R & D -based university-industry collaborations

According to the contact management approach that collaboration is successful which can
produce value for its participants, where the value creation is determined by economic utility
coming from cooperation, or the contact performance determines it significantly. In this
aspect the high contact performance is towards the successfulness of collaboration (Ivens
Pardo 2007).
However, the interpretation of contact performance can cause two basic problems in case of R
& D collaborations. On the one hand it is necessary to clarify what can be university-industry
collaboration and what cannot. On the other hand the definition of contact performance
should be identified clearly. There can be several problematic questions while studying these
two definitions deeply.
Analysing the exact meaning of university-industry collaboration it can be stated that the
studies, dealing with them, tend to handle R & D interactions as a homogeneous cluster with
the name of collaboration (maximum they distinguish the tightness, institutionalization, and
the members of the collaboration).However, the university-industry interactions should be
distinguished by the followings: whether the direction of the interactions is vertical or
horizontal, and whether their duration is short-, or long-term. Vertical interactions have a
project transaction, where the university provide service while the company receive it. The
result of the transaction - in its clear form - behoves the party who receives the service.
Contrarily horizontal interactions - based on a kind of task distribution - mean common task
achievement, where the parties share the results according to a previous agreement. The
horizontal and vertical interactions require different approaches according to the different
roles of the parties, and their relationship to each other. On the other hand, in case of
university-industry R & D interactions it is necessary to distinguish the single or the limited
(in time) interactions from the continuous interactions. In case of a single interaction, the
relationship between the parties ends up with accomplishing a transaction, parties want to
maximize the achieved utility in a very short time.
Contrarily, in case of a continuous interaction, the parties point of view is for long time, they
tend to have relationship-specified investments in order to maximize the acquirable utility. By
the latter we can speak about collaboration.
Defining the contact performance, specified to general and R&D collaborations which are
necessary to interpret the performance of the university-industry R&D collaborations, raise
several problems which cannot be answered unambiguously by the literature (OToole Donaldson 2002). Investigating the theoretical side of the definition, we can see that there is
no contact performance approach in general connotation. Theories studying collaborations
furnish an answer for this question in several ways. The theory of transaction costs suppose
that the performance in the context of contact is nothing else than the efficiency of the
transactions. It measures the participated organizations performance in this area with special
tools typical of the contact, with the costs of processes, with the stocking and production costs
occurring as a result of maintaining the relationship, and with the expectations of the company
regarding the possible continuation of the contact (Williamson 1985, Heide Stump 1995).
The agent-theory approaches - similarly to the theory of transaction costs - handle the results
of inter-organizational relationships mainly from the side of the expenses, typically in clientagent relation. Basically, the main dimensions of the evaluation refer to the opportunist
attitude in relationships, and to monitor the maintenance of contacts, decisively in risk
assessment perspective (Bergen and co-authors, 1992) The literature of channel management
tries to evaluate the results of the contacts mainly according to the benefits which can be
defined economically, taking into account the relating costs and profit factors (e.g. sale and its

cost factors) (Heide and John, 1988). Besides the abovementioned the social exchange
approach can also be mentioned, which defines the foregoings in a significantly expanded
way, involving elements such as flexibility or satisfaction in the dimensions of evaluation
(Macneil 1980).
Beyond the obvious conceptual, intendment lack of contact performance, the evaluation of
university-industry R&D collaborations performance has further problems. Namely the
referring studies apart from their different starting-point, and therefore their results are usually
controversial, they do not separate the performance of the collaborations and the project
executed with them.
In the university-industry relation co-operations, realized in the field of R&D, are mainly
vertical collaborations. (Rothaermel Deeds 2006; Blum Mller 2004).
The university-industry R&D collaborations with vertical nature have several characteristics:
they include conventional development transactions. These interactions become
collaborations when they include more contracts, or series of projects controlled in
contracts.(Bercovitcz Feldman 2007).
the triangular nature is another feature of the vertical university-industry R&D
collaborations Although in the university-industry collaborations, as in relationships, the
industrial contracting party and the team fulfilling the order have the main role, the
university management appears as a unavoidable factor (Blum Mller 2004; Heidrick
and co-authors 2005; Barakonyi 2004).
beyond the abovementioned it is dissonant that these collaborations can be characterized
with special nonbusiness - business conflict of interest. The conflicts of interest in vertical
university-industry R&D collaborations, as potential sources of conflict, can be caught in
three main points: norm conflicts; activity conflicts; management conflicts (Resnik
Shamoo 2002; Santoro Betts 2002; Wu 2000; Slaughter Leslie 1999).
Accordingly, to analyse the contact performance in university-industry R&D collaboration
context, it is necessary to investigate the motives of the collaboration, the utility nature
coming from the collaboration itself, the components, the cause and effect relationship of this
utility. Furthermore, it is also needed to analyse the different utility-perception of the
participants to be able to manage them.
Collaboration between enterprises, universities and research institutes in Hungary
In Hungary the research-and-development became emphatic these days, or the earliest after
the regime change. Before that large companies did researches inside.
At the end of the XX century there was a significant model-change at the universities. There
are essential changes in the university management, financing, educational system. The
universities (and the academic research institutes), as knowledge-producers, the sources of
new academic knowledge and well-qualified experts trainers, are rather important characters
of the knowledge-based economy (BonaccorsiDaraio [2007], Inzelt [2004], Laredo [2007],
Martin [2003], Nedeva [2008], SanchezElena [2006], Varga [2000], MowerySampat
[2005]).
In the broad sense innovational process universities are the potential partners of the
companies. The increased autonomy of universities and the change in the structure and the
size of financing have changed the strategy of universities and university researchers.
Comparing to the increase of research costs, the absolute or relative decrease of budgetary
amounts spent on financing researches, the more and more competitions in the sources of
public sector, and the fact that the collaboration with external partners (and gaining money

from them) are encouraged by the state, have made the universities open to satisfy the demand
for the new knowledge set up by the enterprises (Laudel [2006]). The significance of
purchasing research results, providing R&D services, and last but not least of the R&D
collaborations has increased.
The structural natures of the collaboration between the enterprises and the universities,
research institutes are unfavourable in Hungary: There are just a few companies laying charge
on R&D activities, R&D organizations have smashed to fragments, their average headcount is
low, and the rest of them are rather science-oriented than innovation-oriented.
Hungary has become the typical recipient country of the active capital: in 2005 the stock of
active capital investment reached 56% of GDP, it increased to 66% by 2007, which was one
of the highest rate among the OECD member states (OECD [2008c] p. 64).
R&D expenditure of multinational companies is the highest in six sectors (information
technology, car industry, pharmaceutical industry, biotechnology, electronics, aircraft and
space industry). From the aspect of FDI in Hungary, four of them appeared and became
important: pharmaceutical industry, information technology, car industry and electronics. 75%
of the R&D expenditure of all foreign companies is concentrated in these four sectors; car
industry and pharmaceuticals stand out. (Chart 2)
R&D expenditure of enterprises in Hungarian manufacturing, 2007

Sectors

In foreign
companies
Pharmaceutical industry
23,9
Information technology
0,5
Car industry
48,3
Electronics
2,9
4 sectors together
75,6
Others
24,4
Total
100,0
Sources: Inzelt, Economic Review, May 2010, p.440

In domestic
companies
17,1
8,4
0,9
4,8
31,2
68,8
100,0

Total
22,3
2,3
37,2
3,4
65,2
34,8
100,0

The R&D expenditure of the Hungarian-owned companies in these four sectors hardly
reaches one third of all expenditure, and only the pharmaceutical industry is significant almost the same proportion as in the foreign pharmaceutical industry in Hungary. In the
Hungarian business R&D computing and electronics has slightly higher proportion than in the
foreign ones.
Moreover, 67% of all the business R&D is financed by foreign companies. In consequence,
the costs of R&D in car industry owned by foreign companies are 32% of all the expenses,
and 16% is the pharmaceutical industry owned by also foreign companies. In regard to the
business R&D the most significant Hungarian branch is pharmaceutical industry, which is
about 6% of all the expenses.
In Hungary the rate of the domestic R&D costs to GDP is still under one per cent. However,
between 1995 and 2005 the business financed R&D expenses increased (OECD [2007] p.69,

168), it was only 0.48 per cent of GDP in 2006, which proportion was rather far from both
OECD average (1.56 per cent) (OECD [2008c] p.81) and Lisbon purpose of EU. This rate is
not apart from the fact that the proportion of enterprises doing R&D is low, according to the
statement of the Hungarian Central Statistical Office there were 688,058 registered
organizations dealing with research in Hungary in 2007.
Distribution of R&D expenditure sources in higher education in percentage of total costs

Sources of expenditure
Governmental sphere (budget and local government)
Enterprises in Hungary
Non-profit
Foreign sources
- enterprises working abroad
Others
Total
Enterprises working abroad/in Hungary
In 1995 90% of financing researches in higher education came from this source, while it was
77% in 2007. The proportion of business sources is low but increasing. In 2007 the business
sector financed 14% of the expenses spent on higher education. This proportion was similar to
this in 2005, while in 2000 it was only 6 per cent. Surely the proportion increase can be due to
the fiscal guiding influence of innovational contribution, and to the fact that companies according to the everyday experience - contract with universities more gladly than paying
contributions to the state. Beyond that the proportion increase also shows that the growing
number of the national and the European Union programs boosting the business sectors
demand for new knowledge affected the collaborations between the public-, and the private
sector (KSH [2008]).
As it can be read in the literature, there are so many dimensions and forms of collaborations
(GulbrandsenSlipersaeter [2007], Inzelt [2004], Inzelt and co-authors [2006], Molas-Gallart
and co-authors [2002]). The contracts can mean several relationship. The innovative
companies based on purchasing the so-called research capacity and research results have an
interaction with the higher educational institutes to buy different inputs for their innovational
processes. The innovational activity of the enterprises taking part in producing new
knowledge is based on collaboration. It means that the companies build up partnerships with
the universities for the sake of a common goal - accomplishing innovations (OECD [2008a]
p.22).

Most of the relationships between the Hungarian universities and the enterprises are research
contracts. They include cash benefits of the certain higher educational institute from private
companies received for fulfilling researches, research services, or for doing tests to
enterprises. There is a soft form of contracts: large companies may pay (directly or through
the university) for the educator-researchers professional league membership fee, or for their
travel costs of participating at conferences, and they may finance the expenses of their
professional publications (Bergen and co-authors, 2006). Moreover, the contracts might
comprise several other activities too. For instance, enterprises can support PhD students, or
may contract to organize the company trainings through the university by its courses.
Similarly to the foregoing, however, the number of contracts with national companies is high,
the income of universities from these contracts is low. In case of the contacts signed by
national companies, the average amount for one contract is 23.5 million HUF. In case of the
contacts signed by foreign companies it was 54% higher on the average, and by the national
companies owned by foreigners it was 66% higher.