University industry collaboration and firms' R&D effort
Abstract This paper investigates the impact of publicly funded university industry collaboration on UK firms' R&D effort. We test the hypotheses that project participation has a positive effect on firms' R&D expenditure per employee and on their share of R&D employment. The paper exploits a novel source of data made up of a set of U I projects funded by the UK Engineering and Physical Sciences Research Council between 1997 and 2007 and firm level data available through the UK Office for National Statistics. We employ propensity score matching to select an appropriate control group of untreated firms on the basis of the probability that they participate to U I partnerships. We then estimate the impact of participation on firms' R&D effort in two points in time via ordinary least squares regression. The results show a positive and significant impact on the share of R&D employment two years after the end of projects. This is also confirmed by a robustness check. A positive effect on R&D expenditure per employee is found both at the end of the project and two years later. These findings are highly relevant for policy, given that U I collaboration is among the most frequent policy instruments put in place by local and national policy makers to foster pre competitive research and firms' R&D activities.