CANADA AND THE UNITED KINGDOM: HIGHER EDUCATION POLICY AND THE KNOWLEDGE ECONOMY

Paul J. Madgett Ph.D. Student

Warner School of Education University of Rochester

Charles Bélanger, Ph. D.

Professor of Management Faculty of Management

Laurentian University, Ontario, Canada

Abstract

ommercialization of university research is a contentious and prominent issue in tertiary education. This paper will elaborate on the commercialization and innovation strategies pursued by Canada and the United Kingdom with respect to

their research funding structures and their focus innovation systems, both regional and national. Over the last two decades, these two countries introduced neo-liberal funding agendas for the state as well as for higher education while offering incentives to stimulate commercialization activities. These countries' policies and programs have targeted Universities to help propel their economic performance, prosperity, and standard of living.

Introduction

s Commonwealth countries, Canada and the United Kingdom have historical, political, and economic ties dating back two and half centuries. Early Canadian higher education institutions emulated the Cambridge model, while the

foundations of the Canadian political system were based on the Westminster model (Dyck, 2007; Kernaghan, 2003).

Economically, the UK has a somewhat higher Gross National Income per capita but a lower Purchasing Power Parity (Beamish et al., 2003). The end of the Second World War marked Canada's gradual shifting of balance away from British influence in favor of integrating itself politically and economically with the United States. The

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inception of the Charter of Rights and Freedom (1982) and the North American Free Trade Agreement (January 4th, 1994) were the formal recognition of that new reality with the U.S. presently accounting for 76% of Canada’s exports (McKibon, 2008). In spite of this new realignment, the Canadian and British political systems continue to maintain ties with the positions of Governor General federally and the Lieutenant Governors provincially who continue to figuratively represent the Queen and monarchy. Our common historical and political links allow for a valuable comparison of the innovation strategies being implemented to nurture the transition towards a knowledge focused economy.

This paper will undertake a descriptive analysis of the strategies being adopted by both of these countries, which involves the shifting of publicly funded research towards market-oriented research objectives. These countries are and have been undertaking a neo-liberal agenda resulting in a cogent shift in government policy. Olssen and Peters (2005) believe: “neo-liberalism has come to represent a positive conception of the state’s role in creating the appropriate market by providing the conditions, laws, and institutions necessary for its operation” (p.315). Associated with this political philosophy, the government is limiting the role of the state by reducing expenditures, prioritizing certain core programs and privatizing government services.

As this policy directly affects universities and colleges, it has been associated with two university jurisdictions, namely teaching and knowledge creation (Olssen and Peters, 2005; Besley and Peters, 2006). These higher education institutions have shifted their teaching modules towards an emphasis on transferable skills and their research towards knowledge transfer to industry (Olssen and Peters, 2005). Furthermore, these market realities induce a greater employment of performance and management structures similar to those employed by business as well as research quality measurements to allocate funding (Regan, 2007; Olssen and Peters, 2005; Besley and Peters, 2006).

However, in the last few years, a slight reversal has transpired due to increased global competition and the realization that tertiary education is a vital policy tool for government and an equally vital component of the knowledge economy (Olssen and Peters, 2005). Concurrently, this strategy is a competitive response to the policies enacted by other western government and the corresponding exodus of manufacturing facilities to developing countries (Audretsch, 2003), Canada and the United Kingdom are attempting to further develop knowledge based industries to generate higher paying jobs (Government of Canada, 2007; Industry Canada, 2006; Department of Trade and Industry, 2003). Each country has a well-developed higher education system and research expertise, both providing a unique advantage in sustaining a knowledge based economy (Kitagawa, 2004; Conference Board of Canada, 2003; Lagendijk and Cornford, 2000; Advisory Council on Science and Technology, 1999; Canadian Council on Learning, 2007).

In order to foster an innovative technology focused economy, two unique government strategies are being adopted: a strong regional mandate in the United Kingdom and a national focus in Canada. Consequently, to increase the probability of success, both countries are attempting to increase their Gross Domestic Expenditure on Research and Development (GERD) to GDP while emphasizing a long-term Return On

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Investment (ROI) strategy, mainly holding equity in new venture firms (Riddle, 2004; Canadian Council on Learning, 2007). Thus, this shareholder focus may be the result of limited financial windfalls realized from licensing (Feldman et al., 2002). An equity stake does provide opportunities of long-term partnerships and ability to better align revenue objectives which allow for universities to take full advantage of potential revenue streams (Feldman et al., 2002).

This study focuses on five specific issues. The first looks at funding (or the lack thereof) which has enticed universities to partake in a mission related to commercialization and economic development. The second gives an overview of the make-up, type and mandate of tertiary institutions in each country. The third and fourth issues attempt to clarify the government policy environment and its effects on commercialization. The fifth and final issue considers the clash between academic freedom, ethical behavior, universities and industry. These five issues have enabled innovation and research commercialization to be a strategic focus of universities in western nations.

1. How did the reduction of public funding facilitate linkages between higher education and industry?

The Canadian Scene. The Canadian higher education system is divided between two levels of government, federal and provincial/territorial. The federal government funds the public research councils and provides transfer payments to the provinces and territories to help fund their public programs which include postsecondary education. In the latter part of the 1980s, the Mulroney government initiated reduced transfer payments to provinces, for health and higher education, with the objective of reducing government expenditures (Swardson, 1993; Banting, 1992). After failing to control the deficit, the Progressive Conservatives were replaced by the Liberals who promised to eliminate the fiscal deficit. More cutbacks led to the reduction of government funding in many aspects of the state, most notably in health care and education. This course of action may have taken into account a noted decrease in the rate of return on invested capital for university education in many countries during the 70s (Stager, 1996). Within a few years, these cuts caused the reduction, on average, in university funding from a high 80% of direct public funding to approximately 60% of their current operating budgets (Mount and Bélanger, 2001; CAUT, 2007). Consequently, this reduction forced Canada to bridge this gap, the universities - and to a lesser extent the colleges - with permission from their provincial governments, shifted some of the financial burden to the student through tuition fee hikes (Quirke and Davies, 2002). Since 1990/91, university tuition in Canada has had an annual growth rate of 7.3% (Statistics Canada, 2005).

Although this price increase should have affected the demand for postsecondary education, Quirke and Davies (2002) surmised that higher education enrollment would not be detrimentally affected because it is a condition for employment in the marketplace. The impact of this type of tuition policy would not affect the affluent or those returning to higher education for professional development but reduce the accessibility and attainment opportunities of the least affluent members of society; thereby, causing deferred social mobility (Newman et al., 2004; Morgan, 2005; Havemen and Smeeding, 2006) with lower rates of unemployment and higher rates of poverty (Baum and Payer, 2005).

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In 2004, the Conference Board calculated a provincial/territorial budget deficit of $1.3 billion and estimated this figure to increase to $11 billion by 2019/2020 (Conference Board of Canada, 2004); unfortunately, these financial restrictions may limit future funds available to higher education. Consequently, higher education must also compete with other policy imperatives such as health, crime prevention, etc. which may be more attractive to the aging baby boomer population (Duderstadt, 2005; Barr, 2004). Furthermore, the federal Conservative government is being fiscally prudent about any increased expenditures with greater emphasis on tax cuts, therefore limiting funds available to tertiary education through transfer payments. In recent budgets, the federal government has invested slightly more money in its research councils, but seems to be more focused on developing a larger role for the private sector (Government of Canada, 2007). This ideal seems to be helping align university research in solving industrial problems in order to improve innovation (Brzustowski, 2006a).

In an effort to provide higher education with additional research funding sources, many provinces launched smaller research granting entities. To illustrate this point, Ontario has created the Four Centers of Excellence. Unlike the federal tri-councils Natural Sciences and Engineering Research Council (NSERC - http://www.nserc.gc.ca/index.htm ), Social Sciences and Humanities Research Council (SSHRC - http://sshrc.ca/web/home_e.asp ), and the Canadian Institute for Health Research (CIHR - http://www.cihr-irsc.gc.ca/e/193.html ), these four Centers of Excellence fund collaborative projects with industry which provide capital to conduct research and to buy the related equipment while also contributing 35% of the project’s budget towards administrative overhead. These collaborative projects allow departments to employ state-of-the-art equipment, to fund graduate students for research, and to get students practical experience in their field; therefore, improve job prospects (Zieminski and Warda, 1999). Similar provincial programs to improve commercialization are: Valorisation-Recherche Québec and Ontario’s Medical and Related Sciences (Riddle, 2003). In addition, there are other benefits for both industry and tertiary education, the following table illustrates the benefits for both the academic institution (students, professors, image management, external funding) and those benefits to the private collaborating entity (manufacturing and production issues, product research and development, skills) (Lee, 2000):

Reasons for

Academic Collaboration with Industry Firms Collaborating with Academics

To supplement funds for one’s own academic research

To solve specific technical or design problems

To test the practical application of one’s own research and theory

To develop new products and processes

To gain insights in the areas of one’s own research

To conduct research leading to new patents

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To further the university’s outreach mission To improve product quality To look for business opportunity To reorient R & D agenda To gain knowledge about practical problems useful for teaching

To have access to new research (via seminars and workshops)

To create student internship and job placement opportunities

To maintain an ongoing relationship and network with the university

To secure funding for research assistants and lab equipment

To conduct “blue sky” research in search of new technology

To conduct fundamental research with no specific application in mind

To recruit university graduates

The federal government provides similar market-oriented funding with its Industrial Research Assistance Program (IRAP) that makes funding available for SMEs through its research and technology development activities (http://www.nserc.gc.ca/news/2002/p020321.htm). Meanwhile, the Canadian Foundation for Innovation (CFI) uses a merit-based review by researchers, research administrators, and research users to fund university and hospital research infrastructure (Doern, 2008; http://www.innovation.ca/about/index.cfm). SSHRC, NSERC and CIHR have instituted their own tri-Council Intellectual Property Management Programs to increase technology and knowledge transfer at Canadian universities (Riddle, 2003). It is important to note, however, that funding allocation from NSERC, SSHRC, and CIHR continues to be based on a peer review model where each project is independently evaluated; those proposals ranked highly by peer reviews and review committees are granted funds (Doern, 2008). This evaluation process is undertaken for all proposals during each funding cycle.

Within the growth of neo-liberalism, there have been many stakeholders who have been affected by the increase levels of efficiency, knowledge capitalism and economic significance of university research (Besley and Peters, 2006; Olssen and Peters, 2005; Fisher and Atkinson-Grosjean, 2002). Consequently another stakeholder, faculty associations believe the commercialization policies are aimed at achieving economic benefits with increase research in applied studies, detrimentally affecting pure research (CAUT, 2001) while some faculty believe industry liaison offices should always be opposed (Fisher and Atkinson-Grosjean, 2002). Moreover, the STEM (Science, Technology, Engineering and Mathematics) fields are the major benefactors of commercialization and increases of research funding (Hum, 2000; Kerr, 2001), potentially devaluing the research conducted in the arts and humanities. This faculty perspective, in some instances, has resulted in misgivings about the long-term trajectory of commercialization vis-à-vis higher education with the CAUT illustrating these beliefs by recently publishing “The Corporate Campus: Commercialization and the Dangers to Canada's Universities and Colleges” and “Universities for Sale: Resisting Corporate Control over Canadian Higher Education” (http://www.caut.ca/pages.asp?page=443).

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Overall, Canadian universities are supportive of generating other revenue streams and have invested more than $80 million in specialized infrastructure for commercialization (AUCC, 2003). In the last few years, there has been an observable increase in branding activities for colleges and universities relating to entrepreneurship, industrial partnerships, and marketing of programs in an attempt to differentiate themselves vis-à-vis other universities and colleges (Bélanger et al., 2007; Mount and Bélanger, 2004). In response to these developments, most universities in Canada have created their respective Intellectual Property Offices to commercialize the ground-breaking research of their faculty and research centers (Fisher and Atkinson-Grosjean, 2002). These offices provide identifiable university community contacts for industry. In recent years, universities have invested in these strategies realizing that income plays a vital role in maintaining one’s standing vis-à-vis its competitors, Kirp (2003) states the following on the competitive market for revenue sources: “It’s no wonder, then, that raising research money, negotiating patent rights, and establishing a presence on the internet are contact sports” (p.5)

The UK Scene. The UK has followed a fiscal strategy relatively similar to that of Canada. There was a revolution that caused a reduction in funding and an increase of access to the masses for higher education in the late 80s with the passing of the Thatcher’s Education Reform Act of 1988 (Green, 1995; Alexander, 2000). Until 1992, there was separate funding for universities and polytechnics, which after all were considered universities (Green, 1995). The decline in per student funding in the 90s had been linked to the rapid expansion of students enrolling in higher education. Beforehand, the UK government had funded its higher education students with grants, but these were slowly replaced by loans. On May 1st, 1997, the Labour Party of Tony Blair was elected replacing the long-standing Conservative Party under the leadership of Margaret Thatcher and John Major (Jacobs, 1997). Blair’s Labour Party won a landslide victory that some blamed on the Conservatives scandals during the election period and accusations of accepting cash from lobbyists to bring issues to the floor for three years (MgGuire and McKinney, 1997) which were heavily publicized by the media. Also, the party had created a policy document New Labour, New Life for Britain that concentrated on five main issues: education, crime, health, jobs and economic stability with a detailed explanation of planned expenditures; therefore, avoiding the conservative attack of raising taxes (http://www.labour.org.uk/historyofthelabourparty3?PublishKey=8bfabed3-47f8-06c4-010a-b60ea9d7b1be).

The Labour government created the next major reforms by implementing fixed-rate fees upfront of $1,600 (fall 1998) for each year on a means-tested basis full-time students (Birchard, 2001; Guardian Unlimited, 2004; Barr, 2005); consequently, these fees were suggested by the 1997 National Committee of Inquiry into Higher Education which recommended a quarter of the costs of higher education be paid in tuition fees (Recommendation 79). These front end fees have currently been removed and student loans based on income contingent repayment plans are presently limited to 25 years (Harvey, 2004; White Paper, 2003). In order to respond to the changing world, the Department of Education and Skills (2003) published a White Paper entitled “The Future of Higher Education” (hereafter referred to as the White Paper). This paper proposes that certain support mechanisms exist to allow students whose parents earn up to £20 000 pounds, to partake in tertiary education. The tuition fees have increased to help replace

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part of this funding gap in an attempt to subsidize universities. These universities have lobbied for the removal of the £3000 pound tuition cap (in real terms), but the Secretary of State maintains that this cap will be kept in place (Harvey, 2004; Ford, 2007) but there have been recent discussions about raising the cap to £5000 (Lipsett, 2007).

The government’s endorsement of the 2003 White Paper was given Royal Assent on July 1st, 2004 resulting in an increase in higher education funding by £10 billion pounds/year in 2005-2006, which is over 6 per cent a year in real terms (White paper , 2003; http://www.dfes.gov.uk/hegateway/hereform/whitepaperconsultation/index.cfm). The UK distributes its funding for infrastructure using the following four organizations: Higher Education Funding Council for England (HEFCE), Scottish Higher Education Funding Council (SHEFC), Higher Education Funding Council for Wales (HEFCW), and for Northern Ireland, the Department of Higher and Further Education, Training and Employment (DHFETE) (see A Guide to the 2001 Research Assessment Exercise). The government has also recommended that universities increase endowments in order to compete with other major universities in the U.S.; meanwhile striving to develop some criteria to match these financial contributions. Unlike many other countries, the government has taken an ambitious step by committing substantial financial resources to strengthening tertiary education. Recent policy documents have supported an increase in business links with universities to garner more opportunities to access funding and corporate sponsors (HEFCE, 1998; White Paper, 2003; Lambert Review, 2003). Resultantly, this trend is enabling higher education to become more accountable in the quality of its teaching and its research (HEFCE, 1998; White Paper, 2003; Lambert Review, 2003). The UK universities have access to the following research councils (www.hero.ac.uk):

1. Biotechnology and Biological Sciences Research Council (BBSRC),

2. Engineering and Physical Sciences Research Council (EPSRC),

3. Economic and Social Research Council (ESRC),

4. Medical Research Council (MRC),

5. Natural Environment Research Council (NERC),

6. Particle Physics and Astronomy Research Council (PPARC), and

7. Arts and Humanities Research Board (AHRB).

These seven councils have formed a strategic alliance to create a common framework for research, for training and for knowledge transfer, and to promote science, technology and engineering research. These councils do not allocate any funding to compensate for administration and/or infrastructure costs relating to the funded project. In the UK, the funding for these councils is linked to the Research Assessment Exercise (RAE) which occurred in 2001 and is currently being conducted in 2008. Thereafter, consultation has begun to replace RAE with Research Excellence Framework that will have greater use of quantitative indicators and will gradually take effect for funding

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beginning in 2010-11 (HEFCE, 2007). Currently, the RAE evaluation uses a process of peer review by experts in all the subject areas. Based on their 2001 results, universities will divide the £1 billion pounds of research funding (http://www.rae.ac.uk). The UK uses the following “dual support” funding role (A Guide to the 2001 Research Assessment Exercise):

Research infrastructure funding (staff, salaries, premises, computing and library costs as examples) is given by the four UK funding bodies.

The cost of individual research projects are funded by the above stated research councils and board.

Therefore, the universities in the United Kingdom will receive funding to cover the direct and indirect costs of a research project; consequently, this would decrease the institution’s implicit cost of conducting research.

2. What are the main structural differences between the two systems?

There are significant structural differences between the two countries. The United Kingdom transformed the Polytechnics into universities in 1992. Because of this change, the UK has 90 universities in England, Scotland, Wales and Northern Ireland (CHEPS, 2003). The Canadian system has 93 universities that are regarded as this country’s principal research engines. In addition, there exist some 200 community colleges, similar to the Fachochschulen, dealing not only with vocational studies, specialized training and applied skills but also with university transfer and preparation in specific provinces (Skolnik, 2004). In a few provinces, Applied Degrees for colleges were legislated to allow them to compete against other institutions through differentiation of their product (ACCC, 2006; Skolnik, 2005). This differentiation strategy offers the community colleges another marketing tool to compete with universities in their efforts to attract a greater number of students. Furthermore, the landscape has begun to shift with colleges wishing to participate in industrial applied research (Bélanger et al., 2005). With this new focus, colleges are hoping to lessen the impact of provincial funding cuts and to increase their reputation nationally and internationally (ACCC, 2006). Historically, in many European countries, colleges have evolved to polytechnics and then later to universities (Kyvik, 2001; Kyvik and Skodvin, 2002), similar to the path taken by Ryerson University in Toronto.

As mentioned previously, the UK controls higher education funding through the following government agencies: HEFCE, SHEFC, HEFCW, and DHFETE. Hence, the government is able to formulate the vision and the objectives to be sought throughout the country. A national strategy mandates a shared vision and planning that allows for the creation of system wide goals and objectives as well as has funding aligned with national concerns in order to allow the country to react quickly to changes in the global marketplace (Canadian Council on Learning, 2007). In Canada, the system is quite decentralized with tertiary education falling under the jurisdiction of the Canadian provinces. The federal government influences the research agenda by funding NSERC, SSHRC, CIHR, IRAP, FCI and their Innovation Agenda. The federal government has plans to create a private sector advisory board for these agencies to help develop business

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driven Networks of Centres of Excellence, Centres of Excellence in Commercialization and Research, and the college initiatives to aid in reaching certain Innovation Agenda goals (Government of Canada, 2007). These set objectives are aimed directly at strengthening Canada’s economic competitiveness by emphasizing the creation of industry clusters (Holbrook and Clayman, 2003; Madgett et al., 2005). Considering that Canada has 13 jurisdictions for tertiary education, the prioritization of their respective perspectives results in regional fragmentation mainly because Canada: “has never had a formal, structured, federal–provincial–territorial mechanism or forum for discussion of common or mutually interacting issues, goals and priorities” (Canadian Council on Learning, 2007, p. 153). This constitutional jurisdiction of Canadian Federalism (Dyck, 2007), has the ability to limit the introduction of standardized national policies relating to accessibility, industry collaboration, quality assessment, teaching assessment (Canadian Council on Learning, 2007).

3. How are government policies stimulating commercialization?

Canada and the United Kingdom are initiating important policies and programs to further increase innovation indicators in their economies. Improvements in these indicators are needed to preserve their standard of living, improve their productivity and maintain their real income levels (Department of Trade and Industry, 2003; Industry Canada, 2006; Government of Canada, 2002). To help stimulate innovation, Canada created “Canada’s Innovation Strategy” while the UK has followed suit with “Competing in The Global Economy: The Innovation Challenge.” How is innovation linked to commercialization? In both countries, the government has identified the need to integrate university research with industry requirements through commercialization to implement new ideas, processes and products into their economies which are needed to compete globally (Department of Trade and Industry, 2003; Government of Canada, 2007; Department for Innovation, Universities and Skills, 2007). Developing countries have an opportunity to destabilize the manufacturing sector of many Western nations by providing inexpensive human capital, government subsidies and other incentives. While taking these factors into account, most corporations have three choices (Audretsch, 2003):

1. Realign production costs significantly which includes reducing wages in the hope of competing with their international competitors.

2. Substitute equipment and technology for labor in order to increase productivity.

3. Shift production to these low-cost countries.

For example, the topic of off-shoring of jobs in the manufacturing and service sectors has become a very problematic political issue (Martin, 2005). For most politicians, there is a need to increase productivity and innovation to limit off-shoring and to compete globally with other countries (Sear, 2007; Lynch, 2007); especially those low wage economies in the south (Jacobs, 1997). If governments have any hope of avoiding options one and three, they must enlist the assistance of universities, public research centers and industry consortia with a view to helping the industrial sector incorporate

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new technologies into its manufacturing processes. In that, Canada has a private sector which spends a significantly lower percentage of their sales on R&D than companies in Europe and the United States and we also have an export focused resource industry that has a low level of investment in innovation and R&D (Bruztowski, 2006b).

In this circumstance, the government has little choice but to play a greater role in providing policy and programs to support technology transfer and to help fund the integration of new processes and products in order to mitigate the weakness of the private sector. Also, this type of government funding would have the effect of revitalizing the relevant research infrastructure, providing skills to our students, and funding for our professors which could lead to greater social and personal benefits (Canadian Council on Learning, 2007; Van Loon, 2005). To optimize new discoveries from public funds, Canadian government should create intellectual property (IP) policies to implement the required ownership (legal) frameworks to provide a standard process for external players to access university research (Government of Canada, 2007). For example, in the United States, the Bayh-Doyle Act (1980) gives Universities control of their professors’ discoveries, allowing them to market these findings to industry meanwhile in Sweden the rights are awarded to the researcher (Goldfarb and Henrekson 2003). There has been some debate whether to allow the researcher or the university in Canada to have control of the discoveries or partnership agreement with both stakeholders; unfortunately, no strategy has yet been implemented at the national level (Riddle, 2003). Contrarily, the UK has agreed to the following (HM Treasury et al., 2004):

“The Association for University Research and Industry Links (AURIL), the Confederation of British Industry (CBI) and the Small Business Service (SBS) should produce a small set of model research collaboration contracts, for voluntary use by industry and universities.”

The above framework has allowed UK universities to control the research outputs of their faculty (Riddle, 2003).

4. What types of commercialization strategies are being implemented?

The UK has taken a regional approach to strengthening its commercialization capacity with a new strategy that is presented in the government’s 2003 White Paper. The full context of this potential change is available in the Science & Innovation Investment Framework 2004-2014, Appendices C, the government’s response to the Lambert Review of Business-University Collaboration. The UK government has acknowledged the steps needed to implement certain aspects of this document. This commercialization strategy identifies the important role of various factors, especially research and industry, in stimulating innovation. Furthermore, the government’s White Paper has made numerous commitments towards helping the universities in the development of their research findings by (HM Treasury et al., 2004):

1. Increasing the level of research funding in general.

2. Increasing the level of funding to £110 million a year by 2007-08 for the Higher Education Innovation Fund (HEIF).

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The government is hoping that the increase in research funding will raise the level of tacit knowledge leading to more economic ends while HEIF funding will increase the capacity for knowledge transfer (Department for Innovation, Universities and Skills, 2007; HM Treasury et al., 2004)

The government policies are focused on balancing their research portfolio with older fields of study and newer disciplines, such as nanotechnology. The HEIF fund, with emphasis on including Small/Medium Enterprises (SMEs), will provide financial support for most facets of knowledge transfer and supply capital for concept development and demonstration. Recent literature endorses the economic advantages of integrating research findings into SMEs (Audretsch, 2003). The UK government is prioritizing this strategic focus for it is believed that the Regional Development Agencies may be able to help form linkages between SMEs in emerging technologies and universities to increase innovation and business growth (HM Treasury et al., 2006).

In South Korea, Chung (2002) discovered that the innovation level of the country depended on the number and strength of its regional innovation systems. Previous British reports recommend that the university business offices provide regional development agencies (RDA) with current research findings, technology transfer, and technology licensing opportunities (White Paper, 2003; Lambert Review, 2003). The RDAs are integrated in local economies and are prepared to aid in further developing technology clusters. For example, the RDA for Yorkshire has already launched six Centers of Industrial Collaboration, giving businesses quick access to research specialization through the region’s university (http://www.yorkshire-forward.com). This type of interaction will benefit the region and will allow for the development of innovation with pre-defined contact person(s) to increase university-business links (HM Treasury et al., 2006; Department of Education and Skills, 2003). At this time, the RDAs’ Regional Economic Strategies have created measures to increase innovation and commercialization by investing £240 million in science, engineering and technology related activities in 2002-03. This represents approximately 15 per cent of their budgets (HM Treasury et al., 2004). These types of projects can help the development of industry groupings which has the effect of attracting more companies and specialized human capital and infrastructure resulting in spin-off companies, higher paying employment for the citizenry, and greater competitiveness with reduced costs and productivity (Laidler, 2002; Wolfe et al., 2005). There is an estimated £8 billion investment needed to sustain their current infrastructure with £3.2 billion and £4.6 billion for research and teaching infrastructure (White Paper, 2003). From 1997 to 2007, the government had doubled its investment in the science budget to £3.4 billion (Department for Innovation, Universities and Skills, 2006). The UK has always been involved in mandating the accountability and the efficiency of university research funding but it will be interesting to note what changes occur with the Research Excellence Framework replacing the Research Assessment Exercise.

The creation of an Arts and Humanities funding board is a good step towards ensuring that this area is not overlooked in the UK. However, in Canada even with the support of a similar fund, the arts and humanities are not getting the same funding opportunities as science and engineering. In 2006/2007, the federal government agencies expenditures on science and technology were: $628 million for SSHRC, $907 millions

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for NSERC, and $812 million for CIHR (Statistics Canada, 2007). In 1963, one of Clark Kerr’s (2001) pathologies for the modern university was that the sciences would be of greater economic value than the humanities and social sciences. The commercialization prospects for the majority of Arts and Humanities departments are, unfortunately, not as prevalent or as lucrative as their counterparts because it is estimated that 78% of spin-offs come from the following fields: biotechnology, health sciences, engineering and applied sciences, and mathematical and physical sciences the sciences and engineering (Hum, 2000).

There are four modes of technology transfer highlighted by Reamer et al. (2003): cooperative research and development, licensing or sale of intellectual property, technical assistance, and information exchanges which are all needed to improve technology transfer. Currently in Canada, many university administrators have begun to emphasize “partnership or perish” as strategic planning focus (Bélanger et al., 2005; Mount and Bélanger, 2001). Furthermore, there has been more emphasis by upper administration to support faculty who have taken advantage of commercialization opportunities (Mount and Belanger, 2001). In universities, most of commercialization occurs under the private sector label of applied research (Mount and Bélanger, 2001). This thrust has been further discussed with the introduction of the Federal Government’s Innovation Agenda. Its mandate is to bring forward Canada’s quality of life, innovation, productivity and economic prosperity for future generations (Government of Canada, 2002). The federal research councils are being utilized as implementation instruments for this innovation strategy. A databank should be created for industry and academia to allow access to an inventory of research projects, findings, and expertise in specific areas to provide a connective entity similar to the RDAs in the United Kingdom. In Canada’s case, most universities have their own Intellectual Property/Commercialization Office or industry liaison offices. The federal government is attempting to make policy decisions to support national innovation systems by hoping to improve national innovation targets (AUCC, 2005). This top-down approach purports to conduct policies supporting innovation that will hopefully improve national innovation indicators (AUCC, 2005). There is lack of collaboration in developing a national strategy for higher education that would allow for certain objectives, rules and standards to be put in place (Canadian Council on Learning, 2007). The Association of Universities and Colleges of Canada (AUCC), as an advocate for its university members has been producing marketing material, for example: “University research: Canada’s strength in a changing world” that highlights the benefits of university research to Canada while providing brief descriptions of breakthroughs from Brock, University of British Columbia, etc. Nevertheless, these policy imperative have caused the transformation and the emergence of academic capitalism. The licensing of technology, findings and spin-offs has provided universities with some financial equilibrium in the beginning phase to fund operational costs of this endeavor with $14.6 million dollar net income ($51 million (revenue) – $36.4 million (operational costs) (AUCC, 2005). Unfortunately, this net income is an extremely minute part of higher education expenditures and will not provide substantial impact of capital for other university operations. The following table illustrates some of the outputs for 2003 generated from commercialization efforts of Canadian Universities (AUCC, 2005):

• 1,113 disclosures

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• 1,252 new patent applications

• 850 number of spin-offs

• 422 new licenses awards

• $283 million value of industrial contracts

Although universities are the major research engines for Canada, for 2005 they performed $9,841 (in millions) of research while the federal government performed $2,138 (in millions) (Thompson, 2005). But it should be highlighted that the individual universities combined have already grossed more revenue than most of the research related federal government departments (Hum, 2000).

5. What are the potential harmful bi-products of commercialization?

The United Kingdom is known as being a public sector employer of New Public Management (NPM). When this organizational strategy was implemented in universities, certain human resource issues arose. Barry et al. (2000) have noted that professors seemed to feel as if they were being dehumanized under New Public Management indicators. Could the increase in interaction with private sector management models further increase managerialism? What type of consequences fostered by these new initiatives will be felt by the student and faculty? Will there be further breaches of ethics? Or do our policy imperatives foster a deliberately ambiguous level of academic capitalism, as noted by Slaughter and Leslie (1998):

the reality of the nascent environment of public research universities, an environment full of contradictions, in which faculty and professional staff expend their human capital stocks increasingly in competitive situations. In these situations, university employees are employed simultaneously by the public sector and are increasingly autonomous from it (p.9).

There is an overall need in both countries to insure that the university, the faculty, and the students maintain their own autonomy and academic freedom which includes releasing publicly harmful results. In many western nations, universities have been founded on the Humboldtian model that views universities as part of the cultural and the social fabric of a nation with the freedom to be autonomous in their drive for knowledge to improve the public and social good (Buchbinder and Rajagopal, 1996; Pritchard, 2004). Consequently, Bok (2003) states some of his concerns about the influence of corporations on university research:

Universities and their hospitals have not always shielded their faculty from corporate pressure to suppress unfavorable results and have allowed companies to block publication, edit the results, or even write drafts of articles and reports that later appear under the names of faculty investigators (p.204).

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A Canadian example to illustrate this conundrum is the Olivieri-Apotex affair which occurred at the Toronto Hospital for Sick Children. For the last few years, Dr. Olivieri has been the focus of bioethical discussions. After Olivieri abruptly terminated the trials, the drug sponsor, Apotex, threatened a lawsuit against her if she announced the detrimental findings (www.caut.ca). Dr. Olivieri made the results public in the hope of protecting consumers and accepted upon herself the potential legal repercussions. A CAUT report supported Dr. Olivieri’s decision by stating that she did her ethical duty by informing the public about the negative effects of the drug. Apotex officials, hospital senior management and staff, and university administrators were found to be woefully lacking in support and judgment in the face of upholding principles of research ethics (www.caut.ca; Thomson et al., 2001). Another example is Dr. Healy who after expressing his educated opinion about the detrimental effects of Prozac lost a position offered to him by the University of Toronto (Bloch-Nevitte 2001). This lack of support from administrations, fearful of losing funds, demonstrates the possible manipulation and pitfalls of corporate financed research and development. Furthermore, the government-mandated short-term outputs from pure research may undercut the future long-term benefits and research integrity of higher education (Zussman, 2005).

Conclusion

ommercialization has become an important focus in today’s university research agenda as a source of revenue and prestige as well as a way of attracting world class experts. Both countries have a dual funding system with Canada having two

government funding levels (provincial and federal governments) and the UK being “dually supported”, that is, with infrastructure and research project funding. Notwithstanding, these support funds do not cover all the administrative and infrastructural costs required in performing the associated research. What can be said for sure is that a strong university may play vital role in strengthening their locality through regional development (Wolfe, 2005).

The short-term future of Canada’s innovation agenda may take more time to unfold as a result of the recently elected minority Conservative government. The previous agenda had proposed the creation of 10 recognized research centers in Canada which would nurture the growth of spin-offs and licenses (Government of Canada, 2002) and provide internationally competitive industries to foster economic growth. In the UK, Tony Blair, has resigned as Prime Minister with the mantle being passed to Gordon Brown. Both of these governments continue to be committed to innovation with their uniquely different strategies for commercialization and innovation with the greater need of research to be useful to industry, government or society at large (Gibbon, 1998). The commercialization environments have some similarities relating to the trigger role of funding cuts and innovation related policies aimed at tertiary education. These strategies differ in the following manner:

United Kingdom Canada

Strengthening its regional innovation system Strengthening innovation broadly by

C

14

by building strong foundations or pillars of

innovation in regions

concentrating on improving its national

innovation system by providing some of the

infrastructure to benefit innovation in all its

geographical locations

Although, many of the changes that have popularized the implementation of market principles are derived from neo-liberal policies which encourages the markets to dictate many facets of their economy. Consequently, this political philosophy promoting an increase in the global marketplace fosters the current role of knowledge capitalism for technology transfer of universities as a policy tool to maintain a high standard of living. These models employ two different approaches with the UK emphasizing research beneficial to a particular region while Canada seems to be concentration on the end of the research spectrum by implementing technology transfer mechanism. Canada is hoping to benefit the country as a whole but the UK model may create an inequality between regions because of its strategy; therefore, creating a greater two tier system for faculty and students with certain regions being highly regarded because of their successes while other are avoided. Unfortunately, a flaw with the Canadian measurement of licensing and spin-offs is that it may not measure various other modes of technology diffusion (Langford et al. 2006)

This paper has identified some levers that have initiated the creation of policies supporting productivity and innovation and their direct relationship with research capacity. The university systems in Canada and the UK are in the process of redefining their mandates with greater emphasis on skill development, applied research and direct partnerships with the private sector. However, by emphasizing development of commercialization, the university may not fulfill all of its goals. Bernard Shapiro (2003), former principal of McGill University, says that the university system may fall into the following predicament: “We should worry that we far too easily and far too frequently translate utility into market value. It is as if we actually knew or actually know for example, what will be useful in the future.” The governments in the UK and Canada are beginning to focus their funding on industry research with and for the private sector. Davenport (2001) has expressed fear that once the important discoveries of basic research have ceased, innovative companies from the private sector will have nothing in the pipelines. We must not commit all our resources in education and research to fill these apparent research gaps because they may not fulfill our future needs (Shapiro, 2003). This type of stout devotion may cause the retardation of higher education and a country’s economic competitiveness. We should show some degree of restraint in embracing this prevalent trend and balance our research portfolio of pure and applied research to mitigate the risk of failure on a longer term basis (OECD, 2003).

15

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