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            In their search for greater financial independence, Australian universities are encouraging academics to commercialize the application of their knowledge and research skills. While these commercialized scholarship (COS) activities generate significant direct financial returns, they also impact indirectly upon the mainstream activities of university life. There has been little research into these indirect effects on university teaching, research and service.

            This article reports a survey of academic and administrative staff of two Australian universities which compared direct and indirect costs and benefits of academics’ COS activities. A novel evaluation technique was employed to assess the extent to which interviewed staff believed that the indirect benefits of COS (such as closer relations with external bodies, prestige and spin-off effects on teaching and research) were in aggregate more significant than the direct financial effects. The technique was also used to assess indirect costs of COS, such as time lost to basic research, and the time and other university facilities consumed for which there is incomplete reimbursement. An aggregation of these indirect and direct benefits and costs suggested that COS projects could be more favourable to universities than a narrow financial analysis would suggest.


            Author and article information

            Critical Studies in Innovation
            Pluto Journals
            June 1993
            : 11
            : 1
            : 95-107
            8629138 Prometheus, Vol. 11, No. 1, 1993: pp. 95–107
            Copyright Taylor & Francis Group, LLC

            All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

            Page count
            Figures: 0, Tables: 0, References: 16, Pages: 13
            Original Articles

            Computer science,Arts,Social & Behavioral Sciences,Law,History,Economics
            indirect benefits,benefit:cost ratios,commercialized scholarship,Australian universities


            1. Inevitably, these valuations were impressionistic, based as they were on the opinions of those who were actively engaged in commercial activities and those not engaged. Further, the choice of the two universities was opportunistic, so that generalizations cannot easily be made. Nevertheless, the information collected provides illuminating descriptive data about the role which commercial academic activities play in higher education institutions.

            2. Distinguishing between applied and basic research is always a troublesome matter. We employ the National Science Foundation (US) definition of basic research: Original investigation for the advancement of scientific knowledge … which do(es) not have immediate commercial objectives (NSF, 1959, p. 124).

            3. James S. Fairweather, Entrepreneurship and Higher Education, Washington, D.C.: Association for the Study of Higher Education, 1988.

            4. R. Levin, A. Klevorick and R. Nelson, ‘Appropriating the returns to industrial R and D,’ Brookings Papers on Economic Activity, No. 3, Washington D.C.: Brookings Institution, 1987.

            5. In University A all centres and institutes were amalagmated with departments, whereas in University B most centres and institutes were free-standing. Had university policies been consistent, shares of department expenditures related to commercial activities would have been much higher in University B.

            6. University policies differed in regard to the organization of research centres and institutes. In University A research centres and institutes were organized within a department, whereas in University B there had been an apparent effort to separate these units from the departments. The difference greatly affects the interpretation of the data in Table 1. In University B the utility of the centre — or institute-based revenues to departments ranges from only moderate to almost nil. From the University perspective the centres and institutes probably contribute to research and service in much the same ways as do department-based efforts.

            7. Weisbrod B. A.. 1968. . “‘External effects of investment in education’. ”. In Economics of Education . , Edited by: Blaug M.. p. 158 Penguin : : Harmondsworth. .

            8. Dunn L. F.. 1977. . ‘Quantifying non-pecuniary returns’. . Journal of Human Resources . , Vol. 12((3)) Summer;: 347––359. .

            9. Walter W. McMahon, ‘Externalities in education’, Faculty Working Paper No. 877, Urbana-Champaign: University of Illinois, 1982.

            10. Haveman R. H. and Wolfe B. L.. 1984. . ‘Schooling and economic well-being: The role of nonmarket effects,’. . Journal of Human Resources . , Vol. 19((3)): 377––407. .

            11. Although the interviewees appeared to assign values to the total indirect benefits with care and thus the monetary values probably are generally valid, interviewees seemed to be more liberal in assigning values to individual indirect benefits.

            12. Yin R.. 1982. . “‘Studying the implementation of public programs,’. ”. In Studying Implementation . , Edited by: Williams W. and Elmore R.. Chatham , NJ : : Chatham House. .

            13. One very large outlier was eliminated both from the benefit and cost data. If the very large values are included, the indirect to direct benefit ratio rises to almost 2.0:1 and the benefit: cost ratio changes from 5:2 to 3:1.

            14. The use of the term ‘spillover’ in this article refers to interactions among activities undertaken by the same person. It is thus not directly analogous to the economists’ conventional use of the term. A synonym could be ‘spinoff.’

            15. Since respondents were selected because they were voluntarily involved in commercialized activities, it is not surprising that most think positively about the impacts of what they do on their other work responsibilities.

            16. Only indirect benefits to costs are reflected. Since all revenues generated (direct benefits) are expended (direct costs) in the non profit universities, only the indirect benefit to cost ratio has a clear implication for policy affecting academics’ behaviour.


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