting and partition work. In addition, provision for furniture and office equipment (computer,
fax, photocopies, and telephones) and pre-operational expenses, such as incubator promotion,
etc would also need to be budgeted. (Possible grant technical assistance for preparing the
feasibility study, training of incubator management, etc is not included in capital costs). The total
capital investment for this venture was estimated at $100,000 and with a contingency expenditure
of additional $75,000 was made.

Investment structure: It was proposed that the Development Bank of Mauritius would provide a
revolving line of credit to be given as soft loans through the incubator management. The project
would be funded through the creation of trust or foundation sponsored by various local agencies.
The sponsorship for this project would be partly in the form of a grant and the balance in terms
of soft loan from the bank.

3.1.2. Non-realisation

This project was not realised for various reasons and summarised as follows:

a) The business incubation concept was not internalised by policy makers during this period;
b) ICT was still in its earnest and the convergence in the business community was more
oriented towards the provision of business support services;

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c) The Telecommunication infrastructure was not well developed;

d) Financing for the ICT sector was not present;
e) The ICT legal framework was still in its infancy;
f) The incentive framework and policies was focussed to the development of the
manufacturing sector, which was generating high employment and income;
g) The technical know-how in the ICT sector was focussed to the implementation of
business solutions in enterprises rather than enterprise creation;

3.2. Second Attempt – Technology Business Incubator

A delegation from the National Computer Board visited the Incubators/Technology Centres in
Aachen Germany in April 2001, following which it was proposed to undertake a feasibility study
to assess the viability of setting up an ICT Incubator Centre in Mauritius. The services of an
international consultant were retained for this purpose. Dr Ulrich Dalrup from GFE Consulting
Worldwide based in Germany undertook a three-day mission and a detailed work plan was
presented to put in place an ICT Incubator Centre under the auspices of the National Computer
Board. The main recommendations as per the feasibility report were as follows:

(i) As the Mauritian Government decided to go ahead with developing the digital industry in the country
and to invest in a cyber-city infrastructure, the Incubator should be implemented at the earliest as this
Incubator would serve to “breed” the ICT companies needed for the cyber city programme;
(ii) The need, to quickly close the technology gap with the OECD countries in the ICT sector;
(iii) Seeing the Indian ICT sector developing, Mauritius should develop its own resources to benefit from the
high value added sector. With a highly qualified population and some outstanding IT-experts Mauritius
should be able to quickly reach the running train of IT- business development and get its share of that
emerging market;
(iv) The Mauritian economy would need highly qualified computer skilled workers;
(v) Investing in this sector would generate new employment with relatively high revenues;
(vi) Once this sector progresses, so called “linkage” industries should show up and “spin-offs” should give an
auto-development to the sector;
(vii) Other sectors of the Mauritian economy should benefit from the new qualifications of the ICT sector;
(viii) Deregulations in the Telecom-sector, that might come one day also in Mauritius, would boost IT-
business;
(ix) A co-operation with one of the successful Incubator programmes in Europe would facilitate this new
venture. A two-year cooperation with GFE/Technology Centre of Apache is proposed.

The ICT incubator programme would be as follows:

a) an organisation, in the form of a private company, a public entity or an existing public or para-public
institution, would manage the Incubator programme
b) an Incubator building;
c) a venture or / and risk fund, a bank or any other appropriate financial institution;
d) a consensus of relevant institutions and politics;
e) a technology producer (e.g. a Technical University), whose output would be skilled technology experts;

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f) the individuals going into a start-up;

g) a network of helping, coaching and assisting institutions and individuals;

The organization or the company/entity in charge of the Incubator programme would have to
fulfil a number of activities/services:

(i) to identify potential start-uppers;

(ii) to cooperate with technology developers or owners to promote and facilitate to identify
suitable candidates;
(iii) to set up a “Technology Transfer” with suitable technology developers, e.g. Universities,
etc.;
(iv) to “screen” among the candidates those considered fit for entrepreneurship and whose
technology idea has a market chance;
(v) to help the start-upper to set-up the financial foundation of its future company;
(vi) to help the start-upper to formulate the companies Business Plan, statutes, opening
balance and to assist to register the new company;
(vii) to assist to find an appropriate office or production site (if no Incubator building is
available);
(viii) to assist with advice in legal, bookkeeping, marketing matters;
(ix) to organize missions to fairs and exhibitions;
(x) to organize in house or local exhibitions;
(xi) to supervise/coach the management;
(xii) to advice the company in difficult situations, but also in periods of growth;
(xiii) to make available “Business Angels”;
(xiv) seminars on diverse business subjects;
(xv) management of the Incubator building.

The proposed organisational structure was as follows:

(a) The creation of a new private company by stakeholders interested by the programme.
The stakeholders would have to fund the budget of that company.
(b) Identify an existing entity or Governmental authority that could get additional mission
this Incubator programme / or:
(c) To implement a new public or para-public institution in charge of the Incubator
programme or to start the programme, the NCB would certainly have an interest to carry
out the ICT-Incubator programme. In that case, NCB has to recruit the necessary new
staff and enlarge its mission.

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The proposed business incubator model was as follows:

Incubator building : 4000 to 5000 m2

Facilities : Networked office with access high bandwidth, IT infrastructure to support
this centre; common services such as telephone, fax, photocopy services,
meeting room and conference facilities, restaurant, secretarial facilities,
technical equipments (digital projectors).
Business support and : Preparation of business plan to new and potential start-ups and on-going
counselling business support to enterprise within the centre; offers in-house facilities, as
an auditing company, a bank and other service providers.
Rental charge : Graduated charges up to a five year period the start-ups pay in their first year
only 60% of the calculated commercial rent - but in their last in fifth year they
have to pay a full commercial rent.
Finance : Creation of a venture/risk fund for this new target group
Board representatives : (a) National Computer Board (b) Small and Medium Industries Development
Organisation (SMIDO) (c) Development Bank of Mauritius (DBM) Ltd(d)
Board of Investment (e) Joint Economic Council (f) Mauritius Research
Council (g) University of Mauritius (h) Industrial and Vocational Training
Board (IVTB) and (i) Mauritius Standard Bureau.
Networking : A Memorandum of Understanding (MOU) between National Computer
Board (b) University of Mauritius and (c) SMIDO
Sector to be : Bio-technologies, medical-/pharmaceutical-technologies, marine-technologies
encouraged and the crafts sector.

3.3. Financial Assistance for the programme

a) SMIDO would be a co-investor in an Incubator Building (with 3.5 million Rs). SMIDO
would also co-finance (50%) the business plans of the start ups as it has a long experience
with SME development;
b) Development Bank of Mauritius could fund the investments of the start-ups up to 60%.
DBM could also evaluate the start-up candidates prior to become accepted to the
programme;
c) The University of Mauritius would be the “technology producer” and is a “producer” of
start-up candidates;
d) The Mauritius Research Council would be a facilitator for research work and could
finance studies and research and development of the start-ups;
e) Board of Investment and the Mauritian Embassies abroad could promote the programme
overseas to identify returning start-ups;
f) Private Banks might realize a venture/risk fund;
g) Elder highly experienced VIPs of Mauritius could become Business Angels;
h) A network of competence, from the island and from abroad could assist this programme;

3.4. The National Computer Board – ICT Incubator Centre

Following the recommendations made by Professor U. Dalrup in the feasibility report for the
setting up of an ICT Incubator Centre, the National Computer Board requested funding from
the Ministry of Information Technology and Telecommunications for this project. The document
was instrumental to promote business incubation as an economic strategy and for securing
funding to kick-start this project.

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In the Government Budget Speech 2001/2002 the following paragraph was noted, “In our drive
to make of Mauritius a Cyber Island, we are not ignoring the need to promote Mauritian
entrepreneurship. Our young people are endowed with talent and potential for innovative ideas
in ICT. They need to be provided with the necessary support and facilities. The National
Computer Board will set up an ICT incubator to promote start-ups”. The mechanisms for the
procurement, commissioning were initiated thereafter, and the Centre was fully operational in
January 2003 with initially four tenants. The project was customised for the local context while
paying special attention to the main recommendations of the feasibility report.

As an integrated effort to nurture ICT start-ups, the centre offers business support, logistics and
infrastructure facilities to youngsters with innovative business ideas. The objective is to promote
entrepreneurship and to create fledgling enterprises in the ICT Sector. The unit occupies a
surface area of 500 m2 and can accommodate nine start-ups. Besides the services and facilities
provided, the Centre has developed a local network to promote and nurture its start-ups and to
promote entrepreneurship. The Incubator Centre was initially conceived to assist local
entrepreneurs and gradually the joint venture undertakings comprising of local and foreign
enterprises have been accommodated.

The National Computer Board Incubator Centre came into operation in January 2003 and was
officially launched on the 21st April 2003. The ICT Incubator Centre provides infrastructural,
logistics and business support to start-ups in the ICT sector. It covers a surface area of 5,534.24
sq ft and can accommodate up to nine start-ups.

The vision of the ICT Incubator Centre is to be a centre of excellence where ideas and
entrepreneurship are transformed into successful and viable business ventures. It mission is to
boost entrepreneurship in the ICT sector and to provide start-ups with the necessary business
advisory services and financial support with viable business ventures.

The objectives of the ICT Incubator Centre are to:

a) Promote entrepreneurship in the ICT sector;

b) Boost job creation in the ICT sector;
c) Develop linkages with other institutions;
d) Market its start-ups.

The Centre offers infrastructure, logistics and business support to the start-ups in the ICT Sector.

Each office unit occupies a surface area of 20 m2 and is networked with ADSL, data and
telephone points, electricity and air-conditioning system. Access to premises is provided through
an automated secured system. The Centre is equipped with a meeting room and provides a
shared administration service include fax, photocopy and secretarial support.

The Incubator Management Team provides business support and advice to start-ups at the
Centre. Training programmes are organised regularly at the Centre for capacity building of start-
ups. Informative sessions are organised by the National Computer Board with key support
institutions such as the Board of Investment, Development Bank of Mauritius Ltd amongst
others. Regular meetings are organised with start-ups by the Incubator Management Team on
issues related to enterprise development and marketing.

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A start-up can benefit from the facilities and services offered by the ICT Incubator Centre for a
maximum period of three years.

The charges for the centre are as follows:

Period Monthly Charge (Rs) Equivalence in US$

Year 1 6,000 194
Year 2 7,500 242
Year 3 8,625 278

3.5. Management of the ICT Incubator Centre

i) Incubator Management Committee

The activities of the ICT Incubator Centre are being monitored by an Incubator Management
Committee. The membership to this committee includes the representatives from the Ministry of
Information Technology and Telecommunications, the Development Bank of Mauritius (DBM)
Ltd, Small Enterprises and Handicraft Development Authority (SEHDA) (formerly SMIDO),
National Computer Board and the Ministry of Industry, Small and Medium Enterprises,
Commerce and Cooperatives. The committee meets on a regular basis for policy decisions and
approval of projects. The organisation structure is as follows:

• Ministry of Information Technology and

Telecommunications
Board of the NCB • Development Bank of Mauritius Ltd
• Small Enterprises and Handicraft
Development Authority (SEHDA)
• National Computer Board
• Ministry of Industry, Small and Medium
Incubator Management Enterprises, Commerce and Cooperatives
Committee

Incubator Technical • National Computer Board

Committee

• Assistant Manager
• Business Analyst
Incubator Management Team
• Administrative Support

ii) Staffing

The National Computer Board – ICT Incubator Centre is managed by one Assistant Manager
and a Business Analyst. One Word Processing officer provides Secretarial and Administrative
support.

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iii) Technical Team

A technical team comprising of members of the NCB screens and reviews the project proposals
received from potential start-ups for the ICT Incubator Centre and make recommendations to
the Incubator Management Committee.

3.6. Cost Benefit Analysis – Investment, Turnover and Employment creation

i) Investment and running cost

The ICT Incubator Centre was set up with an initial investment of Rs 2.15 million.

The capital expenditure included the setting up of the necessary infrastructure and logistics for
operating the Centre. It included cabling, wiring for broadband Internet connectivity, setting up
of network points and setting up of the IT infrastructure. Meeting room facilities is available
which is equipped with one multimedia projector and one laptop for visual presentation.

The National Computer Board meets the running cost for the ICT Incubator Centre through its
yearly grant secured from the Ministry of Information Technology and Telecommunications. The
running cost for the ICT Incubator Centre is estimated to be Rs 3.2 million per annum and
includes rental cost of the building, staffing costs, electricity, telephone, ADSL Connection, and
shared administration services such as photocopy and fax facilities among others.

The Centre also generates some revenue from the facilities and services offered to the start-ups
located on the premises and include rent, fax and photocopying services. The revenue collected
from these services is estimated at Rs 600,000 per annum.

ii) Investment by start-ups and job creation

One of the main objectives for the setting up of the ICT Incubator Centre was emphasis on
employment creation.

Employment created in the financial year 2002/03 was 27, and 27 new jobs have been created
Financial year 2003/04. For the financial year 2004/05, 33 new jobs were created. Similarly, the
start-ups at the Incubator Centre have invested an amount of Rs 15.7 million in their business
venture up to date.

3.7. Start-ups at ICT Incubator Centre

1. Since the ICT Incubator Centre became operational, the Centre has supported 17 start-ups
in the ICT sector.
2. Out of these 17 start-ups, 5 companies have successfully graduated from the Incubator
Centre.

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Key indicators on start-ups at the ICT Incubator Centre are as follows:

2002/03 2003/04 2004/05 Total

No of Companies hosted /
6 11 13 18
Supported
Employment Created (New) 27 27 33 87
Investment made by these
Rs 2,440,000 Rs 5,217,400 Rs 8,042,600 Rs 15,700,000
companies
No of Companies going out of
the Centre
Successful * - 1a 4b 5
Unsuccessful - 3 1 4
Total - 4 5 9
Source : National Computer Board
Note: (a) Alliance Réseaux Ocean Indien Ltd (Dec 2003) (b) Innovative and Creative Lines Ltd (August 2004),
Active Connect Ltd (February 2005), M-ITC Ltd (June 2005) and AM Web Solutions Ltd (June 2005).
* “Successful” here means graduating from the Incubator centre to a new location.

Based on the regular meetings with the start-ups (formal and informal) at the ICT Incubator
Centre. A SWOT Analysis was formulated to this effect .The SWOT analysis captures the key
strengths and weaknesses and also describes the opportunities and threats facing the start-ups at
the National Computer Board – ICT Incubator Centre.

a) Strengths b) Weaknesses

‰ Access to services provided by the Incubator ‰ The difficulty of building brand equity.
Centre. ‰ Management training for promoters and
‰ Access to common logistics and shared employees.
administration facilities. ‰ Loans facilities by banks not easily accessible.
‰ In-house business counselling and timely advice. ‰ Specialised skills in ICT difficult to find.
‰ Secured workspace and subsequently flexible ‰ Absence of the local infrastructure for
working hours. conducting online transactions and real time
‰ Access to various institutional network support credit card validation mechanism.
and contacts through the National Computer
Board.
‰ Easy access for media and events coverage.
‰ Networking with start-ups at the Incubator
Centre is an added advantage for enterprise
development.
‰ Flexibility - The ability to meet the customer’s
needs with a customized, flexible solution.
‰ Access to pool of graduates from the University
of Mauritius for short-term assignments.
c) Opportunities d) Threats

‰ Increased business opportunities through ‰ Future/potential competition from large ICT

outsourcing and potential joint ventures with the companies and multi-nationals.
development of the Cyber City. ‰ Given the nature of computer technology,
‰ Declining cost of Internet connectivity will investment in skills development and new
create business opportunities for the start-ups. software impedes on the cash flow of the start-
‰ A period of three years of incubation increases ups.
the survival prospect of the start-ups.
Source: National Computer Board

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3.8. Success & Failure

The ICT Incubator Centre has nurtured eighteen enterprises out of which some have successfully
graduated while a few ones have closed down. The success rate has been attributable mostly to
the perseverance, qualities of the entrepreneurs and the business network developed by the
Incubator Centre. Failures of enterprise have been characterised (a) technical deficiencies (b)
Inability of the entrepreneurs to properly market the product.

Under the technical deficiencies category, the absence of the local infrastructure for conducting
online transactions and real time credit card validation mechanism was a major handicap to
promote online transactions. At the same time, the purchasing habit of local consumers has been
largely been limited to cash, cheque and with few credit card facilities.

On the other hand, the inability to properly market the product and services has also contributed
to some extent to the downfall of some enterprises. The added burden of the rising cost of the
facilities & services used by the enterprises at the Centre plus the salaries of employees
accentuated the demise of these enterprises.

As a case study the business track records of M-ITC Co Ltd, Innovative and Creative Lines (ICL)
Ltd and AM Web Solutions Ltd are detailed in Annex I, II, and III respectively.

3.9. Partnership and International Co-operation

The National Computer Board is working in close collaboration with local stakeholders in the
areas of business development and capacity building. It includes the University of Mauritius,
SEHDA amongst others. At the international level, the National Computer Board – ICT
Incubator Centre has benefited of UNDP and the World Bank for technical assistance.

i) University of Mauritius

The National Computer Board had signed a memorandum of understanding with the University
of Mauritius in the year 2002. The agreement had clearly set up guidelines for areas of
cooperation, which includes provision for training, consultancy, marketing and mentoring to
start-ups and to encourage Entrepreneurship Development in the ICT sector. In this context, a
series of activities were organised jointly by the National Computer Board and the University of
Mauritius.

ii) UNDP Assistance

The National Computer Board had prepared a project proposal to support new and potential
start-ups incubators in the field of ICT. The aim of the study was be to appraise the existing
facilities and services offered to start-ups and examine ways for enhancement. The study also
assessed the capacity needs of start-ups and of the incubator management team, while paying
special attention on the business and marketing perspectives for long run sustainability of the
Centre. The exercise also considered the existing links between institutions (local and
International) and advise on the long term planning of the Incubator Centre addressing issues
such as clustering and networking with International institutions. The project would be carried
out in two phases. Phase I dealt with a study and recommendations, while Phase II would deal
with the implementations of the recommendations. For Phase I, the NCB has benefited the
financial assistance of UNDP for an amount of US$ 19,200. The Phase I of this project has been
completed. The main recommendations included the following:

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Creation of critical mass for sustaining the ICT Incubator Centre. The consultant has recommended that a
critical mass of 20-30 start-ups were required to make this project sustainable. To this effect, the
Centre needs to be relocated outside the city of Port-Louis.

Creation of a Virtual Incubator Module. It was also proposed that a Virtual Business Incubator
Network be created to support start-ups not physically located at the Centre. It would supported
through a web portal and would include training, counselling brainstorming and mentoring
activities.

Capacity building programme. Under this component the capacity building of (a) the Incubator
Management Team (b) Start-ups (c) potential start-ups have been addressed.

Pre-incubation Cell. To re-enforce the collaboration between the National Computer Board – ICT
Incubator Centre and the University of Mauritius, it has been proposed to set a pre-incubation
within the latter premises. Faculty members and students would also be able to contribute and
benefit from this initiative. The aim of the project would also be to commercialise the research
undertaken at the University. This initiative will also help to bridge the gap between research
undertaken and its commercial use with the industry.

iii) InfoDev ICT Incubator Initiative

The National Computer Board has received funding under the InfoDev ICT Incubator initiative
of the World Bank for an amount of US$ 100,000 in June 2004. The funding would be used to
provide technical assistance and capacity building of the ICT Incubator Centre for Phase II of
the above-mentioned project.

Conclusion

The ICT Incubator Centre has been implemented within a conducive environment whereby
policies have been oriented to the development of the ICT sector. It is believed that the business
incubation policy would be successful if it is an integrated strategy of the economic development
process and supported by all the stakeholders.

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References

Board of Investment - http://www.boimauritius.com/

Business Park of Mauritius Ltd http://www.e-cybercity.mu/

Central Statistical Office - http://statistics.gov.mu

CIA - The World Fact book - Mauritius 2005

E-Government Initiatives 2000-2004 - Ministry of Information Technology and Telecommunications,

Republic of Mauritius

Feasibility Report for the ICT Incubator Programme by Dr. Ulrich Daldrup (2001)

Government Online Centre - http://www.gov.mu

ICT Outlook 2000-2004 - Ministry of Information Technology and Telecommunications, Mauritius -

http://telecomit.gov.mu

ICT Outlook 2002 - ICT Penetration within the Mauritian Society, National Computer Board.

Information and Communication Authority - http://www.icta.mu

Information Pack - National Computer Board - ICT Incubator Centre

Integrated Strategic Action - Programme for 1998-2005 - Summary Report, National Computer Board.

Mauritius – Challenges of Sustained Growth , IMF 2005

National Computer Board, http://www.ncb.mu

National Computer Board – ICT Incubator Centre, http://incubator.intnet.mu

National Productivity and Competitiveness Council - http://www.npccmauritius.com

Support Arrangements for Development of Informatics in Mauritius (1992), Preliminary study for the
United Industrial Development Organisation.

(Exchange rate 1 US$ = MUR (Rs) 31)

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Annex I

Start-up M-ITC Ltd

Date of Entry 1st October 2004
Date of Departure 30th June 2005
Promoter Name Mr Michael José Motet
Activity IT Consultancy
The enterprise is currently providing software development and
consultancy services to enterprises operating in Denmark. The
contracts are obtained from companies based in Denmark, which
are actually outsourcing part of their software development to M-
ITC Ltd. The IT solutions are developed using C++, C# (.Net),
Linux, Unix, Mac and Windows.
New Location 34, Remy Ollier St, Port-Louis
URL http://www.m-itc.net/
New Office Space Area 60 sq mts
Useful indicators Initial Actual
Investment Rs 100,000 Rs 600,000*
Labour 4 11
Turnover Rs 1,1 m Rs 3 M
* Investment has been made on hardware and open source software
has been used mostly for development purposes.
The new location will easily accommodate the additional staff
recruited by the enterprise. In-house training has been undertaken by
Danish trainers.
Investment Certificate The company has acquired an ICT Certificate from the Board of
(if any) Investment for the “development of customised secure business
solutions such as the public key infrastructure (PKI) modules for
export only” on 6th January 2005.
Target Market Denmark contractors which outsource major government software
development contracts to small companies
Benefits obtained from The company has acknowledged the contribution of the ICT
the ICT Incubator Incubator Centre during the enterprise initial and critical phase of
Centre development. The infrastructural support including office space, fast
Internet Connection via the ADSL connection and shared facilities –
telephone, fax services and logistics were essential for the growth and
expansion of the company. The enterprise was able to focus on its
core competencies i.e software development
Challenges The main challenge of the enterprise as at date was to be able to get
the right candidate and providing on the job training.The company
has earlier advertised in various newspapers to attract candidates with
expertise in Java, C++ and Linux. Interviews were conducted on the
premises of the Centre. The Ministry of Labour had contacted them
and sent a number of potential candidates for consideration.(~ 100
C.V’s). These people have been registered with the Ministry recently.
Comments “Without the support of the National Computer Board – ICT Incubator
Centre I would not have been able to start a business in Mauritius”.

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Annex II

Start-up Innovative & Creative lines (ICL) Ltd

Date of Entry 1st April, 2003
Date of Departure 31st August 2004
Promoter Name Mr Rajiv Juwaheer
Activity Developing Web Applications and providing Web Solutions to
enterprises. The enterprise is providing Web solutions and Web
applications Development to local SMEs. The allied activities of the
enterprise include:- (a) Website Development (b) Setting up,
commissioning of Web servers and Database servers for online stores
(c) Maintenance of Web & E-commerce sites.The company has
diverstified its activities to include training on ICT. To this effect, the
enterprise has a training room facility that can accomodate 15
persons. A computer room with 10 personal computers are available.
A workshop facility has also been catered for maintenance and
software development purposes.
New Location 5, Octave Sandapa St, Port-Louis
URL http://www.iclnetwork.com/
New Office Space Area 80 sq mts
Useful indicators Initial Actual
Investment Rs 400,000 Rs 0.9 m*
Labour 3 8
Turnover Rs 775,000 Rs 900,000
* Investment has been made in the renovation of new office and
acquisition of hardware for the company.
Investment Certificate
none
(if any)
Target Market Mr Juwaheer is targeting local SMEs and individuals for its services.

Benefits obtained from The promoters and his staff have benefitted from the infrastructural
the ICT Incubator facilities and supports through its training and informative sessions
Centre organised by the NCB. The informal meetings have benefitted the
enterprise in acceding the appropriate information on a timely
basis.Through the participation at the InfoTech , an annual event
organised by the NCB, the company has profiled potential enterprises
for its services.
Challenges The main challenge has been marketing its services, as clients are
constantly looking for competitive prices.
Comments The ICT Incubator Centre facilitates the early stage of business development
through its various support systems.

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Annex III

Start-up AM Web Solutions Ltd

Date of Entry 1st March 2004
Date of Departure 31st June 2005
Promoter Name Mr Remy Grandpierre (French National)
Activity Provision of website development services, website-hosting services,
3D animation and multimedia content development.
New Location Grand Baie, Business Park
URL http://www.amltd.net/
New Office Space Area 60 sq mts
Useful indicators Initial Actual
Investment Rs 697,000 Rs 1.15 m*
Labour 3 10
Turnover Rs 0.5 m Rs 1.5 m
* Seven additional staff have been recruited as the existing office
space at the ICT Incubator Centre was not able to accommodate the
new staff.
Investment Certificate The company has acquired an ICT Certificate from the Board of
(if any) Investment for “website development and multimedia content
development services” on 23rd March 2005.
Target Market Mr Grandpierre is already in contract with approximately 40 clients in
Mauritius. The target market include small and medium businesses
and small hotels.The foreign market includes France, Réunion Island,
Mayotte / Comoros, Madagascar, Seychelles and South Africa. Mr.
Grandpierre has established contracts with potential clients in some
of these countries. Some of these contracts include Isorol and Leader
Club (France), Mayotte’s Edition Grand Public (business directory &
booking portal) and the Réunion-based communication agency
Yasib.com.
Benefits obtained from The company has benefited from the infrastructural facilities, logistics
the ICT Incubator and the business support provided by the ICT Incubator Centre
Centre during its stay. Mr GrandPierre has participated in the InfoTech 2004
event organised by the National Computer Board. The event was an
opportunity to market its services to the local SMEs and to establish
network contact. The informative sessions on the various facilities,
incentives, and legal framework and obligations organised by the
National Computer Board have been helpful to the promoter given
that he was not well versed with the existing legislation system for
business in Mauritius.
Challenges The company has interviewed many candidates with specific
experience in PhP and most of them had little working experience.
Following several advertisement in the newspapers and lists obtained
from the manpower database of the NCB, some reruitments have
been made.
Comments “Besides logistic and infrastructural support offered by the Centre, I have been
obtained appropriate information regarding business development in Mauritius” .

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4.2.11. Academia-Industry-Government Relationship: Experience of the College of

Engineering and Technology, University of Dar es Salaam Tanzania

Academia-Industry-Government Relationship:
Experience of the College of Engineering and Technology,
University of Dar es Salaam Tanzania

B.L.M. Mwamila and A.K. Temu

College of Engineering and Technology, University of Dar es Salaam

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Abstract

The three basic objectives of CoET have a very strong bearing on the relation with the industry.
Achievement of these objectives hinges on the synergic interaction of the three pillars of CoET
(namely the three Faculties, TDTC and BICO), the government and the industry itself.
Collaboration with Tanzania Gatsby Trust (TGT) has fostered closer linkage between CoET and
many technology based SMEs in Tanzania though technology development and transfer. Though
the same collaboration CoET has to interact with the responsible ministries in the government to
ensure our SME intervention does not contravene existing and future SME policy.

SME survey conducted throughout the country showed that the sector is largely informal and
very much under-performing due to a multitude of barriers and constraints facing it. CoET in
collaboration with TGT and Carnegie Foundation of New York has identified a number of
SMEs to work with under business/technology incubation project aiming at improving their
production and competitiveness. The project is proceeding very well and it involves also the local
district government where the entrepreneurs are located. It is envisaged that graduating
incubators would form or join innovative clusters to continue being competitive.

The competitiveness element required of the SMEs and Incubators goes well with the Innovation
Systems and Clusters Programme in Eastern Africa (ISCP-EA), which CoET has spearheaded
since 2003, with a view to fast-tracking socio-economic development in this region. The
programme advocates triple helix operation for its success.

Whereas academia-industry relationship looks reasonably strong, the government-industry or

government-academia relationship has not been equally strong. Government involvement in the
triple helix is, however, improving as a result of a series of awareness campaign, spearheaded by
CoET, through workshops, conferences, exhibitions, publications and direct interaction with
responsible officials. CoET awareness campaign is now directed to the financial institutions to
ensure SMEs are funded in order to be competitive.

Introduction

The College of Engineering and Technology is aimed at:

(i) Supplying the country with sufficient middle and high level engineering human-power as
agents of development and change, thus contributing to the indigenous development of
infrastructure, industry and trade;
(ii) Performing research in the interest of suitable exploitation and local processing of natural
resources in Tanzania, ultimately leading to the innovation of technical products and
production processes for the local industry; and
(iii) Providing expert professional services in the form of consultancy to industry as well as
public and private organisations and institutions.

Achievement of the abovementioned objectives hinges on the synergic interaction of the three
pillars of CoET shown in Figure 1.

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Figure 1: The synergic interaction of the three pillars, viz. the three Faculties, TDTC
and BICO

Teaching & Consultancy &

Research Services
(Faculties/:
(BICO)
ECSE, CEBE &
MECHE)

Technology
Development &
Transfer
(TDTC)

The three Faculties of CoET, viz. Civil Engineering and the Built Environment (CEBE),
Electrical and Computer Systems Engineering (ECSE), and Mechanical and Chemical
Engineering (MECHE) are responsible for academic training and research through the 13
academic Departments. All laboratories and most workshops belong to teaching Departments.
Thus the three Faculties are the custodians of most of the techno-ware and human-ware available
at CoET. Because the curriculum requires that students must spend eight weeks in industry at the
end of first, second and third academic year, respectively, the faculties have maintained a
traditional contact with the industries that provide such training places. The same industries are
also invited to contribute their views during curriculum reviews.

The College recognizes its role towards achieving national socio-economic advancement through
the proper selection, adoption, adaptation and further development of technological solutions as
well as development of appropriate and sustainable technologies. It is thus intended to involve all
academic disciplines of the College in prototype development and technology transfer. All
technology (prototype) development by College staff, technology brokerage as well as the
subsequent transfer to industry is being coordinated by the Technology Development and
Transfer Centre (TDTC).

TDTC aims primarily to impact on the development of SMEs, on the lives of the general public
through the development and dissemination of technologies that have direct relevance to the
Tanzanian society.

The Bureau for Industrial Cooperation (BICO) is mainly aimed at enhancing the capability of
College to contribute effectively in the industrial development of Tanzania through the provision
of consultancy, expert professional services and professional advancement (or development) of
engineers and technologists. Through these consultancy and professional services the college
generates funds for its various activities, among which is to provide incentives to staff.

The three basic objectives of CoET are directly linked to industry. The objectives also address
the Tanzania Development Vision 2025 through which is envisioned that Tanzania will have
graduated from a least developed country to a middle income country by year 2025 with a high
level of human development. The economy will have been transformed from a low productivity
agricultural economy to a semi-industrialised one led by modernised and highly productive
agricultural activities, which are effectively integrated and buttressed by supportive industrial and

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service activities in the rural and urban areas. A solid foundation for a competitive and dynamic
economy with high productivity will have been laid.

For Tanzania to indeed realize this vision, all able bodied and mentally sound members of her
society have to subscribe towards the establishment of the expected “solid foundation for a
competitive and dynamic economy”. This assertion is based on the realization that innovations in
the form of new or improved products, services and processes are the basis for sustainable
growth and prosperity in today’s knowledge-based society. And the success of an innovation
system is very much dependent on the triple helix relationship, where the government main role
is provision of conducive policies and environment.

This paper underscores the importance attached to university-industry-government linkages in

ensuring that training of engineers at the CoET impacts optimally to the development of the
local industry and sustainable national development.

The case of CoET collaborations with Tanzania Gatsby Trust (TGT), Carnegie Corporation of
New York and the Swedish Development Corporation (Sida/SAREC) are used to demonstrate
CoET’s resolve to stimulate and promote innovativeness and growth among SMEs in the
country as part of improving university-industry relationship. The government on its part has put
in place several interventions to ensure growth among SMEs. The paper attempts to describe a
process that will provide building blocks for a strong foundation for a competitive and dynamic
economy, and to contribute to the process of actually laying the foundation.

SME Contribution to the National Economy

Majority of Tanzania’s population is estimated to be making their living on subsistence

agriculture and Small and Medium Enterprise activities. It is estimated that SMEs contribute 35%
to GDP and 20 % of the total labour force. A number of studies indicate that SME
entrepreneurs in Tanzania are considered to be potential in creating jobs and contributing
towards economic growth.

In addition, the government has emphasized the importance of the informal sector as part of
SMEs in the war against poverty. In October 2004, a Peruvian economist, Prof. Hernando de
Soto, was commissioned by the government of Tanzania to prepare the ground for the
implementation of a programme to formalize properties and businesses in Tanzania, popularly
known by its Kiswahili acronym MKURABITA. The programme, which is a clear link between
the government and industry, is aimed at integrating the Tanzanian informal sector into the
mainstream economy.

However, it is important to highlight that the report for the first phase of MKURABITA, has
indicated that 98% of all businesses and 89% of all assets, especially buildings and land of
Tanzanians are in the informal sector. This gave a challenge to researchers, politicians, financial
institutions and development stakeholders in general, to help in making the programme a success,
in order to make the properties and businesses formal so that they could be used in fighting
poverty for the majority of Tanzanians.

COET - SME Relationship

The College of Engineering and Technology in collaboration with the Tanzania Gatsby Trust
(TGT) conducted a survey of a total of 2’225 entrepreneurs country wide. Most of these were in

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the food sector, textile, metal work and woodwork. On a smaller scale there were also other
sectors such as construction, electrical works, agriculture, shoe makers, car seat cover makers,
solar equipment, mattress makers, pottery, fishing and fishing boat makers, car garages,
handcrafts, detergents, plastics, etc. Woodwork is the largest sector, holding about 30% of the
SME activities, followed by metal work with 23%. Food processing is the next in line at 18%
followed closely by textile having 14%. All other sectors mentioned above combined have a total
share of about 15%. The dominance of woodwork as an occupation for most SMEs could be
attributed to continued expansion of cities and towns that demands bigger supply of construction
materials as well as furniture. The trend is also aggravated by availability of raw materials save for
the environmental destruction.

The survey has also shown that almost 67% of the businesses are relatively new, having been
established in the last 10 years. The longer the time from when the business was established, the
fewer are the businesses that still exist. This suggests that a large percentage of businesses have
failed to survive due to different reasons, and one of the reasons could be that of lack of proper
business planning at the start.

With regards to the number of employees, most of the SMEs had less than 5 and out of the total
number of employees, the majority of the respondents, about 40% claimed that 80-100% of them
were skilled. It is also known that most of the small businesses are run by family members, but
the survey found that only about 15% of SMEs had 75-100% family members, while the
majority, about 35% claimed to have no family members at all working in the business.

The issue of packaging was also investigated and it was found that, only a few entrepreneurs,
about 15% of the respondents, do package their products. This could be attributed to the nature
of the products themselves, since some do not need packaging. When the data was filtered to
analyse only those in the food-processing sector, it was found that almost 50% of the respondent
food processors do package their products.

The survey has shown that most of the SMEs are not happy with the way their enterprises are
running due to, among others, the following reasons:

a) Lack of market for their products;

b) Lack of capital to expand their business; many are depending on meagre personal funds;
c) Lack of appropriate equipment as well as technology;
d) Lack of awareness of sources of financing as well as technical advice;
e) Lack of cooperation among and networking of similar SMEs.

Compilation of survey findings from the different zones to produce a country report has been
completed (CoET, 2006) and the launching of the same will be done soon.

Student Projects and Practical Training

Linkage with some of the SMEs has been continued through final year undergraduate projects,
with TGT financing. So far, a total of 25 student projects have been executed, 10 projects in 2002
and 15 in 2003. In 2002, all the projects were in the food processing area. In 2003, however, the
scope was widened to cover other disciplines while emphasizing stronger SME collaboration.
Further, five projects (out of the 15) were specifically for low cost housing related projects. For

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the year 2004, 28 student projects were submitted for TGT funding, out of which 15 were
selected. All the projects have been completed and a compilation of the same has been done.

An impact assessment on the 2001/2002 student projects was made and revealed that results
from two of the ten projects have been adopted by SMEs. These are on Clarification of
Juice/Wine Using Pectrinase Enzymes, which has been adopted by M/s Solar Innovations, and
Quality of Soymilk as Influenced by the Blanching Conditions which has been adopted by M/s
Abantu Food Products as well as M/s Soya Halisi Foods. These two cases demonstrate some
degree of success in the transfer and utilization of technology developed by CoET to SMEs.

Linkage with some of other SMEs is also maintained through students’ practical training. This
provides additional training places on top of the traditional ones, which is a positive move as we
are experiencing expanded enrolment. Depending on the year of study, the students’ can do small
research work of benefit to the firm thus increasing their employability.

Business/Technology Incubation

Having studied and understood SME needs from the survey, it would make no sense to end there
without doing something to alleviate the gravity of the problems observed. TGT, Carnegie
Corporation of New York and CoET have agreed to work on a number of interventions aimed at
addressing these needs, be it directly or indirectly. The Business/ Technology Incubation Project
is one of the ongoing projects under these collaborations.

Decisions regarding these interventions were reached after soliciting views from the SME
stakeholders. This was done by conducting workshops, following the completion of each zonal
survey. In total, four workshops were held, one in Dar es Salaam for the Eastern zone in
December 2002, a second one in Mwanza for the Western and Lake zone, in December 2003, a
third one in Arusha for the Central and Northern zone in February 2005, and the last was held in
Iringa for the Southern and Southern Highlands zone, in March 2005. The workshops attracted a
good number of participants, which included SMEs themselves as well as relevant institutions,
e.g. Small Industries Development Organisation (SIDO), Tanzania Chamber of Commerce,
Industry and Agriculture (TCCIA), Confederation of Tanzania Industries (CTI), etc.

Following the first stakeholders workshop held for SMEs from the Eastern zone, incubation was
deemed to be the best intervention to be implemented in the zone. Therefore three localities
were selected, namely Kibaha, Lushoto and Morogoro. Initially, Zanzibar was also selected
however it was later dropped due to the fact that there already is a similar initiative in Zanzibar
being undertaken by the government. Therefore, focus was placed on the three locations in
Tanzania mainland.

The specific objectives of the project are as follows:

a) To promote the concept of technology incubators;

b) To identify locations where pilot incubators could be successfully established and confirm
their feasibility;
c) To establish the identified incubators;
d) To provide ongoing support to the incubator tenants;
e) To ensure business sustainability of SME after graduation from incubators; and
f) To disseminate the outcome of the pilot phase.

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The establishment of the identified incubators involved the following major activities:

i) Preparing business plans for incubators;

ii) Assisting potential tenants to prepare fundable business plans;
iii) Establishing promotional partnerships;
iv) Identifying mechanisms for tenants’ support and corresponding support providers;
v) Recruiting incubator management teams;
vi) Securing physical facilities for incubator operations;
vii) Procuring equipment and machines for the incubators;
viii) Preparing tenants’ admission and exit criteria; and
ix) Admitting/signing contracts with tenants.

In the year 2006, the focus of the project is in the fourth objective i.e. “to provide ongoing
support to tenants”. The major activities involved are as follows:

(a) Business skills/Entrepreneurship training;

(b) Specific tailor-made trainings;
(c) Technology incubation;
(d) Enterprise counselling;
(e) Information;
(f) Legal advice;
(g) Internal networking to encourage business relations; and
(h) External networking for business advice, technology support, access to finance/loans and
markets.

The University of Dar es Salaam through CoET, in collaboration with TGT are considering
establishing an “incubator with walls”, to be based at the University. This is envisaged to be the
hub of all the incubators of the University. Following agreement reached in the TGT - UDSM
Committee meeting held in July 2005, regarding the establishment of the incubator with walls at
the University of Dar es Salaam, preparatory plans are being made to decide on the mode of the
incubator, the costs involved as well as the financing mechanism for the whole venture. A
proposal for the undertaking is being prepared for submission to possible financiers. Gatsby
Charitable Foundation (GCF) has offered to support this initial phase in terms of expertise, while
NEPAD has also shown interest and may avail some funds for the purpose. The University of
Dar es Salaam has agreed to provide land for the incubator.

Role of CoET in Innovation for Industrial Development

Innovation can be defined as the capacity of a nation to adapt to worldwide changes in nature,
technology and economics as well as influencing them. In this connection, population growth will
trigger search for new solutions towards better chances of survival.

In a world characterized by globalisation and competition, continuous innovation is a necessary

condition for every country. Absence of innovation in a country means that domestic producers

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will continuously lose market shares to others who are continuously innovating. As a result such
countries that are not innovating will in the end also loose incomes and are therefore prone to
poverty.

The fundamental factors for development of innovations include skills, the exchange of
knowledge and opportunities for mutual learning as part of the interaction between businesses,
research institutions and political bodies. Research produces new knowledge, but in order to
promote growth it must be converted into innovations which produce new and improved
products, services and processes for which there is clear demand.

i) The innovative potential of a nation is determined by the following, among others:

ii) The intellectual infrastructure of the population;
iii) The technical infrastructure, i. e. the capacity to transform theoretical scientific findings
into technically feasible solutions;
iv) The historically developed tradition of skilled trades and technical know-how in large
sections of the population;
v) A well-coordinated education system and a consensus between educational institutions,
science, the economy, and society; and
vi) People’s basic mental attitude towards the development of science and technology.

Thus, an innovation system is constituted by interaction between production, diffusion, and use
of new and economically useful knowledge. An innovation system serves as a framework for the creation of
capabilities for firms in a variety of sectors and activities. Further, the concept of innovation systems
focuses on the mechanisms that promote the synergy for generating innovations, including both
the overriding macro framework and incentive structures between institutions that are highly
specific for innovation. Innovation is about adapting to changing circumstances and making new
things in new ways. As new ways to do things always emerge locally, the need for an innovation
system hinges on the desire to stimulate adaptation to changing circumstances.

Joint strategies and actions motivated by the anticipation of mutual benefits are greatly important
in clustering. It follows from this that clusters are geographically proximate groups of
interconnected companies and associated institutions in a particular field linked by commonalities
and complementarities. Clusters encompass an array of linked industries and other entities
important to competition including governmental and other institutions such as; universities,
standard setting agencies, vocational training providers and trade associations.

Whereas all clusters may have properties that serve to speed up innovation, some can be
observed to perform particularly well and hence be classified as innovative clusters. An innovative
cluster innovates in the broadest sense of the definition, where the innovation can emanate from
improvements in the way actors organize themselves, products are developed, produced,
commercialised, distributed, etc.

The innovative cluster is, in principle, evolving constantly, learning from experience and able to
adjust to changing circumstances. It is likely to be well-positioned to explore new opportunities
beyond its present boundaries and, at the same time, combine flexibility with inner strength,
stability and a sense of direction to achieve the following:

• Continuously changed traditional boundaries to knowledge generation and diffusion, by

establishing linkages to wider and alternative sets of knowledge inputs;

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• Re-conceptualised products and markets;

• Upgraded mechanisms for seed-funding, risk-taking and entrepreneurship;
• Transformation of old institutions and organizations through learning as well as
unlearning of earlier habits and practices.

Cluster development has attained considerable attention over the last decade, not least as an
operational means to enhance the competitiveness of firms and regions. This is largely due to its
responsiveness to the demands of the new economy for; speed, quality, flexibility, innovation,
networking and building critical mass. Thus, early establishment of the clustering behaviour is
particularly important in supporting the development of competitiveness of emerging industries,
and hence laying of a solid foundation for a competitive and dynamic economy with high
productivity. CoET thought that through clustering even SMEs can gain the necessary critical
mass to service world markets, hence establishment of the Innovation Systems and Clusters
Programme in Tanzania (ISCP-Tz).

Innovation Systems and Clusters Programme

The CoET has spearheaded Innovation Systems and Clusters Programme in Eastern Africa
(ISCP-EA) since 2003, with a view to fast-tracking socio-economic development in this region.
The programme advocates triple helix operation for its success. In this endeavour CoET has
been collaborating with the Faculty of Engineering at Eduardo Mondlane University in
Mozambique and the Faculty of Technology at Makerere University in Uganda. In February
2004, CoET organized and hosted the 1st Regional Conference on Innovation Systems and
Innovative Clusters in Africa, and in March 2005 the Faculty of Technology in Uganda organized
and hosted the 2nd Regional Conference on the same theme.

In September 2005, with the support of Sida/SAREC of Sweden, weeklong and intensive
training courses on the development of Cluster Initiatives (CIs) were held in Bagamoyo, Tanzania
and Jinja in Uganda. The training drew participants from the triple helix, namely academia,
government and the industry. Following success of the training, which was reflected by the
enthusiasm and momentum exhibited by course participants, eight pilot CIs each composed of
members from the triple-helix were established in Tanzania and seven in Uganda. Each of the
eight CIs in Tanzania prepared action plans for a low budget implementation of the initiatives,
which were harmonized in a workshop held in Dar es Salaam on February 09, 2006 and launched
on the same day. These clusters will present their progress in the third Regional Conference on
Innovation Systems and Clusters in Africa slated for September 2006.

The ISCP-EA programme has five major objectives, namely:

(i) Research and innovation systems policy reviews;

(ii) Implementation of pilot innovation systems and/or cluster initiatives;
(iii) Awareness creation and publications;
(iv) Competence building;
(v) Coordination and follow up forums.

The intervention programme is expected to stimulate and facilitate the development of

innovation systems and innovative clusters in Eastern Africa. The achievement of this purpose
will be measured in terms of; enhanced innovativeness among firms and farms, enhanced

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competition and cooperation among firms and farms within clusters and sectors, and acquisition
of competitive mindset.

The expected outputs, among other things, are:

(a) A network of capable individuals interested in innovation systems and clusters formed;
(b) Innovation systems and clusters identified and characterized for possible in-depth study
(mapping of clusters and innovation systems);
(c) In-depth study of selected clusters and innovation systems carried out, including:
o Assessment of extent to which they are innovative and bottlenecks for growth;
o Determination of mechanisms that will make innovation systems in the various
sectors stronger and sustainable, and clusters innovative and sustainable.
(d) Consolidation of potentially innovative clusters stimulated;
(e) Innovativeness of firms and farms within pilot existing and new clusters and innovation
systems stimulated;
(f) Various advocacy initiatives implemented;
(g) Short and long-term training in innovations, and innovation systems and clusters
established;
(h) National Steering Committees (NSC), National Coordinating Offices and a cluster
development monitoring system established.

Expected Impacts

The expected impacts arising from the implementation of the proposed programme can be
summarised as follows:

i) Poverty reduction

With acquisition of competitive mindset and adoption of the innovative cluster approach,
productivity will increase, quality of products and services will improve and Small and
Medium Enterprises (SMEs) will grow thereby generating more jobs and employment. These
developments will trigger national socio-economic growth which will enable Tanzania to
cope with the rigours of international competition accompanying globalisation. The resulting
financial empowerment will lead to acquisition of adequate nutrition, clothing, housing, etc.
and thereby subscribe to poverty reduction.

ii) Enhanced value addition of local agricultural products and natural resources

Through enhanced innovativeness and acquisition of competitive mindset, value addition will
be applied to all agricultural products and other natural resources, including minerals, before
they are exported abroad. Foreign currency earnings will thus be boosted and the economy
will grow.

iii) Preservation of the Environment

Entry into international markets demands consciousness of various environmental aspects as

echoed by the World Summit on Sustainable Development in 2003. Thus, enhanced

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innovativeness and competitiveness that qualifies for entry into international markets, will
also lead to more environment friendly products and services.

iv) Gender

Farming and nearly all home-care activities are mainly done by women. Further, most small
scale food processing is also done by women. Thus, value addition of agricultural products,
cheap and readily available energy saving and alternative energy sources will lead to financial
empowerment of rural women and facilitate the growth of their businesses, thereby
enhancing gender relations in rural communities.

v) Capacity building

Local capacity building will result through:

• Enhanced internal research capacity;

• Strengthened national innovation systems and enabling policies;
• Postgraduate training in innovations, innovation management and related aspects;
• Enhanced innovativeness and competitiveness of businesses.

This programme component is intended to establish the extent to which innovation systems
and clusters, and innovation policies exist in Eastern Africa. The programme component
shall also establish deficiencies of existing innovation systems and clusters. Finally, an attempt
will be made to establish the extent to which firms and farms are innovative in the three
countries.

Implementation of Pilot Cluster Initiatives

Cluster initiatives are organized efforts to increase the growth and competitiveness of respective
clusters that involve cluster firms, government and the research community. Thus, doing research
and identifying gaps in the systems of innovation and clusters is not an end in itself. The ultimate
goal is to have a system within which firms and farms are innovative. This programme
component is to conceptualize and support, improve, or introduce innovation systems for
specific sectors or clusters in a practical way, showing short-term results, while fitting into a
national long-term innovation policy framework. This programme component actually seeks to
put in place systems that are innovative, and initiate innovative clusters. It will also save as a
practical learning process on what works and what does not. This entails getting teams of
competent and committed individuals representing the whole triple helix sphere to facilitate
respective cluster initiatives.

The selection of the eight pilot Clusters Initiatives in Tanzania was based on presentations of
various potential clusters during the Stakeholders Workshops held in January 2005. They were
subsequently discussed and approved for implementation. The following criteria were used for
the selection:

• Current activity level;

• Availability and potential for effective use of resources (human and physical);
• Existence of actors committed to bringing about change;
• Responsiveness to expressed needs from the society;

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• The strategic idea and its growth potential (e.g. job creation);
• Existence of future market potential;
• The ambition for renewal within the initiative;
• Potential for collaboration between academia, business and political bodies (including the
government) within the initiative; and
• Geographical focus, viz. the functional region of the initiative.

The following are the eight pilot Cluster Initiatives in Tanzania:

1) Bagamoyo cultural heritage tourism cluster;

2) Eastern region mushroom cluster;
3) Morogoro metal works and fabrication cluster;
4) Morogoro small scale fruit and vegetables food processors cluster;
5) Arusha seeds and seedlings cluster;
6) Sisal cluster;
7) Zanzibar seaweed cluster; and
8) Nutraceuticals cluster.

Competence Building and Research

Technology development is one of those things that cannot be left to be stirred by market forces
alone because of the possible occurrence of the market failure phenomenon and other
externalities, which are beyond the control of innovating firms and farms, especially for the less
developed countries. There is, therefore, a need to inhibit market failure effects by putting in
place policies for technology development. Proper policies in turn require prior investment in
policy research. This programme component intends to contribute to this through capacity
building in various aspects of innovation, including innovation studies. Innovation is a dynamic
and context specific concept, and the different strategies that can be adopted by countries or
sectors in those countries depend on their own specific development advancement and other
in-country factors as well as on developments in innovation systems in the global economy to
which the national economy is increasingly linked. It therefore calls for continuous researching,
and capacity building in the area to achieve a critical mass of experts in innovation research.

Establishment of short-term and long-term (MScs and PhDs) training on innovations and related
aspects is one of the key specific objectives of this programme component.

Triple Helix Status in Tanzania

A quick look at Tanzania’s Triple Helix constellation (academia, industry and government
relationship) reveals a number of issues that need to be addressed in order to facilitate economic
development drawing on an increased university-industry interaction but also on how policy can
feed into the discussion and stimulate industrial innovativeness. Economic reality has made
consultancy linkages the main communication channel between university and industry.

Starting with industry and its present status, regardless of the criteria chosen for analysis, there
has been little progress over the last decades. Tanzania remains basically a non-industrialized

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country heavily reliant on agriculture. The ongoing transformation has had little effect on
business start-ups and expansion in the SME sector whereas the parastatal sector has literally
been phased out. The low level of technological capabilities is a key bottleneck to responding
positively to ongoing liberalization.

Secondly, industrial firms’ relations to other firms and/or organizations are not optimised for
knowledge transfer and joint learning. A strict division of labour between firms in the value chain
is in most cases absent leading to poor specialization. In recognition of the fact that it would have
been difficult and impractical for each industry to establish its own Industrial Research and
Development unit, the Government decided to set up specialized Industrial Research and
Development Institutions. The Industrial R&D institutions were entrusted with the noble
objective of providing support services to industry through research and knowledge
dissemination. The institutions include, among others Tanzania Industrial Research and
Development Organisation (TIRDO) established in 1979, Centre for Agricultural Mechanization
Rural Technology (CAMARTEC) established in 1981, Tanzania Engineering and Manufacturing
Design Organisation (TEMDO) and SIDO. However, the level of industrial R&D is still low
because the Government spending on industrial R&D is very limited, which has left the few
R&D institutions in an insecure situation having to rely on consultancy, training, and services
offered to industry. These revenues do not cater for R&D activities but solely meet operational
costs of the institutions.

On realising the importance of SME contribution to the economy, the Government approved
the Small and Medium Enterprise Development Policy in 2003. The policy comes up with a
number of interventions in support of the SME sector, including the improvement of the legal
and regulatory framework, addressing issues related physical infrastructure, improving access of
financial and business development services to SMEs as well as putting in place a supportive
institutional set-up for the sector. However studies have shown that policy is not linked to any
financing mechanism; a situation which business analysts say might hamper its implementation.
This is due to the fact that the implementation of various portions of the policy was left to
government ministries and agencies, parastatal organisations, NGOs and associations. The study
also revealed that the policy did not adequately address issues of the poor infrastructure, high
cost of utilities and communication system, all of which are crucial for the development of SMEs.
It is also true that the taxes imposed on SMEs are numerous and high, thus deterring SME
development and growth.

In another move the Government launched the National Trade Policy in August, 2003 whose
main objective is to facilitate Tanzania’s smooth integration into the Multilateral Trade Systems
(MTS) so as to take advantage of opportunities inherent in the free flow of resources in the
current wave of globalization. This policy has identified the need to utilize innovative industrial
clusters of Export Processing Zones as an effective policy instrument of building robust export
driven growth of the economy. The outcome of this is yet to be seen.

Despite all the government efforts, there is neither appreciable innovation nor an innovation
systems policy in Tanzania, but there are various government policies that emphasize the role of
Science and Technology (S&T) in development. Thus, S&T is discussed in the National Science
and Technology Policy of 1995 issued by the Ministry of Science, Technology and Higher
Education. But what is probably more relevant to the development of innovative clusters is
government’s awareness and dedication to build a scientific platform that may contribute to
industrial progress.

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A clear derivative from the aforementioned is that there is dire and urgent need for change if
Tanzania is to achieve what is envisioned in Vision 2025. Peoples’ mindset has to change towards
a competitiveness mindset, enhanced quality consciousness and enhanced productivity. To
facilitate these, there is also need to develop a mechanism for change.

Need for a Competitive Mindset

Competitive mindset is one that equally welcomes competition and cooperation, and seeks to
build competitive advantage. It also entails strategic thinking that leads to a strong distinguished
position on a global scale, identifying the needs and wishes of clients, developing products and
production processes, and finally employing high international standards when assessing the
performance of institutions.

The world economy has entered an era of total competition. There are many examples around
the world where the traditional sources of comparative advantage, like natural resources, are less
valuable than initially perceived for the development of a strong competitive economy.

At the firm level, competitiveness is the ability to provide products and services more effectively
and efficiently than relevant competitors. At the industry level, competitiveness is the ability of
the nation’s firms to achieve sustained success versus foreign competitors, without protection or
subsidies. And, at the national level, competitiveness means citizens ability to achieve a high, and
constantly rising, standard of living.

Competitiveness in some industrial segments allows productivity improvement through higher

specialization in the respective industries and segments. Consequently exports volume increase
for that specific segment in which firms are relatively more productive than firms in other
countries.

Competitive advantage grows out of the way firms organize and perform discrete activities. Of
course, activities vary in their importance vis-à-vis competitive advantages from industry to
industry. All activities contribute to buyer value. Hence, firms create value for their buyers
through such activities. The ultimate value a firm creates is measured by the amount buyers
are willing to pay for the product or service offered. A firm is profitable if this value exceeds
the collective cost of performing the required activities. To gain competitive advantage over
its rivals, a firm must either provide comparable buyer value, but perform activities more
efficiently than its competitors (lower cost), or perform activities in a unique way that creates
greater buyer value and commands a premium price (differentiation).

Need to Develop a Mechanism for Change

Firms gain competitive advantage by conceiving new ways to conduct activities, employing new
procedures, new technologies or different inputs. A firm is more than the sum of its activities.
The value chain of a firm is an interdependent system or network of activities, connected by
linkages. Linkages occur when the way in which one activity is performed affects the cost or
effectiveness of other activities. Linkages often create trade-offs in performing different activities
that must be optimised. For example, a more costly product design, more expensive components,
and more thorough inspection can reduce after-sale service costs. A firm must resolve such trade-
offs, in accordance with its strategy, to achieve competitive advantage. Thus, strategy guides the
way a firm performs individual activities and organizes its entire value chain.

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Linkages also require that activities are coordinated. The coordination of linked activities reduces
transaction costs, allows better information for control purposes, and substitutes costly
operations in one action with less costly ones elsewhere. Coordinating linked activities is also an
important way to reduce the time required to perform them, which is increasingly important to
ensuring competitive advantage. Careful management of linkages can be a decisive source of
competitive advantage.

Creating competitive advantage requires the management of the value chain as a system rather
than a collection of separate parts. Reconfiguring the value chain by relocating, reordering,
regrouping, or even eliminating activities is often at the root of a major improvement in
competitive position. The value chain provides a tool for understanding the sources of cost
advantage. A firm’s cost position represents the sum of all costs incurred for performing all the
required activities relative to competitors. Cost advantage can occur in any activity. Gaining cost
advantage usually requires optimising the linkages among activities, as well as close coordination
with suppliers and distribution channels. The value chain also exposes sources of differentiation.

Conclusion and the Way Forward

Given the fact that the majority of the industries in Tanzania fall under the SME category, the
SME needs/expectations as shown above are the ones that have to be addressed in order to
enhance the performance of these industries. The University-Industry link therefore needs to be
stronger than ever. The College is already working on ways to address the SME needs by the
establishment of incubators and SME clusters to serve those SMEs which need that kind of
support, mostly starting-up enterprises and those that are still in need of assistance. However for
much larger industrial set-ups, the College can deliver support services through its two organs,
viz. BICO and TDTC, depending on the need.

To sum-up, the University has continuously strived to have a functional linkage with industry.
Despite some failures experienced in the past, the goal now is to have a link that will serve all
levels of industry, from the micro ones to the largest scale that we may have in the country and
even beyond our borders.

The Tanzanian SME sector is, at present very weak and underdeveloped. However, it presents a
high potential for growth, leading the nation to industrialisation. The existing government
policies, legal and institutional infrastructure is comprehensive enough. The intervention
measures that have been initiated so far, including those which are under the CoET - TGT
collaboration project are seen to be very supportive and in the right direction towards developing
SMEs. However, the resources that are available at present are grossly inadequate to cover the
whole country and the needs of SMEs.

It is recommended to have continued and stronger collaboration between CoET, TGT and other
stakeholders in order to solidify and extend the efforts that have already been started in some
parts of the country as described in this paper.

The Innovation System and Clusters Programme initiated by CoET promises success in triple
helix operation and provision of the mechanism for change of mindset in favour of
competitiveness, enhanced quality consciousness and productivity, among SMEs. There is,
therefore, need to support the eight pilot Cluster Initiatives, established through the financial
support from Sida/SAREC, so as to enable them succeed and pave way for establishment of
others. There is also need to mobilize resources to finance implementation of the other
components of the Innovation System and Clusters Programme conceived by CoET.

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In recent years, the overall policy environment has being more supportive to enterprise
development as well as private sector development. The Small and Medium Enterprise
Development Policy approved and launched last year comes up with a number of interventions
in support of the SME sector, including improving the legal and regulatory framework,
addressing issues related to physical infrastructure, improving access of financial and business
development services to SMEs as well as putting in place a supportive institutional set-up for the
sector. The SME Policy recommends development of industrial clusters as one of the strategies
for steering enterprise development.

On the other hand, successful development of industrial clusters depends on a number of other
interventions including putting in place an effective Industrial Research and Development
(IR&D) infrastructure. As elaborated above, Innovative Industrial Research and Development is
a core function which must be done to facilitate the development and dissemination of industrial
technologies and innovations. Developing countries, like Tanzania, need to put emphasis and
devote adequate resources to IR&D activities if they seriously need fast and sustainable rate of
industrial growth.

It should also be emphasized that development of industrial clusters should be a collaborative

task involving developers of physical infrastructure, financial and non financial service providers
as well as the prospective entrepreneurs.

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Bibliography

Andersson T., S. Schwaag Serger, J. Sörvik and E.W. Hansson (2004), “The Cluster Policies White Book”,
International Organisation for Knowledge Economy and Enterprise Development (IKED), Malmö,
Sweden.

Bångens L. (2001), “A Study of the S&T system in Tanzania: A Proposal for Further In-depth Case
Studies”, A Study for SIDA, Sweden.

C. Z. M. Kimambo (2005), “Stimulating Small and Medium Enterprises Development for Poverty
Reduction through Business and Technology Incubation”, Proceedings of the 3rd Annual
Engineers’ Day - Vision 2025: Engineering Contribution in Poverty Reduction, Engineers
Registration Board (ERB), Dar es Salaam, March 18 - 19, 2005, pg. 109 - 125.

C. Z. M. Kimambo, K. Hartmann, M. A. M. Victor and I. B. Mshoro (2004), “Piloting

Business/Technology Incubation in Tanzania”, Proceedings of the Annual Seminar for 2004 - The
Role of Engineers in Shaping Tanzania’s Social Economic Development, Institution of Engineers
Tanzania (IET), Arusha, December 2 – 3, 2004, pg. 61-77.

College of Engineering and Technology (CoET), University of Dar es Salaam and Tanzania Gatsby Trust
(TGT), “A Report on: Country-Wide Survey on the Status and Needs of Small and Medium Sized
Enterprises (SME) in Tanzania”, January 2006, Draft.

Jordan National Competitiveness Team (2003), “Jordan’s Competitiveness Book: Confronting the
Competitiveness Challenge”, Ministry of Planning and International Cooperation, Amman.

Lugones G. and Peirano, F. (2004), “Proposal for an Annex to the Oslo Manual as a Guide for Innovation
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Innovation Systems”, Aalborg University Press, Denmark.

Memorandum of Understanding between Tanzania Gatsby Trust and the Prospective College of
Engineering and Technology, University of Dar es Salaam, February 14, 2002.

Mgeta Mganga (2006), “SME Policy Implementation Problems”, The Guardian, Tanzania May 04, 2006.

Mwamila B.L.M. and Temu A.K. (eds.) (2005), “Innovation Systems and Clusters Programme in
Tanzania”, Proceedings of a National Stakeholders Workshop, Bagamoyo, Tanzania, January 24-25,
2005.

Mwamila B.L.M., Trojer L, Diyamett B. and Temu A.K. (eds.) (2004), “Innovation Systems and
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Solvell O., G. Lindqvist and C. Ketels (2003), “The Cluster Initiative Green Book”, August 2003,
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Sölvell Ö., G. Lindqvist and C. Ketels (2003), “The Cluster Initiative Green Book”, Ivory Tower AB,
Sweden.

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Tanzania, United Republic of (1996), “The Sustainable Industrial Development Policy – SIDP (1996 –
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Tanzania, United Republic of (2003), “Economic Survey 2002”, Presidents’ Office Planning and
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Strategy for Minnesota”.

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4.2.12. Research Institutions and SMEs: Trust Mechanism and Partnership

Research Institutions and SMEs:

Trust Mechanism and Partnership

Zhao Yandong
National Research Center for Science and Technology for Development

Yang Jun
Nankai University

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Introduction

Small- and medium-sized enterprises (SMEs) have been playing an important role in the
development of China’s national economy in the 21st century. A survey sponsored by
Volkswagen Foundation, Germany revealed that in 2002, value of products and services provided
by Chinese SMEs accounted for 50.5% of the national GDP. The SMEs also created 75% of the
jobs, and contributed 60% of China’s exports and 43.2% of taxes. Development of SMEs has
become a hot topic in China, receiving attention from all walks of society.

It has been widely accepted that the establishment and growth of SMEs are based on
innovations. However, it is very difficult to trace the dynamic process of innovating activities in
SMEs, not only because of the diversified forms of SMEs, but also because of the dynamical
feature of innovations resulting from the efficient interaction between SMEs and external
environment. Anyway, both researchers and practitioners have done detailed researches on
innovations in SMEs. In micro level, they have tried to find out the principles and results of
innovation in SMEs from directions of entrepreneurship, resources, information and knowledge.
In macro level, they have tried to identify and create operational environment suitable for
innovations of SMEs in a country or a region.

Undoubtedly, management experts are mainly interested in anatomizing SMEs. Discussions on

what kind of operational environment is more favourable to SMEs, however, have attracted more
attention from researchers in different subjects, including management, economics and sociology.
More and more scholars are advocating the establishment of regional innovation system to
support innovation and growth of SMEs. Although they have had enough discussions on the
concept, characteristics and features of such a system, they have not yet conducted enough
research on deep-seated factors between regional innovation system and growth of SMEs. For
example, how the regional innovation system can be established? How and in what way such a
system can spur innovation of SMEs? How to define the scope of a regional innovation system?
What are the differences in innovation modes and efficiency in SMEs inside and outside the
system? To answer the questions, National Research Center for Science and Technology
(NRCSTD) in Beijing, China, and Fafo Institute for Applied International Studies (Fafo) in Oslo,
Norway started a international cooperated research project named “A Study on the Institutional
and Technological Innovation of Small and Medium-sized Enterprises in Western China”. The
project is financed by a grant from the Norwegian Agency for Development Cooperation
(NORAD) under the project number CHN-2086. The project, through on-the-spot
investigations in Chengdu, Sichuan Province, and Xining, Qinghai Province, aims to discover the
operational situation and shortcomings of the regional innovation system in western China. It is
also designed to discover the modes and features of SMEs’ innovation inside the system, find out
reasons behind the weak innovation ability and poor performance of SMEs in western China,
and explore ways to help them improve their innovation ability. Interaction between research
institutions and SMEs innovation is a key part in the functioning of regional innovation system.
This paper, based on the results of the first round of investigation and case studies, aims to
discuss the features and principles of such interactions from the angle of trust mechanism. We
also try to find out problems in such interactions and seek for solutions and suggestions to the
problems.

Background and Problems

Etzkowitz and Leydesdorff (1998) proposed that in a free economy, innovation contributors
included governments, enterprises and research institutions. Although they had different targets,

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standards and restrictions, they were increasingly penetrating into each other to form the so-
called “trilateral network and hybrid organization” relationship. They believed that a more mature
relationship among the three helix, the stronger innovation ability in a country or a region. In
China, after more than two decades of reform and opening, the government doesn’t interfere in
resources distribution through administrative orders. Instead, it is controlling the economic
operation through macro measures. Research institutions and enterprises have become
independent bodies to engage in market activities, which of course include their innovation
activities. That means the “trilateral network and hybrid organization” has taken shape in China,
and undoubtedly, in such a framework, research organizations are playing an active role in
propelling innovations in SMEs. They provide knowledge, technology and information support
to SMEs. Such a role is also demonstrated by close interaction and co-operation between
research institutions and SMEs.

The essence of cooperation between research bodies and SMEs is trust. For one thing, the
cooperation between enterprise and research institutes is characterized by a high information
asymmetry and uncertainty. As a result, the trust between them became the indispensable base
for their successful cooperation. For another, such cooperation are often linked by personal
relationship rather than organizational relationship. In the inauguration and initial periods of
SMEs, entrepreneurs often have absolute controlling right on the enterprises, while in the
meantime they are also the main persons to represent the enterprises to conduct external co-
operation. All the relations linking SMEs and outside world are developed by entrepreneurs. In
other words, personal trust between entrepreneurs and outside world is the key for SMEs to
obtain resources such as financing, technology and human resources. For SMEs that are in fast
growth period and have already standardized their management to a certain degree, it remains to
be hard for them to interact with the outside world through organizational exchange (such as
through departments in enterprises) as large enterprises do. They also rely on entrepreneurs to
explore new relations to expand their interaction with outside world further.

However, in a transitional society, such interaction and co-operation on the one hand must get
rid of the influence of planned economy while on the other hand need to seek for new modes
compatible with market economy operation. That means trust mechanism in co-operation
between research institutions and SMEs must be transformed, too. This study believes that trust
mechanism is the deciding factor for efficiency of co-operation between research organizations
and SMEs. We aim to theoretically explore principles in the transformation of trust mechanism in
co-operation between research bodies and SMEs in the transitional period and demonstrate such
principles through case studies. We also try to seek for relevant policy suggestions to improve co-
operation efficiency for research institutions and SMEs, push forward innovation of SMEs and
improve growth environment for them.

Trust Structure in Chinese Society in the Transitional Period

Luhmann (1979) has distinguished two kinds of trust: personal trust and institutional trust. He
noted that personal trust was established on the base of degree of familiarity and emotional links
between people while institutional trust was external, using punitive or preventive mechanism
such as laws to reduce the complexity of social exchange. Scholars such as Yamagishi
（1994）further elaborated that personal trust was a kind of safeguarding trust which existed in
personal relations, while institutional trust was a basic trust which was based on people’s trust on
social mechanism. He argued that the two kinds of trust formed the trust structure in the society.
Therefore, the transition in China’s social system is sure to bring about transformation of
institutional trust from one form to another. In the transformation, personal trust fills the space

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left by absence of institutional trust and becomes the major part of the trust mechanism in
Chinese society. In the meantime, the interaction between personal trust and the forming
institutional trust can result in an extremely complicated trust structure in Chinese society. Such a
structure in turn affects co-operation between research institutions and SMEs, making the co-
operation a dynamic one yielding different impacts on innovation and growth of SMEs in
different periods.

1. Special Personal Trust in China

Studies show that personal trust is to some degree affected by culture. Some scholars even
described trust as a kind of cultural phenomenon, suggesting that trust was part of a society’s
culture codes passing generation by generation in some ways. For example, Fukuyama (1998:34)
believed that trust came from “inherited ethnical customs” and was a product of moral standards
shared by the society. That means trusts in different cultures are different and the unique Chinese
culture produces a special personal trust in the Chinese society.

In earlier studies, many western scholars believed that there was only low-degree or limited trust
in Chinese society. Weber(1920), in his research on Chinese religions, noted that the people in
Confucian culture stressed on “self-restraint”, and didn’t trust others, which seriously hindered
development of China’s credit and commercial activities. He argued that trust of Chinese people
was established not on the base of common belief community, but on kin community, or on
family relationship and quasi-relative relationship. Such a specialized trust is hard to be
generalized. Fukuyama believed that in countries such as China, Italy and France, all social
organizations were based on kin-linked families. People in such societies lacked trust to people
outside their families. In such societies without general trust, it was very difficult to standardize
company operations. Family enterprises owned by Chinese would not allow professional
managers to manage their companies. They would rather split the company into several new ones
or even disintegrate them completely (Fukuyama, 1998:296). Although Chinese American scholar
Redding didn’t believe Chinese did not trust any other people absolutely, he did point out that
there were only limited trust among Chinese people and such trust were mainly on individual
level. Chinese people trust family members absolutely, but their trust to friends or acquaintance
could only be established when they set up a kind of mutual-dependent relationship. (Redding,
1993:85-86).

However, recent studies, especially investigations made by domestic scholars, revealed that the
trust level among Chinese people was not as low as scholars estimated earlier. For example, an
investigation conducted by Zhang Jianxin et al. (1993) showed that Chinese university students
trusted acquaintances and strangers more than their US counterparts did. Peng Siqing (1999) also
challenged the opinion that Chinese people lacked trust. He proposed two kinds of “distrust of
outsiders.” The first one was people did not trust others because they didn’t have deep
understanding about them. The second one took place even if people had full understanding to
outsiders, they still did not trust them. Logically, only the second kind of disbelief could result in
a low-trust-degree society. It was reasonable not to trust people who you were not very familiar
with and it also happened in Western countries. In other words, the first kind of disbelief can
turn to be trust through interactions.

It can be noted that the debates on trust in Chinese society was focused not on the level of trust,
but on the special essence of trust in Chinese society. Just like what Weber said, the great
contribution made by ethnic and abstinence churches in Protestantism was casting off kin links
and building up advantages of belief-based communities over kin-based communities, including
families. A popular view is that trust is a kind of expectation on what actions individuals may take

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to others. If an individual expected another people to take possible actions beneficial or at least
not harmful to him/her, s/he would trust that people (e.g. Oliver E. Williamson, 2001). China is
a society that attaches great importance to relations, and to establishing and maintaining relations
network. People have their own relation networks and relations to a large extent determined trust
expectation of individuals.

However, the interacting Confucian culture and agriculture culture in China set up the relation
order in the country. Behind the relation networks are the differences in people’s trust to
outsiders. Family members linked by kin enjoy “starting-point trust”, which means individuals
have born trust to family members although the level of such trust may change with time and
frequency of interactions. Undoubtedly, such trust is based on emotional recognition and helps
Chinese family enterprises to achieve efficient operation in their initial periods. Some scholars
(Chu, 2003) defined it as family trust. However, Chinese people can also gradually develop
relations with people outside their families, such as town mates, colleagues and classmates, into
relations similar to that of family members. More people can be included in their trust lists. Such
trust comes from good expectation developed after long-term exchange of the two sides and
their similar background, which means similar behavior customs. It is easier for people with same
background to get mutual understanding and reach consensus in exchange. Chu Xiaoping (2003)
defined such trust as pan-family trust.

2. China’s Forming Institutional Trust

Under the planned economy, government was the monopolized distributor of social resources
and controlled the social and economic development. Administrative orders were major tools in
economic co-operation, and thus became scarce resources in the society. It was easier for
individuals and organizations with administrative orders to gain trust from others and get co-
operation opportunities with other institutions. In other words, institutional trust in planned
economy era was a kind of trust based on administrative orders. Since China initiated the reform
and construction of market economy in 1980s, the government has gradually stopped interfering
in economic development directly. Market principles have replaced administrative orders to play
leading role in economic development while laws and systems have become rules guiding
people’s daily life, as well as personal trust. A kind of trust suitable for market economy has
gradually taken shape. Such a trust system is based on individuals’ recognition of social system
and laws. Individuals believe that laws and systems can ensure that he or she may not suffer
losses if other people can not keep their words, which happens very often in transactions,
especially in first transactions between the two sides. Contracts become the bridge linking co-
operation partners. However, in the process when old institutional trust is gradually fading out
while the new one is in the formation, personal trust becomes the main body in social trust
structure as people attach more importance to personal relationship rather than laws. In this
period, family trust, pan-family trust and institutional trust construct the spindle-shaped trust
structure in China, as shown in chart 1. On the left end is family trust under which people are
more emotional than rational. Pan-family trust in the middle is the main part in the personal trust
in Chinese society. What on the right end is the forming institutional trust under which people
are more rational than emotional? See chart 1.

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Chart 1: Trust Structure in Chinese society

Rational factors
Low Medium High

Family trust Pan-family trust Institutional trust

High Medium Low

Emotional factors

The trust structure in China, which is dominated by pan-family trust and short of institutional
trust, has resulted in some dilemmas. On the one hand, although pan-family trust stresses both
emotional and rational contacts, the rational fact, however, is often covered in some emotional
exchanges. In other words, although people are very serious on some issues but often they do not
speak out, taking into consideration of maintaining relations with their partners. In the meantime,
it takes a relatively long time to establish pan-family trust, which to some extent restraints
companies from harvesting gains through expanding personal relation networks. In Italy,
however, SMEs have gradually got rid of the impact of individual personal relations. Instead, an
enterprise network has been established providing co-sharing resources, information and
knowledge to the companies. Such a network is an important contributor to the advantages of
Italian products. In China, although there are regional SME clusters, the SMEs still rely on
personal relations and their co-operation is still based on family and pan-family trust, which leads
to a high transactional cost to maintain these relationships. Efficiency of such co-operation is
relatively low due to a lack of punitive mechanism after some people break their words.
Meanwhile, it is also expensive to maintain such trust.

During the transitional period, China’s special trust structure has been transferred into relation-
based activity standards, which are reflected in all aspects of social life. However, such a structure
is in contradiction with legalization demand aroused by market economic operation. A typical
example is the limited scale of enterprises owned by Chinese families. Meanwhile, such structure
also determines the modes and features of interaction between research institutions and SMEs,
and demonstrates the internal demand for a transformation in trust structure and its formation
mechanism in China’s transitional period.

3. Transformation of Trust Mechanism between Research Institutions and SMEs

In planned economy era, administrative distribution of resources was the decisive factor in
development of SMEs, especially collectively-owned SMEs. They enjoyed low charge or even
free technical support from State-owned enterprises (SOEs) and research institutions. Overall,
such distribution mode made the interaction between SMEs and research institutions a linear
stable one, with administrative orders from the government bridging the two. However, personal
relations of SME managers, based on family trust or pan-family trust, still played a key role for
SMEs to obtain administrative orders, which were scarce resources then. What enabled the firms
to get the orders were good personal relations between their managers and government officials,
SOE managers and staff in the research institutions. Therefore, on the surface, co-operation
between SMEs and research institutions depended on administrative order-based institutional

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trust, but in fact, it was personal relations based on family or pan-family trust that helped the
companies obtain the administrative orders.

Chart 2: Transformation of Trust Mechanism between Research Bodies and SMEs in

Transitional Period

low
Institutional trust based on administrative orders
Co-operation risks

Research bodies

Transitional (pan) family trust Transitional

high period period

SMEs
Institutional trust based on market economic systems

low

Market economy

The Chinese society has been in transition Since 1980s. With the establishment of market
economic systems, SMEs began to look for more technical support from research institutions in
the market. But capital shortage made it hard for them to buy needed information and
technologies. Under such circumstances, co-operations based on entrepreneurs’ personal
relations network has become the major co-operation form, under which research bodies and
SMEs join hands and are responsible for the results of the co-operation. As China’s legal system
remains to be improved, research institutions are more likely to select familiar entrepreneurs as
partners in a bid to reduce risks. In such co-operation, pan-family trust acts a good foundation,
but it also leads to imbalanced development among Chinese SMEs. Those enterprises with closer
relations with research institutions can easily get technical support, while for those without such
relations, it is very hard for them to achieve technological breakthrough. However, with
improvement of China’s legal system, a new institutional trust based on market economic system
has been introduced into co-operation between SMEs and research institutions. In this period,
such co-operation is built on pan-family trust but institutional trust has been applied in the co-
operation since both sides seek for legal protection and more trust through contracts. Since such
institutional trust has not yet been established fully, sometimes the aim of people signing
contracts is to maintain pan-family trust and to define personal relations. Some contracts are just
a kind of memorandums of understanding, rather than legal documents. Sometimes the contracts
are not very effective (Cheng & Rosett, 1991).

In the transitional period, changes have taken place in the trust mechanism between SMEs and
research institutions, making it more complicated. As shown by chart 2, in the transition from
planned economy to market economy, the base for institutional trust between SMEs and research

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bodies has also been in transition from administrative orders to market economy legal systems. In
the meantime, the re-building of institutional trust can sometimes lead to lack of institutional
trust, which makes the co-operation between SMEs and research institutions very risky in the
transitional period. Under planned economy system, both enterprises and research bodies didn’t
have to pay for failure of co-operation while in an ideal market economy, perfect legal system can
stop both sides from breaking down their words. All these make family and pan-family trust to
play a significant role in the co-operation because such trust helps to ward off risks brought
about by imperfect institutional trust system. To some degree, both SMEs and research
institutions are walking on ropes when seeking co-operation.

Investigation Design and Means

Most of studies on regional innovation system were based on second-hand statistics with few of
them conducting on-the-spot investigations. In fact, regional innovation system is a complicated
system. Although statistics can verify operational results of the system, figures can’t tell deep-
seated problems in the operation. Grounded theory is an efficient way when making analysis on
complicated issues. Therefore, the project selected grounded theory as its research means and got
first hand materials through on-the-spot investigation. The project was designed according to
following principles:

We selected Chengdu in Sichuan Province and Xining in Qinghai Province as the two places
where the investigation was made because the two cities could represent developed areas and
under-developed areas in western China respectively. We could compare the cities with each
other.

We selected more than 10 SMEs respectively in the two cities as our interviewees. The SMEs
were in different industries and sub-sectors and were established in different times. To each of
the enterprise, we conducted at least twice in-depth interviews. The samples could also be
classified into two categories: one included well-performing firms in their lines in local cities
while the other were poor performers.

We plan to conduct a second round of interview to all the sample enterprises one year later.

We also interviewed local authorities, intermediaries, and bank staffs responsible for granting
loans to SMEs.

When doing the interview, we focused on all the innovation steps taken by the firms since their
establishment and tried to make the background, process and results of the steps as clear as
possible. We tried to dig out factors influencing SME innovations. Undoubtedly, such factors
include both internal factors and an innovation support system in which the SMEs interact with
outside organizations such as government, research institutions and banks. The project team
conducted the first round of investigation in Chengdu and Xining respectively in October, 2004
and April, 2005. We interviewed 13 and 14 SMEs in the two cities respectively. Firms in the two
cities are in different industries. In Chengdu where economy is relatively developed, the firms are
in diversified industries including service, processing of agricultural products, forage processing,
medicine and medical equipment, designing of chemical equipment, electric appliances, auto parts
manufacturing, furniture and software development. In contrast, in Xining, there are limited
industries. Among our interviewees, six are manufacturers of Tibet medicines while the others are
in chemical, machinery and software development. Most of the interviewed enterprises were
established in 1990s. Their sales income in 2003 ranged between 400,000 yuan to 2 billion yuan.
The project team collected around 200 innovation events happened in the firms in the past over

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20 years. The issues include inauguration of the firms, introduction of key talented persons,
development of new products, shifting to new businesses and getting certificates. Of the events,
around 30 were related to co-operation between the firms with research institutions. However,
due to factors such as limited interview time and reluctance of interviewees, the project team got
clear information on only 10 innovation events in five interviewed enterprises.

Case Study and Discussions

As we mentioned above, case studies are aimed to reflect the changes taken place in trust
mechanism in co-operation between research institutions and SMEs, and to discover problems in
practice. To this end, we had two standards in selecting our cases, one was that the enterprise
should has completed the transformation of trust mechanism successfully while the other was
that interview on the enterprise should contain enough information on its co-operation with
research institutions. We conducted detailed analysis on 27 interviewed enterprises in Chengdu
and Xining, and found one enterprise most suitable for the two standards. Therefore, we selected
Company JT in Chengdu as our case.

1. A brief introduction to the case

Company JT was established in 1998 as a forage company producing premix for forage
production. In 2002, it began to brew expansion to other industries and developed a business
mode of “company + base + farmer” in breeding of Ma goat (a special species of goat in
Chengdu). In 2003, it joined hands with a Canadian Enterprise to establish the Chengdu JT Co
Ltd.

The company was launched by Li Hui, a graduate from Sichuan Agricultural University. Her
major was animal nutrition and breeding. After graduation, she joined Chendu Charoen
Pokphand, the subsidiary of world leading forage producer Charoen Pokphand Group. One year
later, she was sent to work in headquarters of the group in Thailand. Later she went back to
Chengdu to work for the company as a technician. In 1995, she joined a privately-owned forage
company and was appointed to be the chief technical officer. Spending three years in the private
company, Li re-joined Chengdu Charoen Pokphand as a technician manager specialized in
research and making directions for premix. In 1998 when she launched the Chengdu JT Co Ltd,
she was dubbed as the employee queen in forage industry in Chengdu. The working experiences
in the past years not only enriched her knowledge in the industry, but also helped accumulate
personal relations network. For example, she developed good relations with many experts in
Sichuan Agricultural University. They jointly conducted many research projects. These experts
also encouraged her to resign from Charoen Pokphand and establish her own business.

Li’s company posted fast expansion in business after establishment. In 1998, sales value of her
company was 1 million yuan, which jumped to 5 million yuan in 2002 and 40 million yuan in
2003. Such a rapid growth was owed not only to customer resources built up in the past few
years, but also to Li’s unremitting innovation efforts. For example, Jintian Forage sought for
innovation in sales through co-operation with research institutions: when selling products, the
company also sponsored lectures to provide training on breeding process and techniques for
potential customers. The company invited five doctorate mentors (who were experts in veterinary
and nutrition in Sichuan Agricultural University) to give the lectures. Moreover, it delivered free
materials to customers and even invited them to dinners.

With the rapid development of China’s forage industry, profit margin of forage production
declined sharply, from the 50 per cent in the initial period to 5 to 6 per cent at present. In 2002,

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the company realized that it could no longer rely on a sole industry and began to look for new
developments. At first, it planned to build up a boar plant and Li conducted negotiations with
owner of an abattoir. However, the negotiation failed to produce any results due to different
management ideas of the two sides. Later, it shifted attention to Ma goat project. Ma goat is one of
the seven varieties included in the State trait gene reserve. However, due to lack of specialized
fostering and breeding base, the amphimixis among Ma goat has resulted in fading of Ma goat
gene. It has become an urgent task to preserve the gene. Supported by experts, friends and
government leaders, Li decided to enter this business. The company set up a training base for
breeding breeder goats. It tries to improve breeder goat varieties through gene research, then
provide the goats to farmers to produce more breeder goats and commodity goats. The company
is responsible for buying back the goats. On the one hand it can conduct deep processing on
goats while on the other hand it can sell live goats. That is the business mode of company + base
+ farmers.

Li’s company has also established an animal gene research institute as its special research and
development department. The institute was registered as a privately owned entity affiliated to the
company. Li Hui is the legal person of the institute while researchers are mainly teachers and
students of Sichuan Agricultural University. The company is responsible for making investment
(including both financing and goats for experiment) while the institute can apply for projects to
gain profits through gene research. But so far it has not yet got any funding from outside. In the
long-term, income of the institute will mainly come from selling gene. With gene breeding a long-
term work, it is expected to take at least three to five years for the institute to start the gene
business. JT and Sichuan Agricultural University have established good co-operation. At present,
the goat breeding guiding group of the university also instructs work of the JT breeding center.
Meanwhile, the company can make full use of the technology resources, equipment (for example,
a gene test machine worth millions of yuan, but Li’s company can borrow the equipment as long
as the university has) and human resources in the university. In the meantime, students in the
university can take JT as experimental base as JT provides funding for the students in gene test,
sample collection, sample analysis, data analysis and anatomization.

Li Hui believes that ordinary breeding plant can not afford to provide breeding standards for
goat breeding farmers and make assessment on improvement of Ma goat varieties while
universities are also unable to do this because they don’t have the big number of goats needed for
the experiment. She was majored in this subject and loves to make investment in research. “I am
different from other bosses”, she said. “I want to make the industry bigger and realize my own
dream”.

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Chart 3: Key Events in JT’s Development

The chart 3 shows that as graduate of Sichuan Agricultural University, Li developed pan-family
trust with experts of the university, which played a very crucial role in the growth of JT in the
first few years. The experts to a large extent persuaded Li Hui to make the decision to start her
own business. In the meantime, customer resources accumulated before she started her own
business also enabled the company to find existing room shortly after it was launched. Later, the
experts also provided great support in business expansion of JT. Confirmed support includes
providing free training for farmers in JT’s sales expansion. Actually there should have been more
supports and we guess that experts might also provide help and instruction in producing
technologies and techniques. The year 2002 was a turning point for JT. The declining profit ratio
of forage industry forced Li to consider further expansion. In her decision-making process,
opinions from experts were crucial in pushing Li to enter the Ma goat breeding business. In the
meantime, the new business resulted in closer co-operation between Li and the university. The
trust mechanism between them has transferred from Li’s individually pan-family trust to a kind of
institutional trust. The research center launched by the two sides was a result of such trust. Under
the new mechanism, the co-operation between the two sides is closer, more target-oriented, and
efficient. Their co-operation modes were more diversified, even including renting technology
resources and equipment resources from the university at low prices. In the meantime, students
in the university can take JT as experimental base as JT provides funding for the students in gene
test, sample collection, sample analysis, data analysis and anatomization. Behind key
developments of JT, there are changes of trust mechanism between Li Hui and a research
institute (Sichuan Agricultural University). See Chart 4.

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Chart 4: Transformation of Trust Mechanism in JT’s Development

Institutional trust

Pan family trust Pan family trust

First carve-out 2002 Second take-off

As shown by the chart 4, if taking the year 2002 as a dividing line, JT finished the first carve-out
before that. In this period, the partnership based on Li Hui’s pan-family trust played a key role in
ensuring the business a success. Sichuan Agricultural University provided information and
knowledge to JT in an informal way, which reduced JT’s cost in obtaining necessary technology,
management and information support by a large margin and accelerated JT’s fast expansion in
the first few years. After 2002, JT started the second take-off. Its pan-family trust was upgraded
to a kind of institutional trust and continued to support JT’s Ma goat breeding business. The two
sides began to apply formal and diversified methods in co-operation and jointly set up a research
institute. That is because informal support of information, technology and knowledge could
hardly meet demands of JT’s further development. It required the firm to further consolidate the
resources in research institutions to serve its development. That is to say, the transformation of
trust mechanism is a natural process and we could also tell that Li Hui played an active role in
pushing forward the transformation.

Overall, JT, to some degree, represents a typical example in transformation of trust mechanism in
co-operation between SMEs and research institutions. It also embodies the interaction mode
between SMEs and outside organizations under market economic systems. Generally, the co-
operation starts from pan-family trust. But with deepening of the co-operation and
standardization of the enterprises, such co-operation based on pan-family trust is upgraded to co-
operation based on an institutional trust. In this way, both sides pay enough attention to both
rational trust and emotional trust, and to both efficiency and results of the co-operation.
However, in reality, most of the SMEs can not accomplish the transformation by themselves, and
the failure often leads to a series of crisis in the growth of the firms, such as trust crisis in
management teams and frauds in co-operation with outside organizations. In our interviews in
Xining, at least three entrepreneurs complained that their friends and acquaintances cheated them
when buying their products, some defaulted and some refused to pay. This problem has become
a severe blockage in development of SMEs. With growth of SMEs, transformation of trust
mechanism is the key for SMEs to co-ordinate relations with outside organizations.

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Conclusions and Discussions

First, interaction between research organizations and SMEs is the crucial part in regional
innovation system. Research institutions support development of SMEs through investment in
technology, knowledge and information. In the meantime, SMEs’ dynamic innovation activities
can spur commercialization of achievements of research institutions. However, China’s special
trust structure results in complicated co-operation between SMEs and research organizations.
Pan-family trust leads to lack of credit guarantee in the co-operation. In addition, the imbalanced
distribution of pan-family relations in the society makes the co-operation inefficient. It is hard for
some powerful SMEs to get support from research institutions because they don’t have relations.

Second, laws and systems are basis for market economy, which requires the co-operation
between SMEs and research organizations to be standardized and institutional. The pan-family
trust based on personal relations of entrepreneurs must be transferred into institutional trust
based on organizations, which helps not only push the SMEs to a fast growth track, but also
enable SMEs to avoid disputes in interests distribution which often come along with their
increasing profits. The institutional trust can also help the two sides avoid losses in case one of
them break their words.

Third, entrepreneurs play key role in transformation of trust mechanism. For entrepreneurs, their
biggest enemy is their successful experience in the past. Some entrepreneurs are addicted to
yielding brought about by pan-family trust to their firms in the initial stage, or even rely on such
trust. This not only restrains the SMEs from further expanding their co-operation with research
institutions, but also confines them from developing relations with other outside organizations.

Last, the government should improve legal and system environment. SMEs are a dynamic part in
China’s economic take-off. In the current information age, future of SMEs depends on technical
renovation and compatible systematic innovation. China’s traditional culture determines its
special trust structure, which is not in line with market economy principles. It is an urgent task
for the government to strengthen legislation, standardize market economic systems, popularize
laws and regulations, and push entrepreneurs to conduct institutional trust-based co-operation.

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References:

Cheng L., and A. Roset (1991), “Contract with a Chinese Face: Socially Embedded Factors in the
Transformation from Hierarchy to Market, 1978-1989”, Journal of Chinese Law, 1991, 5: pp. 265-
279.

Chu Xiaoping (2003), Trust and growth of family enterprises, Management World, 6th issue, pp98-104

Fukuyama, F. (1998), translated by Li Wangrong, Trust: creation of social ethnics and prosperity,
Yuanfang Publication House.

Li Weimin and Liang Yucheng, (2002), Special trust and general trust: Chinese people’s trust structure and
features, Sociology studies, 3rd issue, pp11-22

Etzkowitz, H. and L. Leydesdorff (1998), The Dynamics of Innovation: from National Systems and
“Mode 2” to a triple helix of University-Industry-Government Relations.

Luhmann, N. (1979), Trust and Power, Chichester: John Wiley & Sons Ltd.

Luhmann, N. (1988), “Familiarity, Confidence, Trust: Problems and Alternatives”, in D. Gambetta (Ed.),
Trust: Making and Breaking Cooperate Relations, pp. 94-107, MA: Basil Blackwell.

Peng Siqing (1999), Establishment of trust: relations operation and legal means, Sociology studies, 2nd
issue, pp53-66

Redding G. (1990), The Spirit of Chinese Capitalism, Berlin: Walter De Gruyter.

Redding, G. (1993), Management thoughts of overseas Chinese entrepreneurs -- cultural background and
styles, Shanghai Sanlian Publication House.

Weber, M. (1920), translated by Wang Rongfen, Confucian and Taoism, Shangwu Publication House,
1995.

Williamson, Oliver E. (2001), Governance mechanism, China Social Sciences Publication House.

Wrightsman L. S., (1991), “Interpersonal Trust and Attitude Toward Human Nature”, in J. P. Robinson,
P. R. Shaver, & L. S. Wrightsman(Eds), Measures of Personality and Social Psychological Attitudes,
1, San Diego: Academic Press, pp. 373-412.

Wrightsman L. S. (1992), Assumptions About Human Acture: Implications for Researchers and
Practitioners, Newbury Park, CA: Sage Publications.

Yamagishi, T. and M. Yamagishi (1994), “Trust and Commitment in The United States and Japan”,
Motivation and Emotion, 18(2): pp.126-166.

Zhang Jianxin, and M. Bond (1993), Personal trust: Cross culture comparison and knowledge modes,
Psychology Newspaper, 2nd issue.

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4.2.13. Emergence of the Entrepreneurial University and the Future of Higher Education in
China

Emergence of the Entrepreneurial University and the Future

of Higher Education in China

Chunyan Zhou
Business School of Shenyang University, P.R. China

Henry Etzkowitz
Business School of Newcastle University, UK

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Abstract

This paper explores the emergence of the entrepreneurial university and future development of
higher education in China through the lens of the triple helix model of innovation. University-
industry-government interactions may be depicted as a triple helix of one type or another in
different societies. The model, with each helix having a central core and a surrounding field
space, differentiates between institutional spheres development under various conditions and
provides a framework to analyze the university as a sphere. A comparison of university systems
and government policies and laws suggests contrasting US and China models of a “university-
pushed triple helix” and a “government-pulled triple helix.” This analysis indicates different paths
toward the entrepreneurial university, albeit with a common objective of promoting economic
and social development.

Keywords: entrepreneurial university, government-pulled triple helix, spin-offs, university-run

enterprises (UREs), triple helix – field interaction.

Introduction

This paper analyzes higher education development in China during the early stages of transition
from a Statist regime. Formation of new firms from university resources became a strategy of
Chinese university and regional economic co-development in an era of severe resource
constraints. Under contemporary conditions, government is providing increasing resources for
academic development; however just two decades ago, academic resources had to be cannibalized
to jump start regional development. The exigencies of this situation produced enterprises that
were strikingly different from US academic spin-offs in two key dimensions:

1. Chinese firms were typically based on existing technology rather than advanced-edged
research. Indeed such firms often began by marketing, rather than manufacturing, “high-
tech” products although they soon used the resources accumulated from sales to begin
manufacturing and then upgraded to increasingly higher-tech products and extended
national to international markets.
2. The university originated firms remained part of the university, were typically managed by
university administrators and faculty members, and operated as wholly owned entities of
the university. These firms constituted a direct business role for the university in society,
rather than representing a separation or “spin-off” process. More recently, as an
independent legal system has been established, a “spin-off” process has been introduced,
in part, in order to reduce the universities legal liability. Nevertheless, universities typically
retain significant ownership and control of these “university-run enterprises” (UREs).

Is ownership of UREs, which have resulted in some firms growing larger than their academic
sponsors, a proper focus of the university-industry relationship? In addition, the university
traditionally a social commonwealth enterprise, i.e. non-profit, by “social contract” has become
profit-making as UREs in leading universities have made them rich. In China, professors who
were poor before the end of 1990s are now considered amongst the “Seven Wolves”.73 Nor were
UREs a unique development; various government units, including the armed forces, also
developed firms as part of a rapid economic development strategy, placing the organizational
resources of society in the service of new business development. At the same time, government is

73 Seven Wolves means the first seven groups of top wealthy.

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a huge stockholder, owning many corporations left over from the era of state-controlled
enterprises. Thus, there is considerable interpenetration and resulting confusion among the three
spheres.

An analogous situation may be identified in the US coming from the opposite direction. In a
laissez-faire oriented society outsourcing of traditional government activities to private firms has
created flexibility in organizational design but also loss of control and direction by government
agencies of some their traditional activities. Moreover, the expansion of university-industry
relations in the US from a relatively few schools before the passage of an amendment to patent
law in 1980, the Bayh-Dole Act, incentivized the entire range of research universities to become
active in technology transfer. Independent versus dependent institutional spheres led to strikingly
different outcomes of university run enterprises and spin-offs in the US and China. Both cases
represent significant experiments in restructuring the relationship between the “public” the
“private” and the “academic” that may be instructive to countries and world regions suffering
from institutional and organizational sclerosis.

I. Comparison of University, Industry and Government in China and America

China is different from the US in its political system and cultural tradition. Will Chinese
universities follow the US model or take another path? Let’s consider this issue through a
comparison among university-industry-government interactions in China and the US.

On one hand, there is an innovative and creative spirit in traditional US culture; on the other
hand, America has recognized the benefit of technological innovation since World War II. V.
Bush’s idea that basic science is an engine of technological innovation is strongly rooted. The
science policy following from Bush’s report, Science: Endless Frontier has successfully supported
basic research in universities, so that there are spillovers of technology knowledge, resulting in
universities’ direct participation in innovation through firm-formation and creation of the
“entrepreneurial university”. At least in Boston and Silicon Valley, and increasingly elsewhere, we
can see that university, industry and government have evolved from a laissez-faire to a relatively
ideal triple helix.

Nevertheless, there has been strong criticism of the emerging economic role of the university.
According to Branscomb et al. (1998), the role of university in a society is determined not only by
economic logic, but also by a “social contract” concerning the division of labour, the university as
an institution for education and production of knowledge. The tension between the
entrepreneurial and ivory tower models has insured that universities clearly define and delimit
their economic activities even as they increase their involvement.

The University System

The U.S. and Chinese academic systems differ qualitatively and in their governance. Although
there is a long history of academic training in the western sense, including development of
research since the mid-20th century; most universities in China focus on teaching and are at a
relatively early stage of upgrading to research and entrepreneurial university modes. Nevertheless,
progress has been rapid, especially in recent years as government has had the resources to
commit to academic enterprise and as universities have generated significant resources on their
own to jump-start high-tech development in response to government requirements, on the one
hand and to financial stringency, on the other.

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US universities began the transition to research in the mid-19th century and an increasing number
have made the transition in recent years even as a 2nd transition has been underway promoting
the commercialization of research. It is the US government support of research in the post-war
era that has fuelled the expansion of academic research through funding from a variety of
agencies, with responsibility for military and health, as well as basic research. Moreover, state
governments, foundations, private donors, both alumni and well-to-do individuals, play a
significant role in the variegated US academic system. Higher education also plays an important
role in the national culture, providing sports and television entertainment. Academic purists may
decry the extension of university functions beyond the strictly academic, but the loyalty to their
alma mater engendered by university sports teams provides a significant impetus for support.
Similarly, university technology transfers’ contribution to the economy legitimates government
support to universities and research.

There are over 3000 universities in the US, including some of the best ones in the world. The
top-ranking universities have considerable strength in research. Top-ranking private universities
have an average of 910 postdoctoral fellows, top-ranking public universities 690; whereas their
counterparts in China only have 300 (Niancai Liu et al, 2002). Since the late 1970s and the early
1980s, higher education in China recovered from the Cultural Revolution. Especially entering the
end of 1990s, a “big jump” occurred in higher education. The university system undertook an
expansion strategy. To date, there are over 1200 universities and a gross enrollment rate of over
25%. There is a rough equivalence in staff and undergraduate student numbers, structure of
student levels, professional curriculum. In other words, the difference is not in educational scale,
but in quality; not in teaching, but in research and entrepreneurial capability.

The difference typically embodies: (1) staff: far behind the US, where all professors in top-
ranking universities have a PhD; (2) educational quality: in recent years, getting worse, due to
rapid expansion; (3) research capability: weak and hard to strengthen from disordered graduate
education, i.e. “educational corruption”; (4) the number of postdoctoral fellows should be
increased but there is inadequate financial support. These gaps must be filled by accumulation,
rather than an “educational big jump”.

Academic technology transfer has grown into a recognized profession in the US, with a
professional organization, the Association of University Technology Managers (AUTM),
complementary to the Licensing Executives Society (LES), which represents its counterparts in
industry. Technology transfer has evolved from a marginal academic activity carried out by an
intermediary not-for-profit entity, the Research Corporation - serving a relatively few interested
universities in the early 20th century, like MIT - into a “decentralized-enhanced” model in which
the transfer function has been internalized in individual schools and, increasingly, has devolved
down to the school level, especially to medical schools.

Transfer has also expanded from patenting and licensing to include increasingly direct assistance
to firm formation, including provision of venture capital and business assistance. Reflecting this
expansion of capabilities, technology transfer and related incubation functions are increasingly
organized as a higher-level administrative unit co-coordinated by a Vice-President. Research
Corporation, having lost its original purpose as its customers internalized the tech-transfer
function, has transformed itself into a venture capital firm specializing in university spin-offs.

In China, technology transfer is attracting greater attention as its potential for economic
development is realized. However, technology transfer typically means technology transfer in its
classic sense, that is movement of technology across national boundaries rather than introducing
indigenously invented university-sourced technology to industry. Nevertheless, National centers

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of technology transfer have been established by government policy in six top-ranking universities,
i.e. Tsinghua University, Shanghai Jiaotong University, Xi’an Jiaotong University, China East
University of Science and Technology, China University of Science and Technology and Sichuan
University. Some universities have even set up international centers of technology transfer by
themselves. It seems that a transition to university tech transfer and the entrepreneurial university
in China is underway. The problem is how a university can generate technologies by enhancing
research, instead of importing technologies from abroad, and subsequently commercialize
research from the university campus.

Government Policies and Laws

Government in the US, including at federal, state and local levels, supports innovation in
university and industry, through making policies, enacting laws, direct investment or indirectly
encouraging (venture) investment, government stock, as well as developing medium and small
firms and so on. The development of aviation, electronic computer and semiconductor industry
greatly depends on government support. During the 1960s, the government bought 37%-44% of
all integrated circuit products, thereby accelerating the development of the industry even though
the overt purpose was simple military procurement. In Silicon Valley, one- fourth of orders are
from the US government. In conclusion, policies and laws, which have powerfully stimulated
high-tech industry in the US, are relatively stable, consecutive and effective, despite the absence
of a coordinated industrial policy.

Since the 1980s, China has created policies and laws to promote the development of science and
technology, knowledge industrialization and high-tech industry. Some of them are very helpful to
three spheres development. For example, the State Council decided to delegate management
power of universities which were subordinate to the Educational Ministry to local government. It
greatly encouraged these universities to support local growth, accelerating development of the
entrepreneurial university in China.

However, sometimes the policies lack stability and continuity. So far there has not been a follow-
up to the ambitious promotion of UREs such as was reflected in the Resolution on Accelerating
S&T Development, which was jointly promulgated by the State Council and the Chinese
Communist Party in 1995. This resolution encouraged universities to establish high-tech firms
using their own research results, and promoted the formation of strong linkages between
academy and industry. It coincided with a sharp decrease in funds for teaching and research that
left entrepreneurial activities as the only recourse for university development. On the other hand,
state funds through loans and easy credit made possible the construction of university science
parks and rapid expansion of firms. These high-growth firms took advantage of imported
technology, low wage rates and expanding local and international markets for their products.
However, in November of 2001, the State Council issued the “Circular on the Experiment of
Standardizing University-run Enterprises Management at Peking University and Tsinghua
University” that seems to restrain university-run enterprises and call for the separation of UREs
from universities.

In addition, there has been lack of foresight in policy-making in China. It seems policies and laws
in US aim at guidance and prevention in advance, whereas in China greatly they are ex post facto
used as tools to control organizations or remedy problems. Moreover, every official who has
taken an important action is typically followed by another person who has his/her new ideas to
put forward in order to demonstrate achievement in the post, i.e. “official will”. This leads to
less-consistent policies but is a commonplace of policy and politics everywhere. Nevertheless, it
may weaken government’s role in promoting innovation. To sum up, unlike US government as a

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referee, Chinese Government works as a referee, a player and an organizer for sport. However,
this broad-brush comparison must be qualified since in key areas of national security the US
government also plays a pro-active role in innovation, for example, through DARPA, the
Defense Advanced Research Projects Agency, founded in 1958, in response to the Soviet Sputnik
success.

Industrial Firms

Industrial firms in the US provide most of the researchers and expenditure to conduct research
work, possess broad R&D financial sources and pay more attention to training. Thus they have
strong self-innovation capability. Some corporations, such as IBM and General Motors, keep
large-scale research labs for basic research, which have made significant contributions to
innovation. Some of them work together with other corporations and national labs to develop
and improve technology. Most of them have established their own office of technology transfer,
in order to track the research in universities and national labs and sell technologies to other
companies.

In the US, industrial firms increasingly view intellectual property rights (IPR) as a core element of
their strategy for development, and attach importance to protecting IPR. They compel
government to protect IPR powerfully, and then protect US enterprises’ competitive advantages
all over the world.

Most of Chinese industry in which manufacturing is dominant operates at a low-technology level

in a labour- and natural resources based economy. Forms are very weak in absorptive capacity
and innovation ability in traditional industries. The transition to understanding and respecting
IPR requires a longer time. Enterprises are also in transition from a Plan- to a Market Economic
System. They are not yet the main sources of technological innovation and that is one reason why
government encourages universities to take on innovation tasks. Based on this premise,
universities in China play an increasingly important role in economic and social innovation,
making the future of higher education in China a significant issue.

II. Entrepreneurial University: Definition and Characteristics

According to the model of triple helix- field interaction, there is a triple helix (field) space, with
various hybrid organizations surrounding the helices. Science parks, spin-off (in the US),
university-run enterprises (in China), incubator, etc. arise from the interactions between
university industry and government. Why can there be university-industry-government affinity?
The radical reason is conformance of the objects or reciprocity, that is, all of them aim at
innovation, the first business application for science findings or technology inventions. In a
knowledge-based economy, knowledge has replaced material, labour and capital, becoming the
most important factor of production. Not surprisingly, the university, as a producer of
knowledge, and industry, as user of it, need each other, forming a common goal.

Nevertheless, a relationship to industry is a necessary condition for an entrepreneurial university,

but not a sufficient one. An entrepreneurial university is not an only a university with many
industrial entrepreneurship activities. It has own meaning and characteristics. In the West,
entrepreneurship activities of a university typically include four aspects: (1) entrepreneurship
education: to organize teaching through facing to needs of industry, encourage students to form
start-ups, tell them how to do it; (2) consultation for industry; (3) technology transfer from
university to industry; and (4) spin-offs: firm formation.

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In practice, a university has the potential to engage with the development of industry, no matter
its level and type. However, different universities have different education goals and missions.
Universities in various levels and types meet different societal needs. The teaching university is
based on education and engagement with the personnel market; the research university engages
production of knowledge, as well as teaching; the entrepreneurial university has three missions:
teaching, research and service for society. In fact, only the entrepreneurial university can
participate in the whole society’s innovation effort to improve the interaction process of the
triple helix, to complete a circulation of trilateral cooperation. See Figure 1.

Figure 1: Triple Helix Field Interaction Circles

In our view, an entrepreneurial university embodies the following characteristics:

• Entrepreneurship culture is accepted and supported systematically, with entrepreneurial

training a component of general education,
• The university plays a an active role in regional innovation strategy,
• There are interface mechanisms e.g. a technology transfer office, such as Office of
Technology License (OTL) and corresponding achievements, and
• There are significant numbers of staff members to form firms, which can receive
considerable income to support the university’s research and other activities.

Given these general characteristics, the entrepreneurial university model is realized with different
emphases in various regional and national conditions.

III. University-pushed and Government-Pulled Triple Helix

The US Triple Helix is a university-led model, according to case studies from MIT, Stanford, and
elsewhere in recent years. New England, a “brownfield” region, had a declining industrial
foundation in the 1930s; whereas the Peninsular region of Northern California, a “Greenfield”
site, lacked a significant industrial base. However, these two universities took the lead in creating
new industry and innovation, auguring the emergence of the university as a leading power in

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regional development. Therefore we call this US model a “university-pushed triple helix.” The
model operated simultaneously in New England, where all three spheres were available to
support high tech development. For example, although manufacturing industry had declined; the
region retained a strong financial industry that had been built on the base of the regions previous
commercial success. The financial industry supported the invention of the venture capital firm,
designed to support firm-formation from academic inventions (Etzkowitz, 2002).

By contrast, a triple helix emerged successively in California where a university-initiated

development project, from the late 19th century through the 1930’s, was largely university-led,
with some industry collaboration as firms were formed by local technology entrepreneurs
including those that emanated from Stanford. The project was supported by the federal
government in the early post-war; building on the base that was available to attract R&D funding
that was newly available on a large scale by military procurement of semi-conductor devices from
this growing industry (Lowen, 1997). The project then became industry-led in the 1990’s, in
response to a recession in what had by then become the world’s leading high-tech region
(Saxenian, 1994).

From 1949, when the People Republic of China was established, to 1980, the university in China
was strongly influenced by the practice of the former Soviet Union and mainly engaged in
teaching. Research, especially for the military, was carried out by research institutes. This policy
followed the French tradition, influential in Russia, which the Soviets found useful for political
purposes. Only ideologically reliable persons were allowed to become university teachers while
researchers, of lesser reliability, could still be utilized in Institutes where they would be cut off
form influencing youth. The separation of research and teaching, in contrast to the Humboldtian
tradition of integration in support of the emergence of the nation state, was imported to China
where it similarly had the effect of separating university from industry.

Since 1980, China’s universities underwent a sea change as a result of then President Deng
Xiaoping’s thesis of science and technology as the primary forces of production. The Chinese
government inaugurated a series of policies and laws to encourage university research activity in
order improve the capacity of the university to contribute to economic development. As a result,
university research developed rapidly. In January of 2006, a National Science and Technology
Conference, with a goal of creating an innovative state, was held in Beijing. The meeting
objective was to increase the capacity of university and industry to contribute to innovation.
University and industry, as innovation actors, are both controlled or pulled by government. Such
a model can be called a “government-pulled triple helix”.

Liaoning Province, in Northeast China, provides an exemplary case of university transition.

Before 2000, the two research universities, Northeast University and Dalian University of
Technology, were managed solely by the Education Ministry. They paid little attention to local
economic development. However, in 2000, some management power was decentralized to
Liaoning Province government, placing these two research universities under joint central and
local government management control. This arrangement greatly encouraged cooperation
between university and industry. Indeed, an increasingly close relationship has improved local
new technology and industry development at a surprising speed.

Moreover, the government also controls industrial development. For example, before 2000, the
Liaoning Province government undertook a high-tech strategy for development, abandoning old
industries in which the region formerly excelled. However, in the face of failure, it decided to
change the strategy, to renewing the old industries with the help of new ones. This strategy

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reorganized the direction of university and industry development and achieved much greater
regional growth than the previous one.

IV. Development of Entrepreneurial University and the Future of Higher Education in China

How can Triple Helix theory be used to investigate the specific situations in developing
countries? Jong-Hak Eun, Keun Lee and Guisheng Wu “depart from the critique that the Triple
Helix and the “New Economics of Science”, which assume typical situations of advanced
countries, fail to provide a satisfactory theoretical framework to address the university-industry
relationship in developing countries” (Eun et al., 2006), to explore university-run enterprises in
China. The “New Economics of Science” has revealed the commercialization feature of science,
and based university-industry-government cooperation on reciprocal principles. In their new
framework, the authors admit the hierarchy of UREs, which can freely use the mother
university’s resources, including labs facilities, and are controlled by the university. There is an
umbilical cord connecting baby to mother. Apparently, the hierarchy was generated by the
political system of China. This partly is because most universities in China are public. Therefore,
to neglect the government sphere’s influence in the study of UREs is improper.

Identifying Industry and University: From UREs to Spin-offs

Although universities in the US and China are both encouraged to create enterprises or form
firms, they are spin-offs in the US, whereas they become university-run enterprises (UREs) in
China. They are quite different in their ownership. A spin-off by definition is an economic entity
of academic origin that becomes an independent entity. A URE is an economic enterprise that
remains part of the administrative structure of the university. Spin-offs in Boston and Silicon
Valley exemplify that universities have made tremendous contribution to local economic and
social development. Many UREs (from some universities such Tsinghua University, Beijing
University, have also taken a leading role in Chinese high-tech industry, but can not play a
dominant role in regional economy development, although Tongfang, Zheda Wangxin, Northeast
Software and Beida Fangzheng respectively established and operated by Tsinghua University,
Zhejiang University, Northeastern University and Beijing University, have become the No. 3, 12,
15 and 25 of the Chinese Top-100 S&T Firms in 2002 (Eun et al., 2006). They only exemplify the
advantages of UREs as high-tech enterprises.

The rise of UREs in China started from 1980, because old-style enterprises in the planned
economy were poor in absorptive capacity, to say nothing of R&D and innovation. Most UREs
started from low-tech and then grew up to higher-tech industry. They are neither “spin-offs”, nor
“start-ups”. The research results with commercialization potential were rarely transferred to
industry. Thus the university fulfills technology transfer and knowledge capitalization objectives
through establishing UREs.

As a whole, UREs have three characteristics: (1) a university takes up an absolute or relative
holding status in its UREs assets; (2) those that operate UREs basically come from university
staff or students, especially at the very stages; (3) UREs mainly rely on their mother universities
for R&D. Therefore UREs are actually “enterprises possessed by universities”. This ownership
problem is currently being resolved by the Chinese government’s implementation of new policies.
As ownership right changes, various issues will appear, involving stockholders, managers,
operators, as well as intellectual property rights problems. Development of the entrepreneurial
university in China will be accompanied by solutions of these problems, including a transition
from the URE to a spin-off model.

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UREs in China are in the core area of the university institutional sphere, but spin-offs in the US
are in the external triple helix field space (Etzowitz and Zhou, 2007), where university and
industry interact. As a result, UREs brought confusion in ownership, became one of the sources
of corruption and a disordered university system, while they created revenue for the universities
in question. The development of UREs has raised the issue of the university’s character and
missions. They have consumed too much energy and time from faculty in the business of low-
tech firms. There have increasingly been complaints that the university is becoming “industry”.
For example, when a university takes on enterprise actors in innovation, through its advantage in
high-tech research; it increases the tension between university and industry. Since universities
have their own companies; excessively competitive university-industry relationships will
eventually induce a difficult technology transfer from university to industry; and so on.

Based-on interest considerations, universities are reluctant to give up the ownership to UREs.
However, as a university expands enrolment opportunities and the absorptive capacity of
industry is enhanced and the university improves its capabilities in technology transfer, there is a
tendency to devolve UREs and explore other forms of entrepreneurial activity. See Table 1.

Table 1: University-run Enterprises in China (1992-2001)74

Year Number of total UREs Number of S&T UREs Number of Non S&T UREs
1992 Not available 850 Not available
1996 Not available 2912 Not available
1997 6634 2564 4070
1998 5928 2355 3573
1999 5444 2137 3307
2000 5451 2097 3354
2001 5039 1993 3046
Source: Year 2001 Statistical Report of University-run Industry in China, 2002, P.10, China University Industry
(Zhongguo Gaoxiao Chanye), 2000, No.6, P.10, University S&T Industry News (Gaoxiao Keji Chanye Tongxun),
1998, No.3-4, P.2

Jong-Hak Eun et al. suggest that the absorptive capacity of industry affects the university’s
decision to establish UREs. When it is weak, the university feels that the only path towards
fulfilling its technology transfer or industrialization mission is to set up UREs and make them
flourish. As absorptive capacity increases, universities prefer transfer technology and UREs
decline.

In addition to the decrease of UREs related to the improvement of absorptive capacity of

industry, there are at least three factors: new government policies, development of (venture)
capital guarantees and enhanced knowledge production abilities on university campuses.
Certainly, another important factor to affect UREs is traditional culture. The solution of the
ownership problem is the focus of current policy changes. In the recent past, unstable policies
have caused uncertainty in universities. Since 2000, some universities in China have been
supported by expanded government R&D investment, the “211” and Innovation Projects and
the increase of enrollment (tuition), which greatly reduced financial pressures on universities.
Moreover, teaching universities can get enough money from tuition. These factors cause the
universities to lose their willingness to establish UREs, even those low-tech UREs that they can
set up. Furthermore, no president wants to involve the university in ownership due to the

74 Eun, et al, 2006.

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problems it creates. From the long term views, it seems that university, industry and government
want to see UREs disappear. Of course, whether they will be replaced by spin-offs is another
issue.

The Starting Point of the Chinese Entrepreneurial University: Professor Consultation

Consultation is the starting point of US entrepreneurial universities, having become an important

practice of professors in some US universities as well as bringing a financial return to their faculty
members. In MIT’s experience, the start of entrepreneurship was consultation by its faculty for
industry, followed by spin-offs. In the 1930s, Professors such as V. Bush learned about firm
technological needs through consultation. They brought problems back to labs in the university
to do theoretical investigation while they dealt with the practical problems. At the same time,
teaching was greatly improved by introducing vivid examples from consulting practice to the
classroom.

Consultation for industry is rising among a few top-ranking universities such as Beijing University
and Tsinghua University, but it is at the very beginning. The resources are concentrated in a few
highly-reputed universities. For example, under the leadership of faculty in Beijing University a
consultation firm was organized, with more than 200 business or technology experts living in
different cities and divided into five groups depending on their expertise. A series of books on
consultation edited by authors at Beijing University was recently published by Zhongxin Press.
Nevertheless, relative lack of consultation led to teaching and research becoming separated from
industry practice. Moreover, there has been a lack of absorptive capacity and self-innovation
ability on the part of industry.

From Entrepreneurship Activities of University to Entrepreneurial University

There are various levels of universities, including national, province and city levels, in a hierarchy.
Universities may also be categorized as technology academy, teaching university, research
university and entrepreneurial university, according to the priority of their objectives. A matrix is
formed here. See Figure 2.

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Figure 2: The Evolution of the University

In Chairman Mao’s era, it was proposed that education should be related to the practice of
industry and agriculture. Schools had their own factories, workshops and experimental fields.
Intellectuals in universities had to participate in industrial practice. This was mainly done for a
political purpose: to change intellectuals, but there is a by-product: to draw university-industry
together. Since 1950, there have been a variety of entrepreneurship activities in universities. See
Figure 3.

Figure 3: The Quadrant of Universities

An entrepreneurial university conducts basic research and achieves technological innovation from
its research results spillover, taking the lead in putting them into practice. On the other hand, a
vocational college or professional school may work closely with industry and be focused on

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meeting its need but is not necessarily an entrepreneurial university unless it innovates from a
science base and plays an active role in regional economic and social development.

Conclusion: Policy Implications

All three helices, in China, have serious deficiencies, especially industry. Thus, university becomes
an important actor to promote high-tech industry through setting up various university-run
enterprises. Government, at national, province and city levels, participates in economic activities
through sector bureaus. For example, the light industry bureau is not only responsible for
administration of the sector but also has some affiliated enterprises. As a result of economic
instability, every sphere entered the market, thus making it disordered. How can government with
remit to regulate and supervise the market deal with the firms run by itself? Can universities
resolve the tension between teaching, research and creating/running enterprises? What is a
university’s nature? In other words, is the third mission of university to foster development of
industry, or to run some enterprises like industry?

The problems above arise from absence of boundaries among the three core areas. Their lack of
independence makes it very difficult for the spheres to create an external field space for
interaction undertaken by mutual consent. The confusion of actors inevitably results in each
helix’s inability to acknowledge its specific missions and play its role very well. Thus, entities
which have clear enterprise characteristics may grow in university or government since there is
not a clearly defined “spin-off” path.

Such enterprises are quite different from spin-offs in ownership. Indeed, they have been labelled
University-run enterprises or UREs to denote their legal status as part of the university system.
More recently government has acted to encourage universities to devolve these enterprises to
reduce the university’s liability for product defects, as the legal system has strengthened, and
opportunities for corruption due to intermingling of academic and firm resources. The URE
model is not unique to universities; the Chinese armed forces have engaged in significant firm
formation efforts and the URE movement has also spiralled back as some enterprises have
established subsidiary higher-education entities, e.g. the software college of Northeast Software, a
Northeastern University URE.

Although a few Chinese universities created some of the largest and most successful high-tech
enterprises in the country, they remained part of their originating organizations until quite
recently, rather than spin-offs as independent entities. This created problems for their sponsors
since as an independent legal system took hold, dissatisfied consumers or business partners
gained the right to sue for redress. Since the enterprises remained in the ownership of the
universities, it placed them at risk. To redress this anomaly, government has recently taken steps
institutionally to separate university firms from their academic source.

Chinese universities are in the midst of transition from teaching to research and entrepreneurial
modes of academic organization. This academic transformation is influenced by transition from a
Statist society in which government controls academia and industry to a Triple Helix society in
which each sphere is relatively independent of the other. Since the 1990s, existing enterprises are
lacking capacity to implement technological innovation and are not able to become real main
actors for technological innovation, although the government has completely recognized “the key
to enhance the capacity of enterprises’ self-innovation is to emphasize the main actor status of

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enterprises in technological innovation, making them the main actor for R&D, innovation
activities and application of innovation results”. 75

This format is hypothesized to provide the optimum conditions for innovation. In recent years,
government support focuses on research universities, through Project 211 and Protect 985; other
universities, especially those local ones, set up their own enterprises to fill the gap left from lack
of government financial support. Universities which were supported by the state also operated
enterprises whose business activities remained within the universities rather than being spun off
as independent firms. Several universities have successfully operated high-tech companies like
Tsinghua Tongfang, Beida Fangzheng and Northeast Software. A similar process of creating
enterprises from available resources took place in Eastern Europe after the demise of the
Communist regime. However, in the abrupt transition from a statist to a laissez-faire regime the
sponsoring organizations lost most of their resources and were typically unable to provide
significant support to grow these enterprises.

Although the factors to decide the intensity of each helix are complex, the most important
includes the R&D capability and financing ability of university; in industry, investment in R&D
activity and absorptive capacity; feasibility and effectiveness of government support by policy and
laws, or by direct investment. Among the three helices, industry is closest to the market and
production practice. In general, it is the main actor or subject in innovation. Sometimes university
can be an organizer or subject for innovation. But government shouldn’t be involved in it
directly.

In the triple helix – field interaction model, the cores and outside space of the helices are
separated. It is helpful to explain China’s current state of the art with respect to the triple helix.
According to the theory, first of all, China should resolve the problems existing in the core area,
i.e. UREs’ ownership issue. The present situation of cores of triple helix spheres involves the
transition from a statist model. This transformation is shown by Figure 4.

Figure 4: University-Industry-Government Triple Helix in China

75Decision on Enhancing the Capacity of Self-innovation by performance of Science and Technology Plan’s Outline, by Chinese
Communist State Council2006.1.

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A policy to develop entrepreneurial universities will raise academic research capacity and
strengthen university-industry links. In order to accelerate the construction of entrepreneurial
universities in China, several measures for university development should be taken:

(1) actively upgrade research universities and encourage the transition from teaching to
research universities, with the help of government policy,
(2) government should greatly encourage consultation practice,
(3) immediately try to change UREs to spin-offs,
(4) make government policies more stable, credible and continuous, and
(5) work with government and industry to develop hybrid organizations like science parks
and incubators around the universities in question to enhance industry-university link.

The research ability of universities in China has to be improved. However, the university sector is
still secondary to the research institute sector in research funding. This situation does not take
full advantage of the human capital flow through and idea generation capability of the academic
research group format. Nor does it take advantage of the research capacity of graduate students
and post-doctoral fellows as a cost-effective R&D strategy in contrast to higher-paid advanced
Institute research personnel.

Universities need more financial support and policy assistance. In 2003, only 16.23 billion Yuan
of total R&D outlay, 153.96 billon Yuan, was for universities, 96.02 billon Yuan for enterprises
and 39.90 billon Yuan for research institutes. From the investment to science and technology
activities, the total amount is 312.16 billon Yuan, including 212.62 billon Yuan in enterprises,
68.13 billon Yuan in institutes and 25.39 billon Yuan in universities. Obviously universities are
not seen as main source of research.76 China also has a long way to go to achieving world-class
research universities.

Most universities will continue transforming from teaching to research universities. In addition to
this transition, there is also a strong movement towards integration of specialized Soviet-style,
specific industry focused universities. In recent years, government, both at the central and local
levels, has merged many universities. After the “merging motion”, a relatively stable university
system will be formed. The next task should be to create their specialties. Furthermore, the
professional schools or German-style polytechnic school will increasingly become a complement
to the technology universities. A national conference on professional education was held during
November 7-8, 2005, in order to enhance the training of technicians. There will continue to be
many technology academies in China.

Universities will be increasingly differentiated. Tsinghua University may become an

entrepreneurial University; Zhongnan University is trying to be an innovation university. Some
foundations may continue as teaching universities, others may persist as polytechnic schools.
Nevertheless, an overall movement can be discerned towards development of multi-universities,
simultaneously oriented to teaching, research and regional economic development. Thus, regional
innovation may take place through a university-pushed and government-pulled triple helix, with a
statist or laissez-faire model trending towards to a triple helix of overlapping, yet relatively
independent spheres. China, however, still has a long way to go to form an ideal triple helix
model for innovation.

76 http://www.stcsm.gov.cn.

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References

Branscomb, L. and J. Keller (1998), Investing in Innovation. Cambridge, MA: MIT Press.

Etzkowitz, H. (2002), MIT and the Rise of Entrepreneurial Science. London: Routledge.

Etzkowitz, H. and Zhou, C. (2007), The Theme Paper for Triple Helix VI International Conference in
Singapore at www.triplehelix6.com.

Eun, J.-H., K. Lee and G. Wu. Explaining the University-run Enterprises in China: A New Theoretical
Framework and Applications. http://www.kiep.go.kr/inc/download.asp/.

Eun, J.-H., K. Lee and G. Wu (2006), Explaining the “University-run Enterprises” in China: A Theoretical
Framework for university-industry relationship in developing countries and its Applications to
China. Reserch Policy. Elsevier, vol.35 (9).Page 1329-1346 (see Table2). November.

Lowen, R. S. (1997), Creating the Cold War University: The Transformation of Stanford, University of
California Press.

Niancai L., C. Ying, L. Li and Z. Wenhua (2002), How far is China Top Universities from World Class
University? Journal of Higher Education Research, 23(2), 19.

Saxenian, A. (1994), Regional Advantage: Culture and Competition in Silicon Valley and Route 128.
Cambridge, Mass.: Harvard University Press.

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SECTION 5

AUTHORS’ CV/BIO

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AUTHORS’ CV/BIO:
Félix-Marie Affa’a
(FSA Laval University, Quebec, Canada)

Ph.D. candidate, De FSA Laval University, Quebec, Canada)partment of management, FSA

Laval University, Quebec, Canada. Previously: Associate professor of biology, Université de
Yaoundé I, Cameroun; Dean of the Faculty of Science, Université de Yaoundé I (1990-1993);
Vice-Dean of the Faculty of Science, Université de Yaoundé (1993-1994).

Qualifications and Education: Licence de sciences naturelles (zoologie), Université de Yaoundé,

Cameroun, CAPES de sciences biologiques, ENS, Université de Yaoundé, DES de biologie et
physiologie animales, Université de Yaoundé, Doctorat d’État de biologie et physiologie animales,
Université de Yaoundé, Maîtrise ès arts (éducation), Université d’Ottawa, Scolarité de doctorat en
sciences de l’administration, Université Laval, Québec. Active research interests: University
reforms; curriculum analysis, research and knowledge management.

Mariza Almeida
(Researcher in Science, Technology and Innovation Theme, Brazil)

Educational background: Ph.D. in the Production Engineering; M.Sc. in Agriculture,

Development and Society, Development and Agriculture; Specialization in the Analysis of
Computation Systems; Agricultural Engineering.

Relevant experience: Federal University of Juiz de Fora, Minas Gerais, Brazil - Professor of
Entrepreneurship, Technological Incubator of Popular Cooperatives / Federal University of Rio
de Janeiro, Brazil –carried out the research for the project to develop indicators and a system of
monitoring and evaluation of the incubation process for the São Paulo municipal government’s.

State Government of Rio de Janeiro serving as an Agricultural Engineer at a project that aims to
give social and technological support to small farmers that received land by the Reform Land
Program (1983 – 2001). Coordination of Research Identification of Reminiscent Areas of
“Quilombos” at Rio de Janeiro State. 1988. (“Quilombo” means the areas which the African
slaves hid during the slavery period in Brazil. According the Brazilian Constitution of 1988, their
descendents would receive from the government this land if they continued to live in the same
place of the original area).

Thomas Andersson
(President and Chairman of the Board – International Organisation for Knowledge Economy and
Enterprise Development, and President of Jönköping University, Sweden)

Thomas Andersson is President of the board of IKED and he is also President of Jönköping
University, one out of three main private universities in Sweden, and Vice President of the
Italian-based International Network for Small and Medium-Sized Enterprises (INSME). Among
other assignments, he is Chairman of the International Council of the Global Trust Center
(GTC), and serves on the Steering Committee of the Global Forum and on the board of
SPIDER (Swedish Program for ICT in Developing Regions).

In recent years, Thomas Andersson was Chairman of the Innovation Policy Expert group
appointed by the Swedish Government, Senior advisor to the Swedish Agency for Innovation

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Systems (VINNOVA), responsible for the 2003 ASEM conference on “Globalisation and ICT”,
and served as secretary of the Minister of Finance’s project on “the Nordic Countries and the
New Economy” under the aegis of the Nordic Council of Ministers. He further was a member of
the ad hoc High Level Expert Group of the European Commission on the Prioritization
Procedure for New Research Infrastructure in the 7th framework programme. Between 2000 and
2004, he served on the International Advisory Board of the World Knowledge Forum, Seoul,
Korea.

From 1996 to 2001, Thomas Andersson was Deputy Director for Science, Technology and
Industry at the OECD. Prior to the OECD, Thomas Andersson was Assistant Under-Secretary
and Head of the Structural Policy Secretariat in the Swedish Ministry of Industry and Commerce.
During these years, he represented Sweden in the European Commission’s meetings for Director
Generals for Industry and in the OECD Industry Committee. Previously he headed the
international research programme of the Industrial Institute for Economic and Social Research,
Stockholm (IUI). He was appointed associate professor at the Stockholm School of Economics
in 1993 and is currently full professor in International Economics and Industrial Organisation at
Jönköping International Business School. He has published a large number of books and articles
and has been a visiting fellow at Harvard University, Bank of Japan, Hitotsubashi University, and
the University of Sao Paulo. He is a member of the Royal Swedish Academy of Engineering
Sciences (IVA).

Francisco Javier Cantu-Ortiz

(Professor of Computer Science and Intelligent Systems, ITESM (Monterrey Tech), Monterrey Campus
Dean of Research and Graduate Studies, ITESM Monterrey Campus, Mexico)

Planning and coordination of the research activities and graduate programs at ITESM Monterrey
Campus.

Dr. Cantú has contributed to the development of various Ph.D. and master programmes in
computer science and artificial intelligence at ITESM. His research interests are Knowledge based
systems and automated reasoning; machine learning and data mining using Bayesian and
statistical techniques for business intelligence and technology management. Economic
development based on entrepreneurial science. Epistemology and philosophy of science.

Dr. Cantú holds a Ph.D. in Artificial Intelligence, University of Edinburgh, United Kingdom,
1997, a Master of Science, Computer Science, North Dakota State University, United States, 1978
and a Bachelor in Computer Systems Engineering, Monterrey Institute of Technology, 1973

Prof. Cantú is accredited as a National Researcher by CONACYT, the National Council for
Science and Technology in Mexico.

Dr. Cantú was head of the Center for Intelligent Systems, ITESM Monterrey Campus, 1989-
2002, Head of the Informatics Research Center, ITESM Monterrey Campus, 1986-1989,
Professor of Computer Science, ITESM Monterrey Campus, 1978-1985 and he was the President
of the Mexican Society for Artificial Intelligence, 1997-2000. Member of various program
committees of AIand KBS conferences. Member of IEEE, ACM, AAAI societies.

He is a member of the following editorial boards: the Expert Systems with Applications an
International Journal. Elsevier Press, London the Knowledge and Information Technology,
Springer-Verlag, Berlín, Inteligencia Artificial and the Iberoamerican journal of Artificial
Intelligence, AEPIA, Spanish Association for AI, Madrid.

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He has furthermore published about 50 articles in journals and scientific conferences in

computer science and intelligent systems.

Kimiz Dalkir
(Professor of Knowledge Management in the McGill Graduate School of Information and Library Studies
President of Glashaus Consulting, Canada)

As Professor of Knowledge Management in the McGill Graduate School of Information and

Library Studies, Dr. Dalkir is developing a specialization stream that includes courses in KM
Foundations, Intellectual Capital Management, Knowledge Taxonomies and Communities of
Practice. She is also President of Glashaus Consulting, a management consulting firm that
provides help with KM initiatives, KM strategy and KM competencies. Prior to joining McGill,
Dr. Dalkir was director of KM Services at DMR Consulting where she was actively involved in
the transfer of knowledge management (KM) and electronic performance support systems
(EPSS) to clients in Europe, Japan and North America. Dr. Dalkir has recently published
“Knowledge Management Theory and Practice” (Butterworth-Heineman).

James S. Dzisah – (University of Saskatchewan, Canada)

James Dzisah is presently a Ph.D. Candidate at the University of Saskatchewan, Department of
Sociology, he holds a M.A. from the University of Saskatchewan and a B.A. (Firs Class Honours)
from the University of Ghana. He also holds a position of Doctoral Research Fellow,
International Centre for Governance and Development, University of Saskatchewan and is a
Teaching/Research Assistant, University of Saskatchewan, Department of Sociology. He was
previously a Teaching/ Research Assistant, University of Ghana, Department of Sociology.

Henry Etzkowitz
(Professor and Chair in Management of Innovation Business School, University of Newcastle upon Tyne,
United Kingdom)

Henry Etzkowitz is chair in Management of Innovation, Creativity and Enterprise at the Business
School, Newcastle University. Where he serves as co-Director of the KITE (Knowledge,
Innovation, Technology, Enterprise Research Centre) He is also Visiting Professor in the
Department of Technology and Society, School of Engineering and Applied Sciences, Stony
Brook University. Henry Etzkowitz is author of Triple Helix: A New Model of Innovation; MIT and
The Rise of Entrepreneurial Science and co-author of Public Venture Capital and of Athena Unbound: The
Advancement of Women in Science and Technology. He is co-founder of the Triple Helix international
conference series on university-industry-government relations. [www.triplehelix6.com].

Christian Friedrich
(Department of Management, University of the Western Cape, South Africa, and Professor at the
University of Applied Sciences, Giessen, Germany)

Prof. Dr. Christian Friedrich is presently holding a position as Professor at UWC funded by
German government (DAAD). Head of Entrepreneurship Development Unit (EDU),
Department of Management, UWC. Project leader for national and international research
projects.

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He has previously been visiting professor at UWC, South Africa and involved in several
international projects in SSE sector between 1998 and 2002 with focus on success factors funded
by the German Research Foundation in Zimbabwe, Zambia, Namibia, and South Africa.

Further Prof. Dr. Friedrich has been Professor for organizational psychology in Giessen at the
University of Applied Sciences, and active at the University of Giessen and Bochum as part-time
lecturer. Resident representative of the Friedrich Naumann Foundation in Zimbabwe and
regional coordinator for the southern African region, with focus on the promotion of SME.
Business owner (IAP Unternehmensberatung in Frankfurt) with focus on HR management, i.e.
Assessment Center and Training.

Academic conferences 2005: The Triple Helix Model in South Africa, NRF/SIDA conference,
UWC, Bellville, South Africa. The challenges of entrepreneurship education at university, OECD
conference, Trento, Italy. 5th International Entrepreneurship Forum, (conference chair), Cape
Town (www.uwc.ac.za/ief).

AAPI conference, in Bangkok, Thailand, key note address: How to improve innovation and
planning for entrepreneurs.

Devrim Göktepe
(Lund Institute of Technology-Division of Innovation, Sweden)

Ph.D. Candidate at the Division of Innovation, Lund University, Sweden.

M.Sc. degree in Science and Technology Studies at Middle East Technical University-METU-
Turkey.
M.Sc. Student at the Department of Urban Planning at Israel Institute of Technology -
Technicon, Israel.
M.Sc. Thesis on the Triple Helix Model and The Israeli Magnet Program: A Comparative
Approach to National Innovation Programs with Implications For Turkey (244 pages).
Research on the comparative analysis of national innovation systems at Samuel Neaman
Institute for Advanced Studies in Science and Technology- Israel.
Visiting Student at the University of California.

Victor Konde
(Economic Affairs Officer, UNCTAD, International Investment Arrangements Section)

Victor Konde is an Economic Affairs Officer with UNCTAD’s International Arrangements

Section, DITE. He is a former researcher of Harvard University’s Belfer Center for Science and
International Affairs and an Associate of the Center for International Development. He is the
founder of the African Technology Development Forum and the Zambian Society for
Biochemistry and Molecular Biology. Victor was lecturer at University of Zambia for seven years
and worked in industry for 3 years. He holds a PhD from Brunel University, UK.

His current work areas include international policy research in technology transfer and
commercialisation and national innovation systems. He has also provides advice to various
governmental and private institutions in designing technology and development strategies. His
main interests include mobilising and commercialising technology assets, promoting government-
industry-academia relations and encouraging entrepreneurship.

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Helen Lawton Smith

(Reader in Management, School of Management and Organisational Psychology, Birkbeck, University
of London; Founder and Director of Research of the Oxfordshire Economic Observatory, Oxford
University, United Kingdom)

Helen Lawton Smith is Reader in Management, School of Management and Organisational

Psychology, Birkbeck, University of London. She is a Distinguished Research Associate at the
Department of Geography, Oxford University and a Research Associate at the Centre for
Business Research, Cambridge University. She is the founder and Director of Research of the
Oxfordshire Economic Observatory, Oxford University. This is a practitioner focused research
centre focusing on understanding the South East knowledge-economy (see
http://oeo.geog.ox.ac.uk). Her expertise is in the geography of innovation with particular
interests in the commercialization of university intellectual property. Helen Lawton Smith has
undertaken studies of innovation and entrepreneurship in both high-tech and traditional sectors
in the UK, Canada, France and Belgium. She has recently completed a study of the performance
of spin-offs from Oxfordshire’s universities and public research laboratories and will be leading a
study of London University spin-offs funded by London Higher, in 2006.

José M. C. Mello
(Visiting Professor, Production Engineering Department, Federal University Fluminense, Brazil Associated
Researcher, NEICT- Nuclei of Studies in Innovation, Knowledge and Work, Federal University
Fluminense, Brazil)

Former Assoc. Professor at the Federal University of Rio de Janeiro and Full Professor, Instituto
de Estudos Avançados em Educação, Fundação Getúlio Vargas.

Research interests: Science, technology and innovation policy, local systems of innovation, triple
helix of university-industry-government relationship and actor-network theory. Research
coordination: Research coordinator of the Brazilian research team, Project UniDev “Developing
Universities – The Evolving Role of Academic Institutions in Economic Growth”. International
project coordinated by Research Policy Institute, Lund School of Economics and Management.
Member of the Technical-Scientific Committee of the Centre of Science and Technology Policy
(CeS&T), Fondazione Rosseli, Torino, Italy; Member of the Scientific Committee of the
“Simpósio de Gestão da Inovação Tecnológica” and of the “Simpósios da Associação Latino-
Americana de Gestão Tecnologica” (ALTEC); Member of the Steering Committee of ALTEC
2005, Salvador, Brasil and member of the Steering Committee of the 5th International Triple
Helix Conference, Italy, 2005. Brazilian coordinator of the UniDev Project- Developing
Universities: the evolving role of academic institutions in economic growths (2005-2007)

Marli Elizabeth Ritter dos Santos

(Coordinator of the Technology Transfer Office at the Pontifical Catholic University of Rio Grande do
Sul, Brazil)

Marli Elizabeth Ritter dos Santos holds the position of Coordinator of the Technology Transfer
Office of the Pontifical Catholic University of Rio Grande do Sul. She has previously held
positions as Director of the Interaction and Technology Transfer Office (EITT) of the Federal
University of Rio Grande do Sul, Assistant of the Rector of the Federal University of Rio Grande
do Sul and General Director of the Pro-Rectory of Post – graduation and Research in the Federal
University of Rio Grande do Sul. She holds a Graduate degree in Social Sciences and a Master
Degree in Administration, Planning and Management in Science and Technology from the

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Federal University of Rio Grande do Sul and a Doctors degree in Administration Sciences from
the Autonomous National University of Mexico.

Roshan Kumar Seebaluck

(Former National Consultant at the National Computer Board and UNDP Mauritius and Assistant
Manager at the Small and Medium Industries Development Organisation – SMIDO, Mauritius)

Rosham Seebaluck has worked with the National Computer Board as National Consultant for
Support for new and potential start-up incubators in the field of ICT, funded by the National
Computer Board and UNDP Mauritius. He has also been working with ICT Incubator Centre as
Assistant Manager at the National Computer Board and Assistant Manager at the Small and
Medium Industries Development Organisation (S.M.I.D.O). Rosham Seebaluck holds a B.A.
(Honours) Economics from the University of Delhi, India and a M.A. Economics from Delhi
School of Economics, India.

Other fields of interest are Entrepreneurship & Business Development, SMEs Development,
Business Incubators, Marketing, Technology Innovation, Macro Econometric Modelling, Macro
Economic Policy, Computer Programming - Assembly, Access & Visual Basic, Web Page Design
and Flash Animation.

Abraham Temu
(College of Engineering and Technology, University of Dar es Salaam, Tanzania)

Abraham K. Temu received his B.Sc. degree in Process engineering from the University of Dar
es Salaam, Tanzania in 1984. He received M.Sc. degree in Chemical engineering from the
University of Trondheim, Norway in 1987. In 1998 he received his PhD in Mechanical
Engineering from the Norwegian University of Science and Technology, Trondheim, Norway
specializing in fouling. Since 1998 he has been Lecturing at the Department of Chemical and
Process Engineering, University of Dar es Salaam, Tanzania. He has worked on problems relating
to industrial energy conservation and renewable energy technologies (biodiesel, bioethanol and
solar cooking) beside involvement in Innovation Systems and Clusters.

Chunyan Zhou
(Associate Professor, Business School, Shenyang University, China)

Chunyan Zhou is an Associate professor, Business School, Shenyang University in China. She got
a B.Sc. in physics, a Master’s degree in science education in Liaoning Normal University, and a
Ph.D. in philosophy of science and technology at STS Center of Northeastern University.

She has published her book Transforming Science to Technology: the Scientific Basis in Technology Time
(Northeastern University Press, 2002.2, Shenyang), awarded the First-class Prize in the Youth
Excellent Results by Research Association of Dialectics of Nature in China. This work revealed
the relationship between science and technology, especially in contemporary society and
systematically argued the important contribution of science research to technology innovation.

She also translated and published University-Industry-Government Triple Helix (Henry Etzkowitz,
Published by the East Press in China, 2005.6, as well as Pasteur’s Quadrant: Basic Science and
Technological Innovation (Donald E. Stokes, Science Press in China, 1999.10, Beijing, Since 1998, she
has published more than twenty papers and held five programmes in science policy and
management.

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Ethiopia Triple Helix Conference

In 2001, she worked for a research project at STS center of Tsinghua University as a visiting
scholar. During 2004.8—2005.8, she visited the STS Program at Stanford University also as a
visiting scholar. Recently she has contributed to the paper Triple Helix Twins: Innovation and
Sustainability following Dr. Henry Etzkowitz, as a co-author. Her interest of research now is
Innovation Theory and Practice, both in the East and West countries, especially University-
Industry-Government Triple Helix Model for innovation, including the relationship between
university and industry, university’s status and role in regional and industrial innovation.

Yandong Zhao
(Associated professor in National Research Center for Science and Technology for Development,
Beijing, China)

Mr. Zhao Yandong studied Sociology in the Graduated School of Chinese Academy of Social
Science, Beijing, where he obtained his doctorate. He is currently an associated professor in
National Research Center for Science and Technology for Development, Beijing, China. His
research area includes social capital and social development, social stratification and mobility,
innovation of small and medium sized enterprises, risk society and development of science and
technology, etc.

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