Estimating the Innovation Effects of University-Industry-Government Linkages: The Case of Taiwan

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ABSTRACT

This study focuses on university-industry-government (UIG) linkages and their influence on innovation in Taiwan. The innovation effects are estimated using a quartet of measures - technology transfers, technology licensing, firms incubated and patents granted - while the UIG influence is estimated via its differential impact according to the size of the firms involved, the type of innovation (process or product-oriented), the stage of the technology cycle, and the role of government. Using a Structural Equation Model (SEM) method to examine these interactions, the study reveals that UIG linkage effects vary with the size of company, in that the major incentive for UIG linkages for large companies is an attempt to acquire a skilled and qualified workforce, while SMEs (small and medium enterprises) tend to use them to gain marketing advantage, particularly for those SMEs or start-ups in emerging industries. The study concludes that Taiwan's innovation capacity is heavily reliant on building the capability of SMEs and continues to depend greatly on government leadership through technology-capability-enhancing institutions such as ITRI.

Keywords: university-industry-government, innovation, SMEs, large company, patents, Taiwan

National innovation systems are now widely acknowledged to play a critical role in the technological development of countries, and scholars (e.g. Freeman 1987; Lundvall 1992; Nelson 1993; Marques et al. 2005) now suggest that innovative elements within various networks and linkages are crucial to increasing a nation's innovative capacity. In particular, Etzkowitz and Leydesdorff (2000) have argued that the 'triple helix' model of the three institutional actors - University, Industry and Government (UIG hereafter) - is prominent in the process of innovation through policy definition, business activities and knowledge diffusion. While the performance of an innovation system depends on the intensity and efficiency of the linkages amongst all three actors, the University tends to play a crucial part in recent years as the country moves to develop a knowledge-based economy. These results are to be contrasted with the conventional view that regards the scale of R&D as a sufficient measure of a country's technological capacity.

East Asian 'latecomer' countries occupy a special place in this literature in that they have utilized various institutions of technology leverage to enhance and accelerate their technological catch-up. Public institutions such as the Industrial Technology Research Institute (ITRI) in Taiwan take the lead initially and diffuse the technology and knowledge into industrial firms through technology transfer, contract research and joint research, technical services and technology training programs (Amsden & Chu 2003; Mathews & Cho 2000; Dodgson et al. 2008). The industrial development experiences in the East Asian latecomer countries are diverse, encompassing the influence of keiretsu in Japan or chaebol in Korea, while Singapore's economic development heavily relied on the multinational corporations for its technology transfer (Hu & Shin 2002; Goh 1996; Hobday 1994). In contrast, 98 percent of industrial firms in Taiwan are small and medium-sized enterprises (SMEs), and yet the country has also fostered world-class large companies such as Giant, Acer, TSMC, Hon-Hai and AU Optronics (all originally starting as SMEs), through joint efforts by public research institutions and other supporting functions.1

As latecomer countries make the transition from imitation to innovation, public R&D in East Asia is focused increasingly on specialization in high-tech industries (World Bank 2003; Mathews & Hu 2007). Apart from the critical role of public research institutes, the adoption of a model based on the US Bayh-Dole Act of 1980 also enabled universities to be seen as sources of knowledge flows in latecomer countries such as Taiwan, Korea and now China (Glänzel et al. …