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50 AICGS POLICY REPORT THE NEW ROLE OF UNIVERSITIES IN THE TWENTY- FIRST CENTURY: UNIVERSITIES AS ENGINES OF INNOVATION Located in Washington, D.C., the American Institute for Contemporary German Studies is an independent, non-profit public policy organization that works AND ENTREPRENEURIAL HUBS in Germany and the United States to address current and emerging policy challenges. Founded in 1983, the Institute is affiliated with The Johns Hopkins University. The Institute is governed by its own Board of Trustees, which includes prominent German and American leaders from the business, policy, and academic communities. Andreas Pinkwart Building Knowledge, Insights, and Networks for the Future AMERICAN INSTITUTE FOR CONTEMPORARY GERMAN STUDIES THE JOHNS HOPKINS UNIVERSITY TABLE OF CONTENTS Foreword 3 About the Author 5 The American Institute for Contemporary German Studies strengthens the German-American relation - ship in an evolving Europe and changing world. The Preface 7 Institute produces objective and original analyses of developments and trends in Germany, Europe, and the United States; creates new transatlantic The Changing Role of Universities as Innovation Engines and networks; and facilitates dialogue among the busi - ness, political, and academic communities to manage Entrepreneurial Hubs 11 differences and define and promote common inter - ests. The Corresponding Changes in Industry 19 ©2012 by the American Institute for Contemporary German Studies Different Paths of Development of Modern Universities in the ISBN 978-1-933942-36-0 United States and Germany 23 ADDITIONAL COPIES: Additional Copies of this Policy Report are available for $10.00 to cover postage and handling from The Contributions of Universities to the Innovation Systems of the American Institute for Contemporary German the United States and Germany 27 Studies, 1755 Massachusetts Avenue, NW, Suite 700, Washington, DC 20036. Tel: 202/332-9312, Fax 202/265-9531, E-mail: [email protected] Please From the Ivory Tower to the Entrepreneurial University 35 consult our website for a list of online publications: http://www.aicgs.org Results 41 The views expressed in this publication are those of the author(s) alone. They do not necessarily reflect the views of the American Institute for Contemporary Appendix: Summary of Conference 43 German Studies. Notes 46 The New Role of UNiveRsiTies iN The TweNTy-fiRsT CeNTURy FOREWORD “Innovation” is the buzzword for the twenty-first century. How can our economies stay competitive? How can our industries grow? How will our work forces adapt to new demands? Universities pay a distinct role in answering these questions, and can be a driving force for innovation. As companies have adjusted to new economic realities, universities have adjusted, too. Rather than competing for the best ideas, universities and companies are partnering to encourage innovation and entrepreneurial ideas among students and researchers. In this Policy Report, Prof. Dr. Andreas Pinkwart analyzes the changes underway within the innovation systems in the United States and Germany. He looks at how modern universities have changed in the twenty- first century, and cites requirements for those universities looking to better integrate in the innovation system. He then discusses how universities can transition from being “ivory towers” to “entrepreneurial universities,” and how businesses can encourage university innovation and entrepreneurship through partnerships and campus companies. This publication is part of AICGS’ broader efforts to examine the various aspects of innovation in the United States and Germany, and our emphasis on providing solutions to current business and policy challenges. AICGS is grateful to Prof. Dr. Andreas Pinkwart for his insights and to Jessica Riester for her work on this report. This Policy Report, together with a conference in June 2011 on “The New Role of Universities in the Twenty-first Century: Universities as Engines of Innovation and Entrepreneurial Hubs,” was made possible by a generous grant from the Stifterverband für die Deutsche Wissenschaft. Jack Janes Executive Director 3 The New Role of UNiveRsiTies iN The TweNTy-fiRsT CeNTURy 4 The New Role of UNiveRsiTies iN The TweNTy-fiRsT CeNTURy ABOUT THE AUTHOR Prof. Dr. Andreas Pinkwart is the Dean and Chairholder of the Stiftungsfonds Deutsche Bank Chair of Innovation Management and Entrepreneurship, HHL – Leipzig Graduate School of Management, Germany. Prior to that, Mr. Pinkwart was a Visiting Scholar at the American Institute for Contemporary German Studies (AICGS) in Washington, DC. From 1998-2011 Mr. Pinkwart was Professor of Business Administration at the University of Siegen, Germany. From 2010-2011 he was a member of the state parliament of North Rhine- Westphalia, Germany. In 2005-2010 he was a member of the German Federal Council (Bundesrat). Prior to that, Mr. Pinkwart was a professor for Business Administration and Economics at the University of Applied Administrative Sciences North Rhine-Westphalia. He is a member of the Board of Trustees of Rationalisierungs- und Innovationszentrum der Deutschen Wirtschaft e.V. (RKW); Erich-Gutenberg- Arbeitsgemeinschaft e. V.; Förderkreis Gründungs-Forschung e.V.; Entrepreneurship Research German Association of University Professors and Lecturers (DHV); and Board of Trustees of SMI – Siegener Mittelstandsinstitut. In 2008 he received the Deutscher Elite-Mittelstandspreis 2008 of Union Mittelständischer Unternehmen e.V., Munich. Prof. Dr. Pinkwart received his M.A. in Economics in 1987 from the University of Bonn in Germany and his PhD (summa cum laude) in 1991 from the University of Bonn. In 2003, Mr. Pinkwart received his habilitation from the University of Siegen, Germany. 5 0PR1efACe The New Role of UNiveRsiTies iN The TweNTy-fiRsT CeNTURy PREFACE The degree of interaction between universities and and firms working at an international level. Central companies as two main institutes in any society has research units within universities have transitioned attracted a considerable amount of research over the into joint-venture research laboratories (i.e., university- past decades. Nevertheless, more research is always industry collaborations), which are close to becoming needed to optimize the way in which they can best an emerging company. In the late twentieth century cooperate in the process of knowledge transfer for we witnessed an academic revolution. Universities the welfare of global societies. began to contribute to society not only through their research and teaching, but also by contributing to the Historically, the traditional school of thought viewed economic development of society. This trend began universities as a typical “production machine” of in the United States in the 1970s and in various human resources. Students pass through the different western European countries during the 1980s and levels of a university education and according to their 1990s. 1 potential, obtain a Bachelor’s degree, a Master’s degree, and even a Doctorate. Later on, companies The role of universities as engines of innovation is in enter the picture when they recruit competent grad - the first place due to the education and qualification uates to work for them or when qualified students of undergraduate students, doctoral students, and seek jobs in the departments of Research and postdocs. The students are the creative disrupters, Development (also referred to as R&D) of large the catalysts, and the future entrepreneurs. This is reputable companies. After a few years, these compa - the traditional function of universities, which is much nies have developed huge R&D departments, in more valued in the current world of sciences than it which many researchers are working on relatively was in the past. similar tasks with a low degree of efficiency and specialization. Traditionally, ideas are developed in What is really new in principle, however, is that the these central facilities and then transferred to the best skilled people are developing their innovative development of a product or service. ideas and inventions more often during their time at universities than in the laboratories of the research- Now companies have shifted to a more project- oriented companies, as was the case in the past. oriented and open-innovation approach, where Therefore, the universities must not only educate their research activities are divided and spread across students, but they must organize the shift of knowl - several sites not only within the company’s head - edge from the university labs to the markets. quarters, but also worldwide. The interest in a large R&D center has seriously declined. The teaching and research in the area of entrepre - neurship, which deals with the discovery of new busi - Alongside the changes within companies, universities ness opportunities by individuals as well as the have changed, too. Earlier trends led universities to creation of appropriate organizational structures, 2 has seek cooperation with nearby companies and national increased almost exponentially. Whereas in Germany firms. However, recent trends have encouraged a there were serious reservations about this new global network of cooperation between universities research and study for a long time, 3 in the United 7 The New Role of UNiveRsiTies iN The TweNTy-fiRsT CeNTURy States, somehow the pioneer in the field of entrepre - for the new role of universities in the innovation neurship, this discipline from the beginning was process, the requirements for modern

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