Determinants of Industry - University Linkages and Their Impacts on Firm Performance, in Western Ethiopia: Implication for Technology Transfer

This paper utilizes the western Ethiopia Innovation Survey data to find out the determinants of industry-university cooperation and its impact on firm performance. We find first that among determinants of Industry-university cooperation, traditional firm characteristics variables of sizes and R& D intensity are not significant at all, while the participation at the national R& D project turns out be most significant and robust in both cooperation modes. This is in quite contrast to the results from the cases of western Ethiopia, and reflects importantly the heavy weight of government policies in promoting the Industry-university cooperation in late-comer economies. Second, regarding the impacts of the Industry-university cooperation, we strikingly find no significant impact on the innovation probability of firms when we control the possible endogeneity such that already innovative firms might participate more at such cooperation modes. This implies that the Industry-university cooperation cannot guarantee a firm success in technological innovation, rather, it may have an influence on the selection or direction of the firms research projects. When we limit the analysis to the innovative firms, we do find positive impacts of the Industry-university cooperation on patents generated from new product innovation but no impacts in terms of sales increase or labor productivity. These results seem to reflect the still transitional nature of the NIS and knowledge industrialization.