Efficiency in university-industry collaboration: an analysis of UK higher education institutions

We examine the determinants of university involvement in knowledge transfer activities, focusing on the value of external services provided by higher education institutions. Data come from 164 universities in the UK and are drawn from the HE Business and Community Interaction Survey (HE-BCI), with a variety of university- and region- specific explanatory variables grafted onto the data from other official sources. The production function for such external services is estimated using the appropriate stochastic frontier methods, and unobserved heterogeneity across institutions of higher education is accommodated by adopting a latent class framework for the modelling. We find strong effects of scale and of research orientation on the level of knowledge transfer. There are, however, two distinct latent classes of higher education institutions, and these differ especially in terms of how external service provision responds to subject specialization of universities and to economic conditions in the region. Research-intensive universities are concentrated in one of the latent classes and, in these institutions, the provision of external services appears to be highly efficient, while in the second latent class there is greater variation in the efficiency of universities.